Study reveals need for tech savvy managers in media companies

MUMBAI: Media and entertainment executives around the world are focused on the impact of technology on their industry.

They believe that more technology-savvy managers are critical to their companies' future success.

Also while television broadcasting remains one of the most profitable segments of the media and entertainment industry, it is generally seen as the most challenged to thrive and grow in the future. On a more positive note cable operators, which have not performed as well in Europe as in the US, were cited by executives more often than other media industry segments as likely to thrive in the years ahead.

This information is contained in a new study conducted by Ernst & Young. Executives who participated in the study say that digitisation of content, combined with the increasing adoption of broadband distribution technologies, is creating major shifts, challenges and opportunities for their industry.

The study is called Fast Forward: Technology Propels Media and Entertainment CEOs into the Future. It is is based on extensive industry research, including in-depth discussions with 23 CEOs, CFOs and leading industry financial stakeholders, including top executives from global media conglomerates like Disney, Viacom and Time Warner

The study notes that the pace of technology-driven changes in the media and entertainment industry throughout Europe and the world has created enormous strategic challenges and uncertainty for global companies. It is not unlike a chess match in which new pieces are constantly introduced into the game. As a result, executives believe that they must bring in new talents and skills onto their management teams who will be capable of better understanding and responding to constant change.

As a result of the fast-paced changes facing their industry, media and entertainment companies are highly concerned about bringing the right disciplines into their organizations. In fact, building the right management team was cited by 75 per cent of participants as a major internal challenge to success, far more than any other factor. Technology and financial knowledge were frequently cited skills that will differentiate the next generation of managers, according to the executives.

75 per cent of executives participating in the study cited digital video recorders (DVRs)-more than any other new technology-as an innovation likely to disrupt the industry's status quo. DVR use, that allows viewers to time-shift programming and thus bypass advertising, is expected to grow rapidly in Europe, reaching 6.5 million households by 2007.

Some 24.7 million US homes are expected to have DVRs by 2007. This will pose a serious threat to about 12.5 per cent, or about $4 billion, of traditional television advertising.

The news is not good for the music industry. Since it has been hard hit by piracy enabled by content digitisation it now has the lowest profitability margins of any media segment. The media and entertainment companies represented in the study had combined annual revenues of $214 billion (FY03) and a combined market cap of approximately $340 billion.

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