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Broadcast industry will mimic music's upheaval, says IBM report

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TORONTO - A recently published report insists that continuing shifts in technology and consumer consumption will force media companies, particularly in the broadcast and film industries, to completely redefine their business models over the next five to seven years.

By 2010, the landscape of the industry will change so dramatically that, in order to survive, media companies will have to move to a truly open environment, allowing consumers around-the-clock access to protected media content for variable fees and the ability to largely control their own media and entertainment experiences, says the report entitled Media & Entertainment 2010, by IBM Business Consulting Services.

As consumers increasingly expect on-demand content, the way they can get news and music now, so will they expect the same from TV and movies.

The report highlights the struggle that media companies face bridging from the historic model of systematic, promotional based, one-way delivery to mass audiences to a world incorporating digital technologies, analytics driven marketing approaches and distribution models leveraging bi-directional relationships. These changes will continue to redefine the economics of the media business, much as has already occurred in the music industry, says the report.

"We're seeing the revolution in the music industry. Those emerging today are embracing technological capabilities and working through regulatory and business issues to embrace entirely new methods of delivering music and related assets that are tailored to the individual choices of business partners and consumers," said Sarah Shortreed, Media & Entertainment Lead, IBM Business Consulting Services (Canada).

By 2010, this transformation will have taken place throughout the industry, and especially in broadcast and film, says the report. "There will be clear winners and losers. The winners will be more open, will deliver protected information through variable packaging and pricing, will know their consumers and business partners intimately, and will deliver media to them how, when, and where they want it," said Shortreed.

Thriving companies in the new environment will allow customers access to information on their own terms, from the ability to purchase and download the rights to a book or other media and have it configured for one or more types of devices, or delivered immediately in traditional hard or soft cover, to extensions to the initial media offerings, with the ability to order the film of the book, the soundtrack or only one song, the liner notes or a single quotation to use in a variety of formats, from a term paper to a wall poster.

IBM forecasts that by 2010 successful media companies will have many of the following characteristics in common:
* Companies will survive not just on creative content, but on creative intelligence about customers, markets, and the value of digital assets.
* Users, opinions, or buzz will be more effectively monitored, helping to shape the content individual consumers experience.
* Conglomerates, traditional studios and publishers will open up their inventories, putting old and new digitized content online in various forms for variable fees. The same song, movie, or other media will cost more, or less, depending on complex variables such as age, sales tracking, or even the rarity of archival content.
* Many independent artists and producers will offer their music, short videos and movies completely free, making money instead from tie-ins, product placements, web-cast concerts and events, and fan merchandise.
* On-line accounting systems will automatically invoice huge data feeds of digital content ordered by network and cable broadcasters from distributors.
* Millions of micro-payments will add up to sizable revenue streams from the sale of new or archived digital content, much of which will never travel to a theatre, retail store or TV station - it will be delivered online.

In order for companies to become truly open media companies, the report outlines specific steps companies can take to survive in the new economic and technological environment of the future, including:
* Create or convert all content to digital formats.
* Be open for delivery, in multiple packages, with variable pricing and always-on customer service.
* Open digital doors to let consumers contribute, produce or author dynamic content.
* The largest investments in content today are in the creation, marketing and distribution of physical media, but costs can be slashed with the digital distribution of on-line media.
* Manage openly and communicate in real-time through digital infrastructure.
* Leverage a new depth of business intelligence made possible by digital technology.
* Use partnership strategies that drive efficiency and optimize customer attention
* Companies will focus on core competencies and divest unnecessary capital investments, developing partnership and alliance strategies to drive efficiencies and scale and add value to offerings.
* Become an on-demand business - focused, responsive, variable and resilient to the realities of a more competitive marketplace.

The IBM Institute for Business Value develops fact-based strategic insights for senior business executives around critical industry-specific and cross-industry issues. This executive brief is based on an in-depth study created by the IBM Institute for Business Value. This research is a part of an ongoing commitment by IBM Business Consulting Services to provide analysis and viewpoints that help companies realize business value.

For more on this report, click here.
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