A new survey of top global media and entertainment executives by Ernst & Young shows that rapid public adoption of new technologies is now driving many of their planning and management decisions. Those participating in the study ‘say that the digitization of content, combined with the increasing adoption of broadband distribution technologies, is creating major shifts, challenges and opportunities for their industry.
"The pace of technology-driven changes in the media and entertainment industry throughout Europe and the world has created enormous strategic challenges and uncertainty for global companies," said John Nendick, Americas Industry Leader of Media and Entertainment for Ernst & Young. "It is not unlike a chess match in which new pieces are constantly introduced into the game."
Among the study's findings:
- The music industry, which has been hard hit by piracy enabled by
content digitization, now has the lowest profitability margins of any
segment in the (enterainment and media) industry.
- The introduction of new industry-altering technologies is occurring at
an increasingly rapid pace without any slowdown in the rate of
consumer adoption.
- 75 percent of executives participating in the study cited digital
video recorders (DVRs)-more than any other new technology-as an
innovation likely to disrupt the industry's status quo.
- Some 24.7 million U.S. homes are expected to have DVRs by 2007,
threatening approximately 12.5 percent, or about $4 billion, of
traditional television advertising.
- Electronic game software has the fastest growth in earnings before
interest, taxes, depreciation and amortization (EBITDA) profitability
of any media and entertainment industry sector.
- While television broadcasting remains one of the most profitable
segments of the media and entertainment industry, executives generally
see it as the most challenged to thrive and grow in the future.
- Cable operators, which have not performed as well in Europe as in the
U.S. market, were cited by executives more often than other industry
segments as likely to thrive in the years ahead.
"While the current level of new technology adoption may differ by country and region, the overall trend remains the same worldwide," said Steve Barber, European head of Media and Entertainment for Ernst & Young. "Content digitization and the introduction of broadband technologies are forcing media and entertainment companies to rethink every aspect of their business, from intellectual property protection to new models for distribution and revenue creation."
