10/11/10Rapid changes in digital connectivity and applications are advancing a technological revolution. Digital media is driving radical shifts in lifestyles and having a profound social impact. It is also creating a permanent transformation in the communications, media, and technology (CMT) sectors.
More than ever, developing markets are actively participating and contributing to this digital revolution. The consumers in these markets represent a majority of the world’s digital natives, and digital penetration will continue to grow at faster rates than in the developed world. These circumstances present significant challenges but even greater opportunities for the players best able to capitalize on those trends.
The recent Abu Dhabi Media Summit brought together prominent industry figures across the globe to explore the underlying potential and related issue.
Booz & Company served as the knowledge partner for the Summit, overseeing intellectual capital for attendees and moderating several panel discussions. The forum highlighted several trends that are shaping the media space in developing markets:
Digital Ubiquity Transforms Emerging Markets
Digital connectivity and technology are not only affecting media consumption patterns in developing markets but dramatically changing people’s lives for the better. Although the digital revolution is having an impact on lifestyles, economic development, and social conditions in countries around the globe, the shifts have been especially profound in emerging markets, which are starting from a lower baseline of digital penetration and experiencing faster growth rates in technology adoption.
Digital Content Has No Borders
Increasingly, the potential audience for digital content is no longer regional but global. At the same time, audiences in emerging markets are hungry for locally relevant content—creating a paradox for content producers with stakes around the world. This trend of globalization applies to the creation of media as well as its consumption. Emerging markets are still attractive investment targets for global media companies, but they are also becoming global creative hubs. There is a counterforce to this trend of media globalization, however. Despite the blurring boundaries between countries and cultures, audiences are not homogenous around the world, and most markets still want some percentage of their content to be regionally specific and targeted. This is a major challenge for international content providers, which must work with intermediaries in every market where they hope to establish a presence.
New Competition For CMT Players
As with geography, the lines that once divided sectors in the CMT space are fading. Television shows can now be viewed on smartphones, in addition to the traditional cable or satellite television service. Telephone calls can now be made on the Internet, rather than dedicated voice lines. This overlapping of roles has resulted in new competition among CMT players, as they jockey to reach consumers in more compelling ways. In this context, the digital infrastructure that telecoms have invested in so heavily (the “pipes”) is at risk of turning into a commodity. Internet companies are becoming telecoms’ biggest competitors, and those Internet players tend to be smaller and more nimble. And their speed of execution and ad-driven business models—which notably do not require subscriptions—put them at an advantage in the digital age. Most important in this discussion of technology meshing is the idea that the technology itself is the means and not the end.
New Business Models To Monetize Digital Content
Although new delivery technologies and consumption patterns are clearly cannibalizing revenue from traditional media players in developed markets, they are also enabling the monetization of content through more innovative channels. Yet most global media companies have not figured out the best business model for generating revenue for digital offerings— particularly costly, premium content. Moreover, even assuming these players can develop effective monetization strategies for digital content, it is far from certain that those models will apply to emerging markets.
The Abu Dhabi Media Summit gave local industry leaders and global thought leaders in the CMT space an opportunity to discuss trends and issues shaping the evolution of the sector in emerging markets in greater depth. The principal challenges include bandwidth capacity, the difficulty of creating content for an audience that is both global and local, the overlapping roles of companies in the CMT space, and the mandate for a business model that can monetize premium digital content. Although these are thorny challenges, the upside is significant. Emerging markets present significant growth opportunities for both global media entities and local enterprises. Accordingly, the conversation at the Summit was largely optimistic and enthusiastic, reflecting the growth potential of CMT emerging markets for the foreseeable future.