MIT-fit-for-the-future-final

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The five digital forces Platformisation: new digital platforms are the dominant way for media providers and consumers to transact: economics and intermediaries are radically different. Virtualisation: businesses use collaboration tools to work together as agile value networks instead of rigid structures: competitiveness is the goal. Figure 1 Step 1: Scan for change What disruptions lie ahead? Like all industries, media is littered with fallen giants that didn’t spot change until it was too late. To avoid their fate, your first hurdle is identifying and making sense of the changes that lie ahead. We’ve categorized the most fundamental systemic supply and demand shifts in the media value chain into five digital forces (Figure 1). Five Digital Forces Prosumerisation: amateurs have access to professional-standard, but cheap, tools to make and distribute vast amounts of their own content, bypassing traditional gatekeepers. Further reading: learn more about the future of media industries Globalisation: consumers and providers buy and sell on a world scale: new competitors and markets emerge. Millennialisation: empowered digital natives use social networks to inform their media decisions: they’re not passive consumers. See our other reports, including ‘A Brave New World of Connected Media’ and ‘Prepping for the New Age of Information Services, Media and Entertainment’ (available on cognizant.com/information-media-entertainment) for more insights into how content consumption habits are changing. 4 COGNIZANT September 2012
Globalisation Thanks to advances in technology and regulation, media companies now have access to worldwide markets and their massive potential, and face new worldwide competitors too. Globalisation has levelled many of the barriers that limited access to staff and factors of production: companies can now recruit the most innovative people and cut costs by capitalizing on labour rate arbitrage. Organisations can also source components and business processes from other countries to improve the quality of their offerings, cut their costs or both. But note that globalisation doesn’t mean “selling the same product everywhere”. It’s not a shortcut to unlimited revenue. Smart media companies know that differences in language, culture, consumption patterns and the law may demand significant localisation, which itself can be costly. Millennialisation Media companies are facing a new type of consumer, one that: • Makes decisions based on recommendations from other consumers on social networks. They trust peers more than experts, and certainly more than adverts. Nielsen found that 92% of consumers trust social recommendations above all other forms of advertising. • Actively participates by creating their own content — everything from comments on blog posts to full-length YouTube videos. And they consume amateur, user-generated content alongside purchased media. • Is more demanding than ever about getting immediate access to their chosen content at a price they think is fair. If they are unsatisfied with the offering or conditions from established providers, they will go elsewhere. These characteristics emerged with the “digital natives” of the millennial demographic. But now net-centric lifestyles have become mainstream. People of all ages are consuming new kinds of content accessed through non-traditional channels. This is a threat, but if you can master new media and engage with consumers — play the game on their terms — it’s also an opportunity. Further reading: listening to the future Nielsen found that 92% of consumers trust social recommendations above all other forms of advertising. 4 Consumers have never given companies so much information about their preferences, location, consumption habits and interests. Big data is a hot topic at the moment and for good reason: information from social media, when mined and analysed, can give you vital insight into demand trends. Read our report ‘Advanced Media Analytics for the Digital Age’ (available on cognizant.com/information-media-entertainment). September 2012 COGNIZANT 5
Page 1 and 2: In association with Fit for the Fut
Page 3: Contents 4. Step 1: Scan for change
Page 7 and 8: The real disruption is that platfor
Page 9 and 10: Step 3: Co-opt threats You can’t
Page 11 and 12: Leverage VRIN to grow your business
Page 13 and 14: Step 6: Build virtual value network
Page 15 and 16: Alternatively, you can create or sp
Page 17 and 18: Building demand To take users away
Page 19 and 20: About Cognizant Cognizant knows you

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