🎥 Intro
Over time, the line distinguishing a company based on industry or sector is becoming more and more difficult, as technology-focused companies continue to offer services across many industries and sub-industries. Amazon, Apple, Google, etc, all of which now offer a strong foundation in entertainment and media across multiple content types and channels. With a looming recession, bank runs, blockchain insolvencies, etc, it’s highly likely we will see more and more companies consolidate, or sell off a majority of their businesses in response to market forces.
☑️ Post Objectives: In this post, we’ll unpack 5 entertainment and media industry trends. Before we unpack each trend, we’ll begin by reviewing market research to support the information subsequently being reviewed.
🧩 Table of contents
Global entertainment and media (E&M) revenues are forecast to reach ~ $2.6 - $2.83 trillion by 2023, with digital media segment revenues accounting for ~ $1.73 trillion, or 61% of the industry’s net profit, following a 2020 pandemic contraction or decline of 2.3%. In 2022 VR grew by 36% and gaming and eSports were on track to surpass $324 Billion USD. E&M is on track to reach $2.9 trillion USD by 2026.
Television is expected to remain the industry’s largest segment, with a projected $912 billion in revenue in 2023– Consumers are expected to spend $105 billion on home video, including streaming services and physical media. In 2023, digital advertising will generate $473 billion in revenue, up from $346 billion in 2019.
In the US alone, the entertainment industry (not, entertainment and media) is estimated to reach $717 billion by 2023 (EOY) and is expected to grow by 9.9% measured as CAGR by 2030. This growth is driven by the increasing demand for streaming services, video games, and other forms of entertainment, as well as the increasing availability of high-quality content through platforms such as YouTube and TickTok, which has captured market share from the traditional TV and film verticals over the last 10 years.
📈 Entertainment industry recession analysis
However, the entertainment and media industries is highly vulnerable to economic downturns, as people tend to spend less on entertainment when their financial circumstances become more uncertain. Therefore, an economic slowdown and potential recession throughout much of the developed and especially developing worlds are likely to have a significant impact on entertainment industry growth projections. Companies in the industry should look for ways to mitigate downturn risks. This includes providing more flexible pricing models, creating more engaging content, and increasing their presence in emerging markets.
1. E&M Optimizing customer experience (CX) 🙋🏻♂️
Netflix has set the standard for the overall user experience within the entertainment and media industry more broadly. It offers the single most impressive online video viewing experience in history. Each aspect of Netflix’s user experience has been heavily optimized from the sign-up flow to viewing a trailer. On a personal note, this is where competing streaming companies cannot come close to Netflix. While HBO, Disney, etc, burn through millions in R&D to build and ship a competing service to Netflix, Netflix has been working to solve each aspect of their product for the last ~ 10 years, and therefore has more control over their costs, even with declining viewership.
E&M Customer experience (CX) trends for 2023 📱
In a world with increased content offerings, entertainment and media (M&E) companies will need innovative new ways to retain customers. For instance, multichannel content strategies, immersive or interactive experiences, enhanced discoverability, and searchability, and backend or server-side optimizations that ensure high-resolution content is accessible without lag or latency, among others, can be used to keep viewers and users engaged, and retained, over the life-cycle, or release cycle of a content offering, show, etc.
Why Netflix was used to frame optimizing CX within E&M 🎭
When viewed from a browser, Netflix has a hover-over effect that I would like to highlight. An expanded preview of the film appears when you hover over the video card; Netflix has demonstrated its commitment to delivering high-quality content consistently, with low latency, and with heavily optimized content, and it has been hyper-focused on the overall customer experience for all of its services, from the front-end with the viewing experience to the back-end with its CDN network to provide high-resolution video without lag or degradation to millions of subscribers simultaneously.
2.The streaming wars 🎦
Among the streaming themes to watch in 2023 is Bob Iger’s return as Disney’s CEO, and possible mergers or restructurings at Warner Bros. A merger between Discovery and HBO Max would create an HBO Max-Discovery+ platform, content library mergers or strategic partnerships with other content providers, price changes or new service tier options, as well as a shift in how sports fans consume content, including YouTube’s NFL Sunday Ticket agreement, followed by Amazon’s NFL Thursday evening partnership for the 2022-2023 season.
3. User-Generated Content 🆔
One big trend in the entertainment and media industry is user-generated content. This trend is being driven by platforms like TikTok, which allow users to create and share their own videos. As more and more people turn to social media for entertainment, traditional media companies will need to find ways to adapt to this new reality. Additionally, the COVID-19 pandemic has accelerated the shift toward digital media consumption, making it even more important for companies to focus on their online offerings.
4. High-resolution content, AR/VR, and gaming 🎮 🥽
Entertainment and Media users of all content types expect the highest quality viewing experience for all content types. Advances in technology have made it possible to create and distribute high-quality 4K, 3D, and 4D content. In addition, the growth of virtual and augmented reality is pushing the industry to create even more immersive and engaging experiences in order to retain and engage customers. In the age of short attention spans and an almost infinite amount of content to consume, Gaming has emerged as a major part of the media landscape over the last few years, as companies like Nintendo, Xbox, and PlayStation have seen a surge in users and revenue as a result of their gaming content for multiple user groups and demographics.
In 2023, it’s difficult to raise attention to business trends without mentioning AI and ML as major themes. As such, both the media and entertainment industries will increasingly use AI and ML to optimize the viewing experience for users, by performing a number of complex processes on the backend, from network optimization to content recommendations.
🌐 🏅 Closing thoughts
In conclusion, it’s highly probable that we will see significant change within the entertainment and media (M&E) industry in the coming years. With a looming recession, staffing issues, which are consistent across most industries, a writers’ strike in Hollywood, etc, all of which will result in a confluence of issues that will lead to a massive change in the coming years. M&E accounts for roughly 6.9% total US GDP, and as such, will remain a major part of the world economy.
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