The pandemic has accelerated digital transformation efforts in M&E businesses to help create innovation, efficiencies, and new revenue streams, according to a new report.
Like every industry, the media & entertainment (M&E) industry has been thrown a curveball with COVID-19, and a recent report from PwC and Microsoft highlights how they're accelerating their cloud investments and moving away from legacy production systems.
Production delays and the underdelivery of episodic content could result in over $3.5 billion in lost ad revenue for broadcasters, according to the report, "The show goes on in the cloud."
Although M&E businesses have been resistant to embrace emerging technologies in the past, they're now focused on digitally transforming themselves.
The pandemic "is changing underlying model assumptions and proving the value of cloud and putting more revenue in the pockets of media that weren't quick to embrace cloud as they have," said CJ Bangah, a principal at PwC US.
And marketers are pulling back spending, according to the report, so "there's more pressure for advertisers to provide an unshakeable business case for ad buys," according to the report. "Increased adoption of new technologies, like the cloud, used to better understand your target audience and track true ad impact, is paramount."
For example, companies can use AI and analytics to track a customer's journey from the point at which they see an ad all the way through until they make a purchase–which is the holy grail for ad agencies, the report noted.
Intelligent cloud transformation will enable innovation and efficiency, according to Mark Borao, a partner at PwC. For example, some studios went straight to streaming while a film festival stood up its event in the cloud. Other production companies and commercial advertising agencies leveraged cloud technologies to keep their employees safe and productive, the report said.
Digital advertisers are enhancing their strategy to embed e-commerce into content, which is putting more pressure on print advertising agencies to demonstrate ROI. Lastly, entertainment companies are digitizing their data to gain a 360-degree view of customers to stay close to them in a socially distant environment.
The cloud is enabling media and entertainment businesses to automate routine and cognitive capabilities to support front, middle and back-office processes, said Borao.
For example, PwC and Microsoft recently partnered on a project to help a media and entertainment client use the cloud to streamline its back-office processes. The client was spending enormous amounts of time sifting through invoices to capture expense information and compare it to contract data to issue an expense forecast for the next fiscal period.
The client used Microsoft Cognitive Services capabilities to automate the process of extracting, interpreting, processing, and creating the journal entries for the accrual. The removal of manual work resulted in significant ROI and increased forecast accuracy, Borao said.
During the height of the pandemic, between February and May, the only media segments that had positive shareholder returns were video games and streaming, since theme parks and movie theaters were closed, Bangah noted.
Now that Hollywood is opening back up and content is coming through, M&E companies are looking to monetize content and get experiences out via cloud, she said.
Looking ahead, Bangah said she anticipates seeing "investment pressure and a desire to cut costs and as media companies haven't spent as much on digital, they'll be pivoting money" to new revenue streams like digital delivery chains and reallocating and harnessing AI for content libraries.
The cloud is becoming more attractive and changing how media companies reach consumers so they can launch new streaming services and measure how consumers are engaging with their content, she said.
When she began researching the paper, Bangah said she expected the focus to be on cloud-based content storage and distribution, but the pandemic accelerated how the M&E industry is innovating, she said.
Media companies faced "incredibly difficult decisions" because their revenue has been impacted, she said. So the question became "where to allocate funds and the quandary of how do I innovate and embrace the cloud with a reduced revenue portfolio and the new ways people are working, and I thought that was super interesting."
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