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Others Ernst & Young's report highlights impact of technology on media, entertainment

Ernst & Young's report highlights impact of technology on media, entertainment

Author | Noor Fathima Warsia | Thursday, Feb 17,2005 8:15 AM

Ernst & Young's report highlights impact of technology on media, entertainment

Ernst & Young has completed its global sectoral report, 'Fast Forward - Technology propels Media & Entertainment, CEO in the future'. The report revealed insights in how technology has changed the media industry in the US. E&Y officials share that going by past records, in most segments of the report, these changes should be seen in India within 12 to 18 months. The report was unveiled by AP Parigi, CEO, Times Infotainment.

John Harley, Partner, Industry Leader, Technology, Communications and Entertainment, E&Y, commenced the presentation. He shared more on the 23 CEOs who participated in this study and some more on the genesis of the study. He said, "With the pace technology is growing, there is a need to know exactly where the industry is headed and what are the steps that have to be taken into consideration for an organisation to face the challenges that the industry presents."

With this he opened the floor to A P Parigi, the Chief Guest for the evening, who threw light on the present changes in the radio and the mobile telephony industry, both of which have seen an explosion due to the evolution in technology. "Technology is omnipresent. Today, if technology disrupts, I have lost a viewer, a listener and in cases of Internet, even a reader. There are lessons that we have from these changes and there are challenges that we need to understand before we can face them successfully."

Farokh Balsara, Head, Mead and Entertainment practices industry, E&Y then took the stage to highlight various changes that the US economy is witnessing due to technological development. Enumerating these points, he said, "The singular area that all participants have recognised, as having negative effects is Digital Video Recording. This has transformed viewing and threatens traditional advertising allowing a viewer to completely skip ads. Also the penetration of such devices is steadily increasing and we will see it enter 30 per cent US homes in 2007, which means the 1 per cent ad loss we see today will increase to 12.5 per cent."

The other points he delved on were in regards to broadband growth changing the nature of content delivery. With both music and movie downloads becoming a possibility, revenue models would dramatically change. Internet advertising is projected to see a high again. Another point that comes across is that strategic growth initiatives, including mergers and acquisitions and vertical integration are clear areas of focus.

The study also makes a point how content would continue to be king, even though it would be dependent on distribution channels. Cable/Satellite operator and subscription based TV content provider would be the next hot spots. He brought out that video games exhibit the highest growth of all entertainment categories. He said, "Electronic games software has the fastest growth in the EBITDA segment. Also this medium would not just deliver the younger TG but also constitutes a significant share of 18 to 35 TG and almost 40 per cent females."

Speaking on the Films and Video context, he said, "The global film Box Office revenue has experienced strong growth, especially out of the US. What is encouraging is that movie rentals, DVD and VHS have become additive technologies and not substitutes to box office."

The study indicates that the introduction of new industry-altering technologies is happening at a fast pace and no slow down in the rate of consumer adoption is witnessed. It also indicates that while free broadcast TV remains one of the most profitable segments of the media and entertainment industry, it would be the one most challenged to thrive and grow in the future. Technological and financial skills are seen as increasingly becoming important for the management teams.

On the print and publishing side, he said, "The report shows that Newspapers and Magazines take a substantial portion of the medium and project similar kind of growth trends."

Going forward, what is high on CEOs agenda is accountability and financial performance, "They are in a constant struggle to balance competing pressures between creativity and financial performance."

The study is based on extensive industry research. CEOs, CFOs and other leading stakeholder including top executives from major global companies like the Walt Disney Company, Sony Corporation of America, Time Warner, Reuters group and many others participated in the study.

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