Media & Entertainment
Assessment of Digital Maturity
In assessing the digital maturity of the Media and Entertainment industry, it is important to distinguish between the product and the business as the two can often be confused. That a company purveys a digital product does not necessarily imply digital maturity. Digital maturity in the Media and Entertainment sector needs to be assessed more in terms of how prepared are the incumbents, and for that matter the new digital players, to cope with potential disruption being caused by digitization of their product and distribution and the consequent emergence of new business models. “Traditional industry business models — product development, pricing and revenue models, marketing, advertising, branding, distribution — have all been impacted by drastic changes sweeping these industries.” (Cognizant) So the standard for measuring digital maturity in the M&E industry needs to be substantially different than that for other industries such as Manufacturing. How robust is their customer experience management where the gap between perceived and offered value can differ widely. In a rapidly evolving operational environment, how well is the intermediation between platform and technology? How much is data analytics contributing to decision making and agility? According to various industry surveys, using these measures, the digital maturity of the industry given its technology profile, appears to be around 59-66%.
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Digital Transformation in Media & Entertainment Industry - CASE STUDIES
Condé Nast is a premier media company attracting 95 million consumers across its industry-leading print, digital and video brands. The company’s newest division, Condé Nast Entertainment, was launched in 2011 to develop film, television and premium digital video programming. In 2013, the corporation was recognized as one of the fastest-growing companies in the digital video business.
Condé Nast’s big challenge was making the transition from magazines to digital content. It was a big leap for them as they transformed their business into a model that will take them well into the future. In showcasing its premium content online, Condé Nast aimed to deliver the best possible experience for consumers. That required constant vigilance for the technical operations group and a way to forestall any potential performance problems that could impact the consumer’s experience. That’s why the company began researching and evaluating application performance management tools that would give them more control and visibility into its platform and content.
Condé Nast needed an intuitive interface which would be easy to use from day one. The company recruited New Relic to give them the confidence to rapidly roll-out new video content and capabilities at Condé Nast Entertainment. Following a DevOps approach, the Condé Nast operations team and New Relic development team shared a work environment and collaborated on projects. New Relic gives operations and development a common language to work together to manage performance. According to the company, the operations and development teams used New Relic daily to review performance from the previous night as well as to monitor trends throughout the day as they did not have a lot of time to lose when it came to content. For example, when they released the interview with Edward Snowden, everybody was watching New Relic to make sure they could respond quickly to any performance issues. Dropping the ball on an important piece of content like that is not an option there.
With New Relic and the new interface, they were able to Fix problems before they even happened. They could see issues before they even manifested themselves. Their SLAs were set to 50 milliseconds, but they were far below that because New Relic was built into their development cycle. Another use case was the company’s video player, which was deployed by third parties as well as Condé Nast Entertainment. They used New Relic Insights to collect overall playback errors from all the places the player is being used.
In the past Condé Nast did not have the opportunity to know how people are responding to our magazines. But we can now see how someone views our website. Condé Nast could also see how people were using its content and the company could visualize how its applications were being used, how they are being stressed, and how daily changes impact the experience. According to the company, New Relic had really given them better insight into how they could move forward effectively. As a result, now they also had more time for rolling out new content. Overall Condé Nast now sees itself as having been taught to be fearless, be the best, and never be afraid to go beyond what everyone else was doing. According to the company, New Relic was just such an important service to have as part of their infrastructure
Source: New Relic
A leading American newspaper based in the New York City. It is the ninth-most widely circulated daily newspaper in the country and the most read newspaper in New York. It was founded in 1919 and was the first U.S. daily printed in tabloid format.
The company faced growing competition in the media industry and a rapidly changing socio-political and economic environment for which the company needed to bring in the necessary scalability and agility in business operations while preserving and improving its customer service. The company needed to transform digitally from its insufficiently scalable legacy system in order to meet future needs. It also needed the necessary content management capabilities such a filtering and catalog creation from a reader perspective. The development costs and sustenance costs related to its existing product lines was also high. Additional challenges faced by the faced by the company included: (i) Poor website UI/UX; (ii) No social media integration; (iii) Disparate content publishing systems; and (iv) A declining user base.
The company needed to find an experienced and dependable partner who could combine global reach with strong expertise in digital transformation initiatives. It recruited Kellton Tech, a global digital transformation solutions company, with rich experience in similar large-scale digital transformation engagements as a strategic partner for delivering with certainty the digital transformation it needed.
The Kellton Tech team conducted a Business impact analysis and contingency planning was also carried out before starting the project in order to better manage this complex implementation for the Company while mitigating risk and ensuring uninterrupted customer service. This helped the team to better understand the impact the disruption of the system might have on the business and how to recover from it so that the content flow to the client is not affected. Upon assuring this, the Kelton Tech team developed a multi-purpose, integrated content delivery platform with a highly intuitive interface for the Company’s range of publications. This enabled customers to access updates and their preferred feeds.
The Company also leveraged Kelton Tech’s expertise in providing a caching feature that helped it to deliver news and media stories in the offline mode or at times of low connectivity. The key features of the platform included:
• Automated cataloging/tagging of news for targeted readers
• Personalized content powered by social media integration
• Customized feeds based on reader preferences
• Intuitive UI for seamless display of content on the mobile device
With the new solution in place, the Company began to deliver timely and relevant content to a much larger subscriber base using different devices or platforms. The legacy content publication system was replaced with a robust CMS that reduced operational costs. It also ensured that all the portals were integrated to deliver the right mix of content desired by readers in real-time. Additional benefits included:
• Increased mobile readership by 50%
• Improved ROI • Increased overall operational efficiency
• Reduced maintenance costs
• Delivered a scalable solution ready for future expansion
Source: Kelton Tech
- Michelin¹ is a global player in mobility and one of the leading tyre manufacturers across the globe.
- Michelin has 107,000 employees and achieved revenues of €21 billion for period ending TTM 6/15 and an EBITDA of €3.4 billion; margins have increased from 13.8% in 2011 to 16.6% TTM 6/15.
- EFFIFUEL™ by Michelin Solutions was the first innovation in the market targeting increased efficiency in fleet fuel consumption.
- Michelin Solutions makes a contractual agreement to meet pre-defined targets, or otherwise provides a refund in proportion to expenses incurred.
- EFFIFUEL™ is a comprehensive ecosystem that includes sophisticated telematics, training in eco-driving techniques and the EFFITIRES™ optimized tyre management system.
- EFFIFUEL™ provides a “satisfaction or your money back guarantee” by providing the fuel efficiency service risk-free to truckers.
- EFFIFUEL™ encourages careful handling of the truck equipment, leading to extra savings for companies and a potential doubling of pervehicle profits.
- A reduction in fuel consumption of 2.5 litres per 100km represents annual savings of €3,200 for long-haul transport (at least 2.1% reduction in total cost of ownership and 8 tonnes in CO2 emissions).
- Business model shift from selling tyre as a product to a service guaranteeing performance, has helped Michelin achieve higher customer satisfaction, increased loyalty and raised EBITDA margins.
- Michelin initiated the digital transformation internally, but they soon realized that in some critical areas, such as big data analytics or infrastructure they needed to partner with external experts.
- Cultural change was another prerequisite to successfully manage the digital transformation journey.
- The risk of changing the business model was mitigated since Michelin Solutions was created as a standalone entity and the company decided to test the solution by launching several pilots.
Sources: Michelin, WEF/Accenture Analysis
- The LEGO Group¹ engages in the development, production, marketing and sale of play materials. It provides toys as well as experiences and teaching materials for children in approximately 130 countries.
- Founded by Ole Kirk Christiansen in 1932, LEGO is based in Billund, Denmark. It is a subsidiary of KIRKBI and is currently privately held.
- In 2014, LEGO earned €3.8 billion in revenues and €1.4 billion EBITDA, with a margin of 37.1%. It currently employs approximately 13,000 people.
- After a period of expansion (1970-1991) LEGO suffered a steady decline (1992-2004) and by 2004 LEGO was close to bankruptcy.
- Reaching a tipping point, LEGO started restructuring and a digital transformation programme focused on new revenue sources coming from movies, mobile games and mobile applications.
- LEGO’s design capabilities have been increasingly handed over to their fans e.g. through the Digital Designer (a web-based 3D design tool to create own designs). It’s USP towards learning and development differentiates it from competitors and convinces parents from millennial generation about the usefulness.
- LEGO achieved an EBITDA margin of 37.1% in 2014, an increase of 15% since 2007.
- Revenues for LEGO have grown at a CAGR of 20% from €1.6 billion in 2009 to €3.8 billion in 2014.
- In 2014, the first LEGO movie achieved revenues of approximately $468 million with a production budget of only $60 million.
- LEGO has recovered steadily post 2005 and it is now seen as “the Apple of toys”.
- LEGO’s new business group has become the incubator of the company, an open platform that allows fans and partners to experiment with “micro businesses”.
- LEGO was able to transform itself by launching new digital based businesses such as movies, LEGO Mindstorms, video games and applications, connected to their block systems that are more appealing to digitally savvy customer groups.
Sources: Lego Corporate Information, FT, LA Times, Global Toy News, WEF/Accenture Analysis
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