Alexandersen Villumsen posted an update 2 months, 1 week ago
In 2022, media and entertainment companies will have a familiar landscape relying on consumer behavior dynamism, technological innovation, competitive intensity, and industry reshaping. Match the continued outcomes of the pandemic on business conditions as well as the workforce, an inflationary economy, along with a charged social and political landscape, and company leaders are steering through unpredictable terrain. Here are five trends to observe in ahead since the industry functions reframe its future.
1. Content distribution gets (more) complex
Investment in new original content shows no manifestation of slowing as we move into 2022. Submissions are the fuel that drives consumer interest and engagement across platforms – streaming, broadcast and cable networks. How the content reaches consumers, however, ofttimes involves an intricate decision-making process.
The direct-to-consumer (D2C) pivot will still be the primary strategic priority for the industry within the coming year. Operators and investors alike are focused on subscriber growth and retention because the key performance indicators for services where switching costs for people are minimal. Despite their rapid growth over the last 2 yrs, most D2C services operated by media companies remain unprofitable and consume cash, devouring resources through the overall enterprise.
The funding intensity related to streaming highlights the benefit for media companies to reap the financial benefits of the linear ecosystem. Even as cord cutting gradually shrinks the universe of traditional video subscriptions, broadcast and cable networks remain cashflow engines. In order to avoid a dislocated unwinding of the legacy pay-TV environment and it is valuable monthly subscriber fees and advertising revenues, network owners must carry on and direct fresh content, including sports, for their linear channels to maintain viewers engaged.
That year ahead, operators (especially those without the scale or capital resources to look truly “all in” on streaming today) is going to be faced with challenging decisions around programming their streaming platforms to operate a vehicle growth, as well as remaining profitable but structurally declining linear businesses to get earnings. This is the tricky juggling act.
Performing on these decisions will require sophisticated modeling and disciplined business planning that spans creative and executive priorities to offer the optimal mixture of growth and financial outcomes.
2. Simplified and customized experiences take center stage
In 2022, consumers continuously look for unique experiences and ubiquitous usage of entertainment content. Companies which solve the discoverability puzzle and aggregate content within a more intuitive and accessible way will rise to the top.
Consumers expect effortless interactions through the end-to-end customer journey, from sign-up to usage and billing. Accordingly, we will have more companies participating in the streaming value chain. Network owners, broadband providers and connected TV manufacturers will probably be doing their best to simplify, optimize and integrate layers and compatibility tools across platforms to further improve the consumer experience.
Content discovery is becoming increasingly difficult for consumers since they bounce between streaming services searching for new series and old hits one of the avalanche of accessible programming. Tech-savvy firms that harness valuable viewership data to offer customers many content they want will enjoy an aggressive advantage. In 2022, streamers playing catch-up will refine their recommendation engines depending on demonstrated subscriber preferences and usage history, and tailor their marketing – in-platform and over external channels – to generate consumers aware of each of the viewing options.
Bundling could also enhance the buyer experience. The scaled digital-native streamers provide a number of integrated offerings with their video subscribers – shopping, gaming, devices, and other digital services. Media companies with diversified businesses or innovative partnerships with organizations – including within the digital asset arena (e.g., non-fungible tokens, or NFTs) – will try and create their own “flywheels” that provide a portfolio of offerings with their streaming subscribers, driving new sign-ups and adding stickiness for the D2C revenue model, extending lifespan in the customer relationship.
An in-depth lineup of desirable programming is table stakes to the streaming game. In an environment where consumers are juggling an evergrowing number of services and switching costs are low, media companies must deliver an event that keeps subscribers connected and engaged.
3. Movie night will return to the theatre
The results from the pandemic about the movie business happen to be severe. Cinema owners struggled to be open as moviegoers stayed away as a result of virus concerns and limited option of fresh film product. While the emergence from the Omicron COVID-19 variant is adding uncertainty, there are signals pointing with a constructive path forward to the box office in 2022.
In 2021, 13 films grossed over $100 million based on Box Office Mojo, below over 30 in 2019. Nonetheless, leads to 2021 indicated a long lasting audience appetite for “blockbuster” features as reopening across the nation gained steam, prompted simply from the distribution of effective vaccines. Looking ahead, a sturdy slate of long-anticipated tentpole movies should help drive the recovery in theatre admissions.
An alteration that may hold in 2022 may be the abbreviation from the exclusive theatrical window to approximately 45 days and, for a lot of mid-size films, a day-and-date release approach that allows people to view new movies within the theatre or in your own home. After having a difficult group of negotiations between theatres and studios, the film industry have aligned by using an approach that preserves the attributes of the theatrical window while acknowledging view of streaming popularity.
The shorter first-run window will allow studios and theatres (and inventive talent) to make use of successful major releases – namely the massive ticket sales that happen on opening weekend and the following many weeks, as well as the ability for studios to leverage marketing spend for a film’s premiere into future distribution windows, specifically fast-following D2C availability.
4. NFTs have entered the press chat
Excitement is building around NFTs as being a vehicle for media companies to grow engagement using their content and IP and might give you a future monetization model since the market matures.
Early adopters are getting NFTs linked to sports, art, collectibles plus much more, acquiring one-of-a-kind digital assets which are easily tradable and whose ownership and authenticity are recorded via blockchain technology.
To become listed on the adventure, media publication rack forming relationships with NFT technical specialists and marketplaces to build up offerings that enable consumers to participate in a completely new way making use of their cartoon characters, movie and TV show scenes as well as other content. NFTs allow media industry players to produce cross-platform consumer interactivity anchored in proven IP and to build new communities by extending the individual relationship into emerging digital areas.
In 2022, the media and entertainment industry will undertake a lot of NFT innovation and experimentation. The cost-effective return of such efforts is unclear; today, NFT projects in the media and entertainment space are essentially marketing investments intended to power engagement and to access fans – especially those active in crypto – wanting to deepen their connection to popular content. In the foreseeable future, media companies could generate royalty income in connection with secondary sales of NFTs… perhaps in transactions associated with activities occurring in the metaverse.
5. M&A remains a popular item about the menu
During the last 12 months, the press and entertainment industry saw the largest players execute over a variety of transactions – landscape-shifting megamergers, bolt-on acquisitions of smaller studios including properties positioned in international markets that produce localized content, targeted deals for niche IP assets which can be leveraged to create fresh programming, and innovative joint ventures intended to accelerate global streaming growth over a capital-efficient basis.
In 2022, the consolidation of studios and networks continue as companies attempt to build this article, capabilities and scale required to battle the digital-native behemoths who make use of tremendous financial and operational advantages.
After deal headlines fade, management teams will face the heavy lift of integration, right-sizing and realigning front office operations, IT systems and corporate infrastructure to realize ambitious efficiency goals. Cost savings realized through integration will fund future growth investment and boost profits, an integral objective because industry transitions from the stable, high-margin linear world with a streaming ecosystem that drives less-profitable revenue (in the meantime).
Robust conditions privately and public capital finance industry is enabling companies to market non-core businesses and other corporate assets that will no longer fit their evolving growth strategies or capital allocation priorities. Accordingly, asset divestitures might be a key trend in 2022 at the same time. Activist investors may play a role in certain of the transactions, being another catalyst for change.
The press and entertainment industry happens to be a whirlwind of strategic activity as companies build, renovate and destroy business portfolios in response to market developments, and 2022 won’t be any different. These five trends indicate that the media market is poised for the next year of exciting change, as companies drive innovation, tackle new challenges and capture opportunities to position themselves for growth.
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