The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard Media and entertainment businesses have been playing the digital game for years. Post-pandemic, however, the rules have intensified, and competing will require even bolder moves and investments in digital, according to our research. The Work Ahead Executive Summary The industry’s ever-accelerating variables have become so unrecognizable in a post-COVID world that M&E executives might feel they’re being forced to play Star Trek’s futuristic, three-dimensional chess game – without knowing the rules. The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard 2 The Work Ahead The media and entertainment industry (M&E) was among the first to digitize its products and services. Whether it was “talkies,” Cinerama, Betamax, DVDs, Napster, the Kindle, Netflix, MP3s or augmented reality/virtual reality (AR/VR), M&E businesses have continuously embraced technological advancements to innovate their platforms. Enter the 2020s: The industry was steadily moving on how organizations are evolving to the next stage of into the “second half of the chessboard,”1 in which the digital world. For our current study, we surveyed an exponentially growing factor (in this case, digital 4,000 senior executives across industries and globally, technology) begins to significantly impact business including 285 M&E respondents, to gauge how work – strategy. Then along came the virus, which acted like and jobs – continues to evolve in a digitally dominant, a supernova for direct-to-consumer entertainment pandemic-disrupted world (see methodology, on-demand. Any media property that could go online, page 23). did go online. E-sports (temporarily) became the only sports on ESPN. Back to the couch for Netflix-and-chill We found that even as dominant disrupters pull after yet another goofy cocktail party on Zoom. further and further ahead in outperformance, laggard companies are still competing with yesterday’s industry Today, the second half of the chessboard’s ever- conventions (and rationalizing to themselves that accelerating variables have become so unrecognizable 3-D chess is an imaginary game or that they’d rather in a post-COVID world that M&E executives might feel play “Hungry Hungry Hippos.”). Being a laggard is they’re being forced to play Star Trek’s futuristic, three- dispiriting, aptly expressed by the character Jolene dimensional chess game – without knowing the rules.2 in the breakout pandemic hit The Queen’s Gambit: “You’ve been the best at what you do for so long, you To help leaders foresee their next moves, we don’t even know what it’s like for the rest of us.” relaunched our Work Ahead series, begun in 2016, The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard 3 The Work Ahead Five key findings underscore the critical lessons the competitive pressures, it’s clear, however, that learned by M&E businesses in their gambits so far: any less than one-third of revenues through digital channels is not enough to be “a player.” Too many M&E companies lag – badly – in digital 1 content efforts. Just 7% of M&E respondents feel The force multiplier of smart technology is they’ve achieved either “widespread” or” good” 4 smart decisions. Whether it’s script writing, technology-based augmentation in their digital creating special effects or perfecting soundtracks, content supply chain. At a time when nothing short digital investments are the M&E industry’s of digital-everything is required, this is a shocking “extra pair of hands.” Over the next few years, admission that requires urgent attention for future respondents will realize large or very large success. gains from their digitally driven improvements in the areas of operational efficiency and AI – and data – powers the future of M&E. decision making. 2 Entertainment and experiences are rocketing into the digital realm. But to understand how Got (hyper) connectivity? Get ready for consumers react to these offerings requires deep 5 regulation. Digital regulation in response to insights, which will be powered by data-fueled everything from misinformation to content AI. Over three-quarters of M&E respondents addition looms large in the M&E industry’s future. (76%) named big data/business analytics or AI as Respondents named digital regulation (47%) as a technologies they’d implemented at some level or high-impact driver of change on their work (second embarked on a pilot. only to hyperconnectivity, at 48%). The industry demands more when it comes to Taking action in light of these trends is critical for all 3 digital revenues. Today, 21% of M&E respondents’ media and entertainment executives. By doing so, revenue comes through digital channels, on leaders can navigate their way through the necessary average, and this will reach 30% by 2023. Given work ahead and level-up to digital grand mastery. Today, 21% of M&E respondents’ revenue comes through digital channels, on average, and this will reach 30% by 2023. Any less won’t be enough to be “a player.” The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard 4 The Work Ahead Going viral in a viral age Sixty percent of M&E respondents believe the pandemic will accelerate the adoption of new, digital working practices. The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard 5 The Work Ahead For M&E players that were un(der)prepared, the damage wrought by the COVID-19 pandemic was sobering, humbling and/or punishing. From empty movie theaters to concert halls, to unoccupied a digitally captive audience numbering in the hundreds of billion-dollar sports stadiums and virtual production and awards millions, all tethered to their sofas as bars, restaurants, arenas, shows, the lockdowns shattered new norms everywhere in the theaters and cubicles gave way to living room couches as media and entertainment industry with breathtaking speed. places of work, play – and perpetually changeless lunchbreaks. (Just witness the cautionary tale of Quibi, the mobile-first As the world prepared to say goodbye to 2020, a certain Los subscription video service. It was an epic failure that tried to take Gatos, CA-headquartered digital giant quipped the following on the streaming giants with quick-hit content just as TikTok gratitude on Twitter: “To everyone who felt like they finished incinerated preconceived concepts of short-form entertainment Netflix this year ... thanks for watching it all!”4 with the arrival of an algorithm.3) As seen in Figure 1, this is the clear path forward, with 60% of For M&E players that were prepared (think: massively scalable M&E respondents believing the pandemic will accelerate the platforms, with beautiful, easy-to-intuit interfaces, and, of course, adoption of digital ways of working. great content offerings), the new normal offered a silver lining: The pandemic drives more digitally-aligned work practices Respondents were asked whether they agreed or disagreed with the following statements about the pandemic’s impact on their business and workforce in the medium term. (Percent of respondents who agree or strongly agree) % 61 60% 59% 58% 51% 51% We’ll need New digital We’ll have We’ll value We’ll need to We’ll need to to pay more working practices to redesign the and pay reassess performance rebuild our supply attention to will accelerate workplace to essential frontline incentives to chain to minimize workforce accommodate workers more minimize personal personal and safety safe distancing and business risk business risk Response base: 285 M&E senior executives Source: Cognizant Center for the Future of Work Figure 1 The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard 6 The Work Ahead ‘Content is king’? Most M&Es are only making their first moves Rather than passively seeking to be entertained, consumers will look for – and, soon enough, demand – mind-blowing moments catalyzed by digital tools, opening the door for creativity, self-actualization and immersive experiences. The Work Ahead in M&E: Scaling a Three-Dimensional Chessboard 7 The Work Ahead As Bill Gates said, “Content is king.”5 And from an M&E industry standpoint, competitive differentiation through content will lead to winning checkmate moves. Witness Netflix’s $30 billion war chest for content investments; even in the short-to-medium term, survival on the changed chessboard is impossible without that investment. To get there, the modern M&E digital content supply chain lives and being a nuisance. Gathering as much data as they can needs to encompass the design, development, management about consumer preferences, outlets curate content that is most and posting of (lots and lots of) digital content like images, video likely to keep customers clicking and send push notifications and music to specific audiences and channels. But as shown to pique their interest. Soon, AI-derived insights will help media in Figure 2, only 7% of M&E respondents feel they’ve achieved companies get closer than ever to the consumers they target. either “widespread” or” good” technology-based augmentation today for their digital content supply chain. At the same time, the lines are blurring between traditional media organizations and tech companies like Google, YouTube This is a shocking admission that requires urgent action, given and Facebook. YouTube already sells its viewing trends to the existential requirement over the last several years for M&E traditional media channels to help enhance understanding of companies to “go digital, or go home.” There is also a seemingly what consumers really want to see and hear. This trend will only “magical” belief that one in two of our study respondents (51%) grow as technology enables companies to turn this data into will surge to “widespread” or” good” digital augmentation personalized insights about consumer preferences.