The open media company of the future

Increasingly media companies will need to vie for consumer attention

As choices continue to expand and time remains limited, attention will become an even scarcer resource. The glut of overchoice and competition will become even more intense, and media companies must continue to vie for the

customer’s attention. A significant portion of content will be packaged and delivered based on customer demand, device and delivery requirements, making customer responsiveness the “killer app” of 2010. Digital content that can travel across platforms will no longer be welded to the distribution medium (fans may not have to miss their favorite television show while waiting in an airport when they are able to watch it wirelessly over their PDAs).

Limited consumer attention, increased availability of content, changing consumer behaviors and evolving technology will combine to fundamentally alter the traditional media company value chain by 2010. Leading companies will reshape their value chains into “attention loops” that facilitate ongoing, interactive relationships among content creators, business partners, customers and consumers.

What will it take to become an open media business?

We have ten strategic recommendations for those companies intent on becoming open media businesses of the future:

1. Get your digital house in order: Create or convert content to digital formats

Media developers should exploit the future’s data-rich, pervasive media environment by creating content in (or converting archives to) platform-universal digital formats that can be played on a wide range of user devices. Digitization will help companies reap wider distribution of more bytes of content in multiple formats; one user may want an entire book or film, but only for a small-screen handheld device; another may want a quotation or a 30-second clip; another, full resolution for high-definition TV. Rights should be tied to the person, not the device, so that portability and transfer of the content from one device to another becomes easier with the development of universal digital standards. The conversion of analog content to digital management is an investment. Media firms need to develop a comprehensive strategy for prioritizing the conversion to digital management — content with the highest ROI or the shortest payback time should be converted first.

2. Manage content for optimum flexibility and asset value

In the pervasive, digital environment, an open approach will enable owners to reap more aggregate ROI from content that is flexibly managed so that it can be sold in long form or in parts, for multiple types of distribution online. Take a deeper look at price points. Price calibration influences perceived levels of quality, but some content, even of recent releases, should be offered at a lower price because it will never produce much profit; conversely, the “sleeper” that performs beyond expectations could contain greater ultimate value. For example, the critically acclaimed film, “O Brother, Where Art Thou” was rated 59th most popular by Variety in 2001, but its soundtrack was judged independently by the public, garnering triple-Platinum RIAA certificationand winning five Grammys and multiple top awards, including Album of the Year from both the Country Music Association and the International Bluegrass Music Association. Use deeper analytics to identify demand indicators that are independent of traditional measurements.

3. Be open for distribution, no matter where or when

In the open media business of the future, platform-universal digital management will help your business cut costs by moving bytes through an online configuration and distribution system that can respond to broadcasters and customers with ordering and fulfillment processes available around the clock, every day of the year.

Your business strategy and distribution system should enable the configuration of content for multiple types of media networks, including cable, satellite, DSL and other significant systems as they emerge. Successful media producers of 2010 will undertake ongoing research and development to support more delivery devices and systems, with an eye to the anticipated increased penetration of home networks and home theaters.

4. Be open for delivery — in multiple packages, with variable pricing and always-on customer service

Although mass media will not die, exploiting more channels and more niches will enable the same content to be deployed in more ways simultaneously. Advanced data analytics are one of the features of digital media management that will help your business deliver to the proliferation of niches in a fragmented market. Realtime data analysis can help your business to:

• Determine an optimum channel mix

• Offer multiple ways to package digital content for a variety of formats, platforms and devices

• Utilize variable pricing — the same content may be worth more to a user at different stages of the product or customer lifecycles

• Use customer relationship management (CRM) more effectively, with more information available online and collected through multiple touchpoints.

5. Open digital doors — to contribute, produce or author dynamic content

Since online distribution costs significantly less than the traditional physical development and distribution cycles, build ways to take advantage of grass-roots digital experiments and contributions. Establish simple online production and promotion resources with seamless, online digital media management. Encourage independent publishing initiatives — comedy blogs, online game characters, short feature films, new music — as a way to develop markets.

Digital tools in the hands of consumers will enable media companies to identify content or devices that might stand up to mass marketing before making the significant investments in scripting or advertising to mass-media standards. If your company owns significant digital content resources, offer pathways to aggregate small fees, such as online workshops for compilers, digital scrapbookers and anthologists, and promote their “albums” online.

Part four of this article will have the remaining five recommendations and the conclusion of 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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