By Shirish Nadkarni
The dawn of 2024 sees the global Media & Entertainment (M&E) industry standing upon the threshold of a new user-centric era, shaped by relentless innovation and shifting consumer dynamics. It is a new era where user choice will dictate the flow of content … and technology giants will carve the path forward.
Brajesh Jha, Genpact’s Global Head of Media, Publishing & Entertainment, claims that there are five major trends that will have an impact on the M&E industry in 2024:
- Generative AI will make solid inroads. Initial use cases for production workflows, newsroom editing, and basic scriptwriting will become more universally adopted. Deepfake dubbing has huge potential to spread and propagate content across geographies. Regulations pertaining to using original IP in large-language-model training could open up new revenue streams.
- More streaming bundles and partnerships will emerge. The Disney and Charter showdown in 2023 shook up the bundling market. In 2024, we are likely to witness the emergence of different types of bundled solutions for consumers – content and cable bundles, content hubs coming together such as Paramount+ and Showtime, and lastly, the Rokus of the world striking deals with multiple content providers. Some will be revolutionary, while others will mimic traditional linear TV. Media companies will have to scrape for every subscriber dollar they can find.
- The local news and publishing industry will take on a new shape. Local newspapers and broadcast stations have been struggling for a while, but they still serve an important purpose in keeping communities connected and informed. As digital transformation accelerates and these outlets build a stronger social media presence, they will attract more non-profit dollars. Overall, we should see the emergence of multi-platform distribution models targeting local communities through print, digital, and broadcast.
- Ad dollars will continue to shift towards digital channels. Overall ad spending is predicted to remain the same or increase in the low single digits. However, the shift toward digital channels such as social media, streaming platforms, and connected TV will keep increasing. As content providers seek higher average revenue per user, they will increase subscription video-on-demand prices, shifting more subscribers to advertising-based video-on-demand (AVoD), where ads will be more targeted.
- Live events and associated revenue streams will boom in 2024. In the year just gone by, Taylor Swift did something that no one had done before. With her Eras tour, she radically transformed live events and their associated industries. Ticketmaster collected US$2.2 billion in ticket sales alone, with the tour generating a massive $5 billion in consumer spending in the US. Beyond just live events, follow-up movie sales are also worth watching.
In this ever-evolving landscape, Evan Shapiro, cartographer with Media Universe, has dissected the pivotal trends disrupting traditional business models and provided actionable strategies for industry players to adapt and thrive in the rapidly changing media ecosystem.
Shapiro unveils fresh consumer research and a set of strategic imperatives designed to navigate the shifting currents of media consumption. He is sounding a call to action, depicting a future that is unfolding in real time.
The streaming sector is experiencing an unprecedented boom, reshaping the M&E landscape with its rapid growth and the challenges that accompany it. As streaming services proliferate, they face the dual challenge of saturating the market while striving to maintain and grow their subscriber bases.
“The Covid pandemic of 2020-21 served as a catalyst for an unprecedented surge in connected television (CTV) sales and subscriptions, leading to a scenario where more people have more smart TVs than they have ever had in more rooms,” says Shapiro.
“This proliferation of smart TVs has not only changed how consumers engage with content, but has also raised the stakes for content providers to develop a comprehensive CTV strategy.”
Collecting and using data that consumers consider to be private may not be as easy in the future as it has been in the past few years. Past behaviour shows that consumers will change their attitudes if they believe companies have been irresponsibly using their data. Both Meta (formerly Facebook) and Wells Fargo saw significant fallout from privacy and data misuse scandals.
“People would be more willing to take legal action against businesses they don’t trust, leading to a long-term decline for companies who violate consumer trust,” says Shapiro.
“The change in cookie tracking and targeting will continue to make it difficult for quality advertisers to find their audiences. This signals a need to change their data approach, which opens the door for ‘Permission Marketing’ and gives businesses the chance to re-define how they think of loyal consumers and stops wasting marketing dollars on consumers who have indicated they aren’t interested.”
A PriceWaterhouseCoopers (PwC) study indicates that, while everyone wants to stay entertained, especially in a world filled with uncertainty, M&E companies are facing uncertainties of their own.
After robust 10.6% growth in 2021 and a notable surge in industry growth after the pandemic receded, the pace of growth in the M&E industry is projected to decline in each of the next four years – 2024 to 2027, according to PwC. The PwC analysis expects the annual industry growth rate to level out at 2.8% by 2027, underscoring a recalibration in the M&E industry.
The slowdown stems from various factors, with certain key sectors experiencing a waning of the initial surge of revenue and attention witnessed early in the pandemic. A notable example is the podcast industry, which saw a substantial 80% decline in podcast material creation between 2020 and 2022.
The predominant challenge in 2024 and beyond lies in consumer spending, hampered by inflation, pandemic fatigue, and the uncertainties of global events.
Consumer spending on media and entertainment is projected to grow at a humble 2.4% compound annual growth rate (CAGR) between 2024 and 2027, resulting in a market size of US$903.2 billion. As e-commerce and digital platform engagement rise, companies worldwide will intensify spending to connect with consumers during decision-making moments.
By 2025, advertising is projected to surpass consumer spending as the largest category in M&E, driven by robust 8.1% growth in internet ad spending in 2022. Advertising revenue is forecast to rise from US$763.7 billion to US$952.6 billion globally over the period 2022–2027.
“We can also expect to witness a surge in digital content providers, intensifying competition in the already content-rich landscape,” the PwC report predicts. “As a result, despite an increase in the time spent accessing entertainment and media content, consumer spending per capita in the digital entertainment and media industries is expected to decrease, dropping from 0.53% of average personal income in 2023 to 0.45% by 2027.”
Over-the-top (OTT) streaming, a pivotal catalyst for industry growth, is experiencing rapid expansion in emerging markets, particularly in Indonesia. This surge is attributed to factors such as a large historically underserved rural population, the proliferation of mobile broadband, and robust demand for local and sports content.
After discontinuing its analogue terrestrial broadcasting signal, Indonesia in the past two years has boasted the highest consumption rate of OTT video in South-east Asia. Approximately one in three Indonesians is using streaming services, resulting in remarkable 40% annual growth in hours watched.
The Indonesian streaming landscape is a battleground for global giants like Netflix, Amazon Prime, Disney+, Hotstar, and HBO Go, which face competition from a vibrant community of local and regional players such as WeTV, GoPlay, Mola TV, and Vidio. The nation’s long-term growth outlook is fuelled by infrastructure development, including the construction of a subsea cable to provide high-speed broadband across the archipelago.
Indonesia, alongside China and India, stands out in Asia for its combination of existing market size and scale, coupled with anticipated rapid growth in consumer spending and advertising.
While the US remains the largest M&E market, the Indonesian M&E market is making significant strides, ranking 15th largest with US$13 billion in annual revenue and rivalling countries like Brazil, Mexico, and Spain. The Indonesian market is poised for further robust growth, with an expected 7.7% compound annual growth rate (CAGR) in overall revenue (consumer spending and advertising) through 2027.
Today’s narrative and the potential for substantial growth revolve around the convergence of established and emerging technologies, with a spotlight on generative artificial intelligence (AI), particularly powered by advanced deep-learning models and neural networks.
OpenAI’s ChatGPT, launched in November 2022, became a game-changer, rapidly amassing 100 million users globally within two months. This new wave of generative AI, also embraced by tech giants like Google, Meta, Nvidia, and Baidu, holds immense promise for the M&E industry.
Generative AI enhances productivity by automating tasks, streamlining content creation workflows, and opening doors to innovative content generation, from scripts and voiceovers to entire gaming worlds at a fraction of the traditional cost and timeline.
However, as the use and sophistication of generative AI grow, the industry must confront serious challenges related to business models, privacy, intellectual property, security, environmental impact, and ethical considerations.
It’s time to rethink and re-define your business models to survive and thrive in 2024 and beyond.