Media consumers, to varying degrees, will be increasingly involved in the creative process

These shifts toward a pervasive media environment will evoke major changes in media and entertainment companies by 2010. Media companies will need new strategies to respond to emerging media experiences

and consumption behaviors.

Although passive consumption will continue to represent a large market share, digital media’s capabilities will engender new forms of interaction, enabling even traditional consumers to make content more individually meaningful:

Traditional passive consumers — will choose among media companies’ predictable mass-market offerings (but use several platforms or flexible viewing schedules with affordable devices) and choose different edits of the same content (for children or adults, for example).

Contributors — will experiment with more options and more innovative platforms, providing feedback passively through purchase choices and data collection, and actively through suggestions, opt-ins or invitations to participate online.

Producers — will program content and devices that they purchase from multiple sources, making uniquely personalized digital play lists or collections for their own tastes. These tech-savvy users will port content files among a variety of devices, and compile chunks of content from many sources into their own playback formats.

Authors — will use affordable Web tools, provided by media companies, to tailor content to business or personal interests.

Users who contribute or interact as producers of their own programming or authors of content will not cease to enjoy passive consumption; they will add new skills and redefine the amount of time they spend enjoying media passively.

Technological innovation will continue to promote interactivity and responsiveness

Relentless technological development means that complexity will continue to characterize the media and entertainment industry in 2010 and beyond. Because technological development is largely outside the control of media firms, businesses will need to reengineer processes frequently to reap greater efficiencies from technological innovation.

Technological innovation: The transition from analog to distributed digital platforms.

Phase one: Digital formats (1996-2001): Continuously improving digital platforms, networks and software, such as MPEG formats, DVDs, CDs, PVRs, video game consoles, etc., affect media and entertainment distribution and value. Powerful market forces in the overall economy drive innovation beyond the control of media companies.

Phase two: Technology integration (2002-2006): Web services, grid computing, peer-to-peer/distributed computing and other improvements to identified needs from phase one. On demand strategies and middleware enable companies to respond more flexibly to customers and competitive shifts. Greater

ROI from technology investments through enhanced standards, utilization and processes, more reliable autonomic (self-healing) systems, reduced network downtime and automating as many functions as possible.

Phase three: Transformation (2006-beyond): Exponentially more advanced and powerful systems transform value creation:

• Business intelligence — Improved data capture, analytics and knowledge management = better informed business decisions

• Economies of scale — Reengineer scale and processes around new technology capabilities = reduced operating expense

• Partnerships — Digital ecosystems with other firms = shared costs, greater value

• Increased productivity — on demand and utility computing; multiple support technologies working more seamlessly.

The future’s higher production capacities at more affordable price points will enable smaller businesses to produce more content that can be gathered to serve more niches. Skilled editors/content managers can deploy digital multimedia devices to serve niche markets, such as language- and interest group subcultures. Content will be able to flow more easily upward from the grass roots as well as downward from the media elites, opening doors to fresh creative approaches.

Digital technology will enable media companies to create content of extraordinary quality, stability, storability and revolutionized production; but considering the substantial cost for these massive technology undertakings, any potential savings on the creative end must accrue over the long term. Lower costs through digital technology will take place in the realms of inventory, supply chain, distribution, back office and security processes where strategic innovations can increase efficiencies and productivity.

Digital platform-universal standards will allow content traveling online to be managed and tracked throughout all enterprise processes, from creative to order fulfillment. This enables media companies to create new value through organizing around the core business and interoperating with partners that can perform certain media business functions more cheaply and efficiently.

Media and entertainment 2010

As more and better networks are deployed, new technologies and devices are rolled out, and content and users become more sophisticated, we anticipate that the convergence of these trends will continue to burden human attention.

Part three of this article will reveal what it will take to become an open media business.

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

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