Driving Growth Through Innovation in the Media and Entertainment Industry

Technology platforms are evolving rapidly, new business models are emerging, consumer viewing habits are changing and new competition is arising from multiple sectors. In general, companies are under intense pressure to devise more effective revenue models, especially in the face of recent double-digit cuts in advertising spending.

Addressing the challenges—and pursuing the opportunities—for a more competitive position means fundamentally changing the way media and entertainment companies operate directed at three primary areas:

• The digital consumer experience: Achieving excellence in engaging and interacting with consumers.
  
  
• Digital monetization: Applying innovative thinking to traditional business models in a way that creates new revenue streams.
  
  
• The digital supply chain: Migrating from analog to digital capabilities across all dimensions of the supply chain, from content acquisition and archiving, to content production, to content packaging and distribution, to fully automated process orchestration.
  
  

The single theme that cuts across all three of these areas and goals is innovation, such that leads to sustainable high performance.

More than any other type of business, the media and entertainment industry has innovation in its DNA. These companies have a track record of thinking in new ways, of reinventing how people learn and play and grow. The task ahead is to apply that same spirit of innovation to business models, operating structures and customer capabilities.

In this report, Accenture examines the role of innovation in driving business growth and imperatives for achieving high performance in the new digital age. The report highlights areas in which media and entertainment companies can take advantage of technology to enhance customer service, capture revenue and improve cost structures.

The challenges ahead for media and entertainment companies are significant. Volatility is at an all-time high. New product lifecycles are shrinking, traditional business models are failing and consumer attention spans are getting ever shorter. Shareholder value analyses of the media and entertainment industry reveals an increasing weighting of the current value—associated with profitability from existing operations—over the future value of many of these companies, meaning they are generating little or no premium from their future strategies.

Responding to these challenges means far more than just trying to extend the growth curve of existing products, services and models. It means fundamental change that requires jumping to a new growth curve entirely. Indeed, a large portion of the way that a modern media and entertainment company operates needs to change.

Going forward, it will be critical for companies to have the flexibility and commitment to innovation that allows them to operate a combination of models, and to move between them as the market changes.

To meet their needs for current as well as future value, media and entertainment companies must be committed to managing the innovation pipeline efficiently to achieve growth—most importantly, directed toward three areas:

• Understanding and satisfying consumer needs, and developing great content and consumer experiences.
  
  
• Applying innovation to the way they think about business and revenue models, learning to live in a marketplace with multiple platforms and multiple paths toward improved monetization.
  
  
• Transforming their cost structure and capturing the benefits of fully digital operations.
  
  

Fundamentally, innovation needs to be encouraged at all levels of a company and embedded in every organizational process. That requires creating a business discipline for managing innovation, beginning with a precise definition of innovation's role in the corporate strategy, and then putting organizational structures and dedicated investments in place.

Without those, innovation will produce only sporadic creativity, not game-changing innovations capable of driving high performance.