In Broadcast - July 2016 - 76


76

www.inbroadcast.com | Vol: 6 - Issue 7 | July 2016

InForm

Mitigating
Digital Shock
Tom Homer, Head of EMEA, Telstra examines the
use of digital partnerships as shock absorbers
for the next wave of disruption...

F

ew sectors have felt the forces
of technology-driven disruption
as profoundly as the entertainment,
media and publishing (EMP) industry.
Mobile access to the Internet in
particular offers a direct route for
content to reach new users and engage
with much larger audiences.
Digital shocks such as these have
allowed newcomers to compete
strongly, while attracting the interest
of large technology platforms from
the likes of Google, Facebook, Tencent
and Baidu offering free content. Many
media giants have been affected by
this rapid transformation, struggling
to implement new business models
that meet subscriber expectations of
always having content at low or even
zero revenues.
Staying Ahead
A recent study by the Economist
Intelligence Unit (EIU), Connecting
Companies, revealed that while media
organisations are all well aware
of the challenges posed by digital
transformation, the reality is that most
are merely 'coping' with the effects
rather than embracing or being active
in changing themselves.
In the face of the competitive threat
from the new players, one way some
more innovative media companies
are responding is by turning to digital
technology based partnerships. Rather
than invest in their own solutions to
take on the technology giants directly,
media companies are seeking out
partnerships as a way to access new
technology and bring innovation
into their businesses quickly and at
relatively lower cost.
One area of significant focus is
media firms creating partnerships
with technology-driven start-ups to get
ahead of the pack and lead disruption
- more so than any other industry. In

the UK, Sky established Sky Startups
three years ago to engage with startups within the industry and stay ahead
of 'future shocks'.
The primary motivation for investing
in these businesses is to generate a
financial return, although the returns
on investment are not always clearly
mapped out. "Occasionally there's
something big happening in our
industry that is on the three to fiveyear horizon," says Hilary Perchard,
VP of Business Development at Sky.
"We don't have thousands of R&D
engineers in labs, so sometimes we
need to do a few things that enable
us to stay close to an emerging trend
without investing too many resources
in it."
Coping Strategy
As a means of navigating digital
disruption, a number of companies
are embracing partnerships with the
very companies that would otherwise
be perceived as competitors. The EIU
found around two-thirds of companies
in the industry have been involved
in a digital partnership, such as an

alliance with an established technology
company or investment in a start-up,
for more than a year.
For traditional media companies,
mobile apps and services have become
a major focus. Last year, American
media giant CNN teamed up with
digital messaging application Snapchat
to reach younger, digitally-engaged
consumers. CNN now delivers news to
the app through ten-second videos. In
Japan, one of the largest publishers
of magazines and Magna comics,
Kodansha responded to falling sales
of physical copies by partnering with
Japanese internet company DeNA to
take their catalogue online.
Partnerships are also important for
providing access to new technology. In
Australia, when the cable TV provider
Foxtel wanted to develop an unlimited
movie streaming service Presto it
tapped Ooyala, a San Francisco based
provider of intelligent streaming
video services, to provide some of
the technology required to build their
platform. This was enabled in part
through Foxtel's relationship with
Telstra, which has acquired Ooyala.

Global Expansion
So what are the benefits of digital
partnerships? Digital partnerships
have been proven to help companies
deliver more 'exclusive' and 'premium'
content, increase online presence
and brand awareness, and reach new
audiences.
There is also more on offer,
including aiding global expansion and
accelerating innovation. It's therefore
no surprise that the EIU Connecting
Companies study showed that
expanding into new markets was the
primary motivation behind more than
half of the respondents' existing digital
partnerships.
It's time for more companies to use
digital partnerships to experiment
with new technologies and services,
and establish new sources of revenue
for the precious content they are
producing. Building digital shock
absorbers that foresee, rather than
simply react to consumer demand, is
the way forward. Companies that fail
to do this run the risk of being swept
off their feet by the next wave of
disruption.

Global EIU Study 'Connecting Companies'
In June 2015, The Economist
Intelligence Unit (EIU) conducted
a global survey of 1,045 senior
business leaders, half of whom
were C-level executives or board
members. A total of 20 industries
were represented in the survey, with
123 respondents coming from the
professional services sector. Click
image to read the full Connecting
Companies: Digital Partnerships
in the Entertainment, Media and
Publishing Industry white paper.
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