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Over a third (34%) of media and entertainment executives admit that their companies will no longer exist in five years unless their business undergoes reinvention.

A newly released report from global management consultants EY, How are media and entertainment businesses reinventing in an age of transformation?, analyses the views of more than 350 global industry executives to reveal the catalysts, strategies and actions that are shaping business transformation.

Faced with multiple evolving and disruptive forces, 50% of executives say they can no longer rely on traditional business models if they are to succeed in this landscape. The survey further highlights a sense of inertia among many media and entertainment businesses, with more than one in four (28%) indicating they need to reinvigorate their business, but that they don't know what to prioritize.

Commenting on the results, John Harrison, EY Global Media & Entertainment Sector Leader, explains "media and entertainment companies remain upbeat about change. But with such diversity of business models and revenue streams, the starting point is often unclear.

“The survey reveals that there is no single path to reinvention, but businesses can succeed by prioritising three key levers of change: operational excellence, innovation and upskilling talent.

“Embracing these ambitions can help them address short-term challenges and unlock long-term value creation."

The survey also unearths the three biggest drivers of change across media and entertainment industry subsectors: responding to a shifting competitive landscape, which could lead to pressure on profitability; struggling to keep pace with technology as businesses evaluate digital innovations, such as artificial intelligence (AI) and 5G; and challenges associated with changing customer expectations, which is impacting the uptake of products and services.

Pursuing operational excellence is the industry's top transformation ambition
Executives identify operating model change (41%) and operational delivery and execution (39%) as their top transformation priorities. Simplifying the enterprise emerges as a key theme in driving the next generation media and entertainment operating model, with 55% of all executives indicating that they want to streamline their business by consolidating internal segments.

The survey further reveals how businesses are using data to achieve operational change. Almost two-thirds (62%) of respondents see the increasing availability of data as an opportunity for transformation. Notably, 56% of executives indicate that they prioritise building first-party data, compared with just 13% who prioritize third-party sources.

Here Harrison notes "the evolving nature of revenue generation, combined with pressure to release capital to fund growth, is leading companies to reevaluate transformation goals and how they respond to shifting customer demands. Making the most of data that resides across the enterprise is one of the most crucial tactics for realizing positive change — particularly in helping businesses to compete by improving the customer experience."

Workforce transformation is key to achieving strategic goals
With four generations coexisting across the workforce - Baby Boomers, Gen X, millennials and Gen Z - the survey highlights the growing imperative to foster continuous learning. A third (33%) of all executives identify the need to close the talent gap and build skills as a driver of change, rising to 43% and 42% among publishing and advertising executives respectively.

Nearly a quarter (24%) see the talent gap as a threat, while 30% list it among the biggest barriers to innovation.

Harrison adds "the need for digital skill sets is now the norm among media and entertainment companies, but changing technology continues to shift expectations. To remain relevant, workers need to migrate up the value chain, reinventing themselves and continually improving their capabilities."

Other key findings from the survey include:

• Only 20% cite corporate strategy and their chief executive's vision as a leading innovation driver.
• 46% say automation is the single most important tactic for achieving cost savings.
• 49% prioritise upskilling the existing workforce as the best way to develop talent.
• Subsector priorities vary: 56% of advertising and marketing companies say evolution of the product or service offering is a priority, falling to 15% among production companies.

Click here to read the EY report How are media and entertainment businesses reinventing in an age of transformation?.

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