Part three revealed the first five recommendations for becoming and open media business. Here are the remaining five recommendations.

6. Create new product windows and business models

Evolve strategies around the timing of release windows, balancing the features of various delivery

systems with the nature of content. Monetize content by compressing cycles and windows. Some music distributors and others are experimenting with creating new windows — offering prerelease digital singles, or selling only albums initially and individual tracks later. We anticipate that start windows for the release of various media products will creep earlier and end later — with the availability of some highly popular content extending indefinitely The goal is to optimize each content asset’s total value through a combination of price points and release window strategies.

7. Manage openly and communicate in realtime through digital infrastructure

Put a digital backbone in place, so you can focus on core M&E research and development. Having a digital business infrastructure based on open standards technology gives your company options that were unworkable in traditional business models. Open standards give your business systems the ability to interconnect regardless of platform with legacy systems, business partners and customers, and to utilize Web services to communicate globally in realtime. A digital spine — integrated both horizontally across operations and vertically with customers and consumers — allows outsourcing of routine functions which can significantly reduce investments in labor-intensive, back-office tasks such as order fulfillment, accounting, human resources, CRM and information technology.

8. Leverage a new depth of business intelligence made possible by digital technology

As your company begins to add more digital infrastructure and services to gain and hold customer attention, business intelligence can be key to creating greater efficiency. Business intelligence can be gleaned system-wide, once your company begins to utilize more digital systems through open standards and middleware technologies, content development and management, online security features, front- and back-office systems, customer relationship and alliance partner management systems. Shared intelligence can help your company focus on strategic initiatives, satisfy customers by appealing closely to their interests and make ongoing determinations of the value of assets, partnerships and customers. Pay attention to your customers and consumers. Gather ongoing feedback to understand what they want and get their attention. Find the “virtual Hollywood and Vine” — monitor new media behaviors to discover the front edge in content and consumption.

9. Use partnership strategies that drive efficiency and optimize customer attention

As your company focuses on its core competencies and divests unnecessary capital investments, develop partnership and alliance strategies to drive efficiencies and scale and add value to your offerings. We foresee the emergence of more boutique companies that will provide specialized functions cost-effectively in partnership with giant brands, as well as the breakup of overextended conglomerates lacking a tightly focused strategy. Your company should focus inhouse on the products or services that differentiate it sharply from competitors.

Business intelligence will help determine where your partnership efficiencies may lie; and digital systems can help you communicate seamlessly and continuously monitor access, rights and security.

10. Become an on-demand business

The emerging media and entertainment environment will be characterized by rapid and continuous discontinuities, a demanding revenue environment with intensive and specialized competition, continuing pressures on costs and returns, a significant amount of unpredictable demand and high business risk. Successful organizations will accelerate value creation by becoming on demand businesses: enterprises in which business processes — integrated end-to-end across the company and with key partners, suppliers and customers — can respond with flexibility and speed to any customer demand, market opportunity or external threat.

The open media business of the future: Conclusion

Despite an environment of uncertain economic growth, narrowing margins, rapid digitization and the threat of piracy, successful companies will open up new ways to create, manage and distribute content. They will open new ways to store, catalog and break down content into multiple product units, as well as open up the delivery, packaging and availability of content elements. They will integrate, manage and protect content, services and business models through open-standards digital technology. And they will create open, reciprocal relationships with suppliers and customers, allowing more access and granting more freedom in available ways to combine content and delivery. To remain profitable, media and entertainment companies must respond to the convergence of technological innovation with the consumer’s imagination and sense of entitlement, as these key trends evolve to meet the open environment made possible by digital technology.

Saul J. Berman is Partner and Global Executive, Strategy and Change, Media and Entertainment Practice, IBM Business Consulting Services.

 

 

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