PwC has released its 18th annual Global Entertainment and Media Outlook 2017-2021 saying that entertainment and media companies accustomed to competing and creating differentiation through content and distribution must focus more intensely on user experience (UX).
Greg Doone, director, digital strategy with PwC New Zealand says this creates opportunities for New Zealand enterprises.
Doone said technological changes in the entertainment and media industry “from established innovation such as Netflix through to emerging segments such as virtual reality and e-sports with rapid growth at a global level” presented opportunities for innovative products and business models that revolve around the consumer.
“For NZ this presents an opportunity we could explore quickly because there is unprecedented growth in markets such as China where we have established networks,” he said.
PwC says it has identified eight emerging technologies as having the biggest potential to improve the user experience: augmented reality (AR)/virtual reality (VR); artificial intelligence (AI); Internet of Things (IoT); big data/data analytics; cloud; 3D printing; access, not ownership; and cybersecurity.
Deborah Bothun, PwC's Global Entertainment & Media Leader, said the next era of differentiation in entertainment and media was being defined and propelled by consumers' increased demand for live, immersive, sharable experiences.
“Consumers want to get closer, more engaged and better connected with the stories they love – both in the physical and digital worlds," she said.
"At the same time, companies can start to empower those experiences through a number of emerging technologies. Perhaps big data and artificial intelligence will create the most dramatic change, redefining how the industry can connect with all stakeholders and drive growth. We're already seeing a number of ways that AI is being used to personalize, customize and curate entertainment content and experiences at scale."
Doone said the trends and consumer behaviours identified in the global report could be seen in New Zealand, but with a slight lag.
PwC says Internet advertising spend surpassed TV advertising globally in 2016, and New Zealand is expected to follow in 2018.
“New Zealand’s internet advertising market reached $891 million in 2016, just shy of the TV mark,” PwC said. “Advertising dollars will continue to shift online, and growing at a CAGR of 9.0 percent, the market will reach $1.4 billion in 2021, overtaking TV in 2018.”
Doone said: “The data we have shows that global spending on advertising is growing faster than consumer spending but what is worrying traditional media is that advertiser spending on the digital side flows disproportionately to a few large platforms like Facebook and Google.,”
He said this was proving a particular challenge for New Zealand’s newspaper industry, which has been slow to grow online advertising revenues. “Publishers say they are challenged by the dominance of Facebook and Google in online ad sales. The industry’s prospects will depend on publishers’ ability to convert audiences into revenue, as well as on ownership structure.”
According to PwC New Zealand’s newspapers’ cross-platform reader strategies have been successful, with more than half of each major title’s audience now coming via web or app. “But monetisation is proving elusive – digital advertising revenue made up just 13.6 percent of total newspaper advertising revenue in 2016 and is forecast to grow by only 2.8 percent CAGR,” it said.
Nor is this likely to change, Doone said. “The influence of millennials and younger generations on the consumption of digital media is also being widely felt. They seek free media, to stream music, watch videos on YouTube and consume free news,” he said. “And as they become the dominant demographic, these habits look set to stay with them.”