Perspectives

The Challenges Media and Entertainment Chief Information Officers Will Face in 2018

Kurt Smith
Senior Vice President, Communications, Media Information and Entertainment
Article

In 2017, we saw the continuation of the new media disruptors (Apple, Google, Facebook, Amazon and Netflix) applying pressure on the traditional – i.e. legacy – media and entertainment ecosystem. In addition, consumption and demographic changes (including cord cutting, over-the-top video adoption and millennials maturing) has accelerated changes to traditional media windowing and go-to-market models. This has allowed the market disruptors, with their ability to interact with a user no matter what device or where the client resides, to have an advantage regarding customer data and the insights derived from these consumer behaviors.

We are also seeing the acceleration of the adoption of relatively new platforms like YouTube (1.5 Billion users), Netflix (~110 million subscribers), and Sound Cloud (175 million subscribers). We believe, ultimately, that these platforms and the associated customer data captured (i.e. products purchased, viewing preferences by device, and click streams) will allow for deeper customer understanding. This will be the future basis of competition between traditional media and entertainment companies and the market disruptors. For example, a user of Netflix identifies who they are as they enter the system. Netflix can deeply understand the tastes and preferences of all family members and then target products and advertising that is appropriate for that family member.

Traditional organizations tend to have too many versions of who their customers are, what products they have purchased, and what price they paid. The ability to surface and rationalize their customer, pricing and product masters will provide the foundational understanding necessary to drive appropriate merchandising and advertising recommendations. Being able to support new and creative tiers of pricing will also be an important consideration.

Chief Information Officers (CIOs) of these organizations are under increasing pressure to ensure that their technology infrastructure and capabilities are nimble and ready for these new market opportunities and platforms and have the ability to better customer understanding. This means having systems and data ready at a moment’s notice (rather than months or quarters) to enter into a new partnership, transaction, or onto a new platform. To be truly nimble, they need to first do a microscopic examination of all legacy IT assets, rationalize them to be able to transform into a truly digital organization.

Cord cutters will continue to weigh their total costs spent on watching various discrete streaming media services. A la carte pricing, skinny bundles, and micro offerings (all the data the business will need to address new markets) will also be important to support from a systems perspective. The customer is forever on the watch, ready to switch fences anytime.

So, does this insulate the future market leaders? Probably not. Currently they take available customer data and use it to improve viewer experiences through better recommendations, better advertising targeting, and ultimately higher costs per impression through better advertising targeting and conversion. Using the Netflix example, making better suggestions for “Netflix Original” content keeps a viewer on the Netflix platform longer, and builds a deeper trust between a viewer and the Netflix recommendation engine. They need to keep their eyes open to be nimble enough to adapt to disruptive technological forces.

The role of media and entertainment CIOs has never been so challenging, yet fascinating at the same time. While 2017 was all about going digital, 2018 will see increased adoption of these use cases. Also, be sure to watch out for internet of things (IoT) and artificial intelligence (AI) solutions becoming the next wave of CIOs strategy requirements.