Industry decision-makers (64%) cited increasing competition as their top challenge amid generally flat or lowered budget outlooks.
More than half of consumers (65%) subscribe to at least one video service, but 39% think the cost isn’t worth it, according to a recent report by Salesforce.
As a result, media and entertainment companies report significant annual customer churn rates — 17% on average — with higher figures reported among streaming service providers and cable/satellite TV operators.
To offer insight into this changing landscape, Salesforce conducted a survey of 350 media and entertainment decision-makers across seven countries for its new Media and Entertainment Industry Insights report.
The rise of streaming, social media, and subscription models over the past decade have turned the industry on its head and fundamentally reshaped customer expectations.
In today’s competitive market, 86% of consumers stated that the customer experience is equally important to product quality. And, with offerings spanning streaming services, broadcasters, gaming platforms, esports, and more — customer experience is a critical differentiator for the media and entertainment industry.
Increased competition is the top challenge cited by industry professionals surveyed by Salesforce.
In addition to providing differentiated experiences that keep customers happy, media and entertainment companies must support a strong bottom line. In terms of companies that collect advertising revenue and average revenue per user (ARPU), advertising remains the leading source of revenue for media and entertainment companies. Yet the outlook on advertising spend is far from positive, with a mere 15% of respondents expecting an increase over the coming 18 months.
Seeking to buck a downturn in advertising spending and capitalise on new technologies and consumer behaviours, media and entertainment companies are actively seeking to diversify their business strategies.
Influencer marketing is an example of this trend, with 65% of media and entertainment professionals reporting that their companies partner with influencers to promote products and services, attract users to platforms, and more.
Web3 is also getting serious consideration from an array of media and entertainment companies for its ability to drive revenue and offer differentiated experiences. Web3 use cases related to loyalty programmes, real-world asset management, and content monetisation are seen as having the most promise for the industry.
While the overall macroeconomic outlook remains decidedly mixed, the media industry is already experiencing a downturn that’s driving caution in spending. This is reflected in budget outlooks — 64% of survey respondents expect a net increase in overall operating budgets over the coming 18 months, however, resources like marketing budgets and headcounts are less likely to see a boost.
Facing the need to do more with less at the same time they seek to win discerning audiences against fierce competition, media and entertainment companies are focusing in large part on efficiency initiatives.
Workflow and process automation is a large part of this equation, yet much work remains to be done. For example, no more than 37% of survey respondents say a given process at their company is completely automated, with tasks like churn prediction and content production particularly likely to be completely or mostly manual.
Commenting on the findings of the report, Christopher Dean, SVP and GM of Communications, Media & Entertainment at Salesforce, said: “A saturated media market giving consumers endless new options to choose from, combined with challenging economic conditions, requires media and entertainment companies to differentiate themselves while also finding ways to reduce costs. Technology, like automation, real-time data, and generative AI, that can drive efficiencies and better customer experiences, will be critical when it comes to remaining nimble and standing out in a crowded marketplace.”
