User-generated content threatens traditional entertainment

By Robert Jaques on Apr 17, 2007 2:54 PM
Filed under Finance

Accenture poll highlights disruptive power of home-grown content.

Explosive growth in user-generated web content is proving to be profoundly disruptive for the established media and entertainment industries, according to research released today.

More than half of respondents to Accenture's latest annual poll of senior executives in the media and entertainment industry identified the rapid growth of user-generated content as one of the top three challenges they face today.

User-generated content includes amateur digital videos, podcasts, mobile phone photography, wikis and social-media blogs.

In addition, more than two-thirds of respondents believe that social media, one of the largest segments of user-generated content, will continue to grow, compared with only three per cent of respondents who said they view social media as a fad.

Two-thirds of the respondents believe that their businesses will be making money on user-generated content within three years.

Over 60 percent believe that their companies will make money through advertising and sponsorship of social media.

Other sources of profit were subscriptions (21 percent) and pay-per-play offerings (18 percent). However, a quarter of respondents do not yet know how their businesses will profit from user-generated content.

The study included interviews with industry giants like Roger Faxon, chief executive of EMI Music Publishing; Leslie Moonves, chief executive of CBS; Doug Neil, senior vice president of digital marketing for Universal Studios; and Sir Martin Sorrell, chief executive of WPP Group.

Sorrell suggested that technological change and the consolidation of digital and non-digital business models will have a dramatic impact on the media and entertainment industry over the next five years.

"The winners will be those who can probe and analyse the changes and manage and merge online and the offline most successfully," he said.

Neil added that the digital distribution of content will be increasingly important in three to five years with the convergence of computers, TV and home entertainment options.

"To succeed in this environment, you need to innovate and anticipate the needs of the consumer, be willing to take risks and try new things," he said.

Faxon believes that the music industry is moving from a sales model to a consumer consumption or participation model, where its economics are predicated on the usage patterns of consumers as opposed to the purchase patterns.

"In essence the commercial roles of music companies will be more as facilitators for bringing music and the rights that support them into the marketplace, as opposed to being originators of the content itself," he said.