The media and entertainment (M&E) industry is undergoing paradigm changes. From the M&E companies’ point of view, migration from the traditional to digital value chain seems to the order of the day. And from the consumers’ perspectives, they are getting increasing access to multiple distribution channels that too at a low cost. The greatest challenge for the M&E companies, therefore, is to embrace these transformations – investing heavily into technology adoption and at the same time cutting down costs in the long run.
Cutting down of costs seems to be the new mantra across the M&E sector. Interestingly, besides saving costs, the migration from physical to digital content can actually open a new world of revenue-generating opportunities for media and entertainment companies. But one needs to have a robust digital content strategy to improve system and processes, enhance operational efficiency and increase revenues.
When it comes to process and operational efficiency, M&E companies need to keep in their minds that every single step of the entire value chain – from pre-production to distribution, needs to be digitally enabled, interconnected and well-integrated to keep pace with the emerging digital media environment. Media companies also require a storage platform that can securely store and manage media assets from the moment they are captured by a camera or other tools through when they are finally viewed by consumers via their preferred digital device.
The advantage is that by digitizing and managing their assets, these companies can actually gain better control of content through the script-to-screen processes, enable collaboration between geographically spread entities, distribute content through multiple media gateways and open up new avenues for monetization of content.
It is still in a transitional phase and M&E companies are carrying out various experiments to eventually gain more efficiency and become cost effective. For instance, many companies are increasingly using third-party shared infrastructure at the production, content management and distribution stages. A digitally enabled workflow effectively integrates shared and dedicated infrastructure.
The process of content supply chain needs to be efficient to improve margins and control production budgets. This will in turn drive transformation across the value chain. The other significant experiment or exercise is increasing use of cloud. The world is now witness to petabytes of content getting generated on a daily basis. And cloud can help media companies store their data without incurring cost on upfront investment for storage space. Believe it or not, a number of studies suggest that the average savings in the process could be in the range of 75-80 per cent. Cloud enables distributed work force to collaborate effectively and concurrently for a faster turnaround and attaining operational efficiency. For example dailies can be uploaded, reviewed and commented by various stake holders at a much faster rate.
Cloud allows seamless integration of legacy ERP, SCM systems of the media companies. These, in turn, also result in significant cost savings by the M&E entities. In today’s context, M&E companies can’t escape cloud platforms and benefit from its agility, flexibility and cost efficiency. While a number of media companies have already set out on their journey of taking their media workflows to cloud, there are few media companies who have taken the lead and have already started reaping the benefits of cloud-based media workflows for both linear and non-linear businesses. The tangible business benefits of cloud workflows include accelerated speed-to-market and delivery cycle, scalability to handle spiked-in workload and lower total cost of ownership, using hybrid architecture and pay-per-use.
Trends reveal that outsourcing of non-core areas is the other option which is being (and will be) increasingly used by many media and entertainment companies with cost cutting and improvement in operational efficiency being two of the top most priorities. It is pertinent to give an example at this point.
A leading (possibly one of the largest) electronics, media and entertainment company in the world had recently outsourced some of its treasury operations to WNS, a third party provider. And this happened for the first time in the industry. The WNS team provided business-critical services in major functional areas of treasury operations, including foreign exchange hedging, inter-company loans and deposits and cashless settlement. It also supported the client’s ancillary processes like re-invoicing, financial planning and access management. And this new experiment reduced operational costs by over 40 per cent year on year, improved client’s Sarbanes-Oxley Compliance (SOX), achieving zero non-conformity on successive SOX audits. The same outsourcing model can be replicated in case of other non-core areas like procurement, supply chain management, legal services, HR and so on, which would also bring down costs meaningfully.
For all practical purposes the WNS model is just one of many such developments happening in the sector. Business Process Outsourcing (BPO) is actually having a significant impact on the M&E industry. Companies have started realizing that they can expect more than cost savings from the right BPO partner. Many such companies are driving improvements in working capital and revenue while better managing the impact of the digital revolution on their business. Sector analysts feel the next logical step after outsourcing could be horizontal and vertical mergers of various forms.
Like in most of the industries, in M&E sector also, the successful businesses will be the ones that are able to become leaner, more agile and tuned-in to the opportunities available. Rate, speed, volume of data consumption and the ability to monetise this and on top of everything, cost control will be the key battle ground for all M&E companies.