When the pandemic started last year, many predicted from the beginning that media and entertainment would be affected in an outsized way compared to many other industries — and not positively. In many ways, this turned out to be true: advertising and the agency space took a massive hit for most of last year; theaters, parks, and sports venues were largely closed or operating at a minimum capacity until recently; and publishing continued its transformation from ad to subscription-focused with varying levels of success. With organizations dialing back capital investments and cutting staff along with shelter-in-place orders preventing in-person events and in-office collaboration, it seemed like a long road to recovery for M&E.
And while there certainly have been challenges for many organizations over the last year, not everything has been negative. The pandemic has brought forth both the worst of times and the best of times even within the same company. It accelerated the transformation of a few companies as they doubled down on their forward-thinking strategy focused on the direct-to-consumer (DTC) media and entertainment sectors. It was also a time of reckoning for those in the advertising and marketing technology ecosystems as they continued grappling with the implications of privacy and delivering better experiences to gain better first-party data from end consumers. Here’s what the past year and a half have taught us about how to adapt and thrive in the new M&E economy.
Organizational agility can make or break relevancy
We saw some businesses come and go, but we also saw some businesses completely reinvent themselves to fit changing customer needs. This time has showcased just how critical it is to stay operationally agile.
The organizations that can pivot quickly and stay flexible during tumultuous times are the ones that are committed to taking risks and also know the value of putting data at the center of a digital transformation strategy. Disney, for example, centralized its media businesses into a single organization responsible for content distribution, ad sales, and Disney+ to continue the acceleration of its DTC strategy. The launch of the Disney+ streaming service in late 2019 could hardly have been better timed: Disney+ reached 60.5 million subscribers in early August 2020 and surged to over 100 million by March this year.
Disney started hosting its own annual ‘Disney Data & Analytics’ conference in Orlando in 2018, beginning to lay the groundwork for leveraging data to enhance the customer experience, manage revenue, and more. By thinking outside the box and investing in a data strategy long before the pandemic, the company paved an early path to better handle the change and setbacks 2020 brought.
Viacom mainly operated as a cable company in the past, but its effective pivot to streaming is also noteworthy. At the end of 2020, ViacomCBS’ streaming and DTC services “saw subscribers spike 72% year over year to 17.9 million total between Showtime and CBS All Access.” WarnerMedia created waves throughout the industry by releasing all theatricals at the same time as subscription video on demand (Tenet, Wonder Woman 1984, King Kong). These examples — and plenty of others not mentioned — illustrate the value of rethinking revenue strategy during a time of change. Rather than just maintaining, media companies tapped into their treasure trove of customer data and content to think differently about what’s been done before to consider new models.
Personalization will remain front and center
Investing in personalization paid off pre-Covid-19, and it will continue to play a major part in enabling M&E companies to differentiate their offerings.
The benefits of data-driven solutions for personalization include quick identification and remediation of issues affecting each individual in the audience. The past year, we saw some of our customers taking matters into their own hands when it came to driving personalization through technology. We worked with many as they extended their data lakes to build customer data platforms (CDPs) and data management platforms (DMPs) to control their functionality and have better visibility into all of their available data. The market has been slow to evolve what a CDP is, and how it can help drive personalization, so forward-thinking organizations are making moves to innovate and future-proof their data strategies rather than waiting for an ideal off-the-shelf solution to come along.
We’re even seeing gaming and streaming video services build SLAs with their business owners that personalization and content recommendations should happen less than 30 seconds after a consumer visits their platform. In the gaming world, speed and agility are especially critical. DTC platforms are battling the war of attention to keep consumers on their platform for longer and create more monetization opportunities, and personalization is at the heart of it all.
Partnerships and consolidation reign
This EY article discusses the prediction that 2021 will see further combination activity “involving mid-sized and smaller network owners and studios” to build bigger platforms in the race to direct-to-consumer models. Partnerships are another way businesses can rethink their current internal processes and break into new markets.
Incumbents are looking for scale in the form of partnerships, as seen by AT&T’s plans to spin off WarnerMedia and merge it with Discovery and Amazon’s plans to buy MGM Studios, its most ambitious move yet in entertainment. These mergers are required to gain a critical mass of must-have content/IP to effectively compete in a subscription world where customers evaluate their subscriptions monthly for worthiness.
A rise in partnerships with telcos has also helped drive the total number of subscriptions for DTC services. Verizon bundles Disney+ and Discovery+ for customers while TMobile gives away Netflix, for example. While all of these partnerships are beneficial in terms of acquiring massive numbers of new subscribers, it’s still incumbent upon the streaming services to retain and renew these end-users that might be on their platforms for free.
EY research released in January 2020 found that 50% of media and entertainment executives believe “they can no longer rely on traditional business models” to drive future growth. Covid-19 has accelerated the move from traditional models and spurred innovation. It’s a time of change, but with the right technology and partnerships, many media companies will see fast growth in 2021.
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