After attending Australia’s first iteration of SXSW last week, the future of media and entertainment is undoubtedly converging across technology, gaming, and commerce. AI was a key discussion point from both leaders and creatives across technology, media, film, and music, however, there was a general view that Technology and AI will augment and enhance, not replace human productivity and creativity.

Technology and the internet have broken the boundaries and distribution of how consumers access content. A simple Google, or search on X (Twitter) gives access to news content from around the globe. As with any industry, differentiation is critical to distinguish themselves from the competition and more importantly, not be seen as a commodity.

The continued growth of streaming and digital in the consumption of content has become the norm and is a prime example of this trend. As of June 2023, Australia’s SVOD market was recorded at 49.9m subscriptions, the largest subscription market ahead of Music, Games and Pay TV. In addition to being the largest subscription medium, it is the most competitive as well, with 69% of Australians having at least one steaming service.

Following on from Netflix’s growth, consumers now have a plethora of choices from local providers, Nine’s Stan, and Foxtel’s Streamotion (Kayo, Binge, Flash), to compete with traditional content creators, Disney+, and Paramount, as well as tech giants, Apple, and Amazon. Digital consumption continues to trend up, but consumers today are savvier, less loyal, and cost-conscious. Podcasts and platforms like YouTube, Rumble and Twitch also provide a free alternative for content and a pathway into paid premium subscriptions.

Despite the competition, there have been some emergent themes in broader media and entertainment:

    1. Content Exclusivity

Originals or a new release of a show is cited as one of the primary reasons for subscribing and resubscribing to a streaming service. Alternatively, live streaming and Sports content have been highly competitive with rights for the Olympics shifting from Seven to Nine in late 2022. Optus Sport’s coverage of the Women’s World Cup and The Matildas’ run to the semi-finals generated record viewership in a decade, eclipsing an average of 4.9m viewers in the Penalty Shootout against France. Stan Sport and Kayo continue the trend, riding Australians’ love of sport with the Rugby and Cricket World Cup respectively.

    1. The Creator Economy, Influencers, and the Numbers

In media, “it’s all about the eyeballs”, and establishing an ecosystem of connected TV, podcasts, social media, gaming, live, music and merchandise is widely proving to be the business model of the future, if not shown from the 2021 sale of Reese Witherspoon’s media business Hello Sunshine and Book Club for US$900m. Branding now extends to influencers, or the “modern media personality” to spark the attention of audiences and provide a sense of familiarity, trust, and credibility in a highly saturated marketplace of content. In today’s digital environment, content’s performance and data can be monitored in real-time to support decision-making.

The emergence and impact of the “humble” influencer and the creator economy has been epitomised by the phenomenon of MrBeast with over 204m subscribers generating 2.5bn views and an estimated US$3m in revenue per month on YouTube. In comparison, News Corp Australia reported 1.1m subscriptions in August 2023 across all its publications, growing from 600,000 four years ago. MrBeast has leveraged its viral videos and following into other areas such as merchandising, gaming, food, and even finance. Others have been able to monetise their digital following through other means including the emergence of amateur boxing pay-per-view events.

    1. Creating Unique Experiences through Partnerships, and the Ecosystem

Global box office numbers for Oppenheimer (US$853m) and Barbie (US$1.38bn) have proved that audiences are willing to leave their homes for the extra engagement, theatre, and community. From Barbie’s success, Mattel potentially has 45 future movies to create from its toy brands, following Marvel with its superhero universe and Nintendo’s shift into movies with Super Mario Bros and Pokémon leveraging audiences’ nostalgia for comics and computer games.

Netflix has shifted in the opposite direction, extending into brand merchandising with their shows, including live experiences and retail stores with partnerships across Walmart, Coca-Cola, and Baskin Robbins. In gaming, luxury brands such as Balenciaga, Moncler as well as BMW and Ferrari have cross-collaborated with Fortnite which has 400m registered players.

The most pressing challenge in navigating the rapid disruption in the media industry is identifying a viable commercial and business case that remains current and sustainable. As the market shifts away from pure growth to revenue, Netflix has been cracking down on account sharing and implemented an ad tier. In the US, Millennials (47%) and Gen Z (34%) are the most likely to “churn and return” to a subscription service. Streaming services are also drip-feeding content weekly, to mitigate this trend and prolong subscriptions.

Cost pressures are also prevalent. Chatbots, Automation, ChatGPT and AI promise enhanced workforce productivity and the replacement of administrative and repeatable tasks. In Asia, there has been the first implementation of digital AI news bots, promising an “ageless, tireless and faultless” news reader.

Fragmentation, decentralisation of media and the abundance of choice for consumers are proving to be the macro challenge and opportunity impacting all sectors. Rather than the emergence of a new media giant, it is more likely that the future disruptors in media will be from adjacent sectors, startups, or individual influencers. Naturally, we continue to see a consolidation of existing players to generate scale, like the retail, consumer, and finance sectors.

Today, unlike the technology disruption a decade ago, technology solutions to support the future of media are here. The ongoing challenge facing organisations is acquiring and keeping audiences engaged, in an environment in which competitors are nimbler, and audiences’ expectations are higher. Audiences today want speed, trust, and access to content and have a plethora of choices as to where to find it. Technology has broken down barriers to entry, and like consumers, organisations have an abundance of choices in technology selection and solutions, however, executives face ongoing pressure to create business models that are commercially viable and competitive.

Kenrick Lui
Associate Partner, Technology and Digital Transformation

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