Issues
- > The Pace of Technological Change
- > Regulatory Reform
- > Changing Advertiser Preferences
- > Consumer Tastes and Spending Preferences
- > Competitive Dynamics
The Pace of Technological Change
Technological advances and innovations tend to drive long term trends in consumer behaviour and spending across the media and entertainment sectors. An understanding of the future path of technological progress and issues such as compatibility, interoperability and capacity (for distribution and storage) is vital for any adviser covering the media and entertainment sectors.
O&O has extensive experience of monitoring technical developments and in understanding how they will impact the TV, radio
and packaged and online entertainment markets.
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Regulatory Reform
Regulatory change is often the most significant driver of sudden valuation changes in the media and entertainment industries. Specific sector regulation permeates the entire media world but is particularly important within the TV and radio broadcasting segments where there is still a great deal of intervention driven by concern over competition and plurality - especially in Europe.
An understanding of government policy, the form and powers of regulatory interventions and application of competition policy and ownership rules to the media and entertainment sectors are vital to any advisory work in these areas.
O&O has provided evidential support to regulators, competition authorities and government initiatives and inquiries at a
UK and European level. O&O has also helped investors understand the likely future path of regulation and, the likely changes in
valuation that might result.
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Changing Advertiser Preferences
Advertiser preferences for different types of media or for reach versus accountability across all types of media, help drive medium to long term changes in the direction of media sector income. Companies make constant alterations to their marketing mix in order to achieve their desired impact on sales and image.
The introduction of search based advertising by the likes of Google and Yahoo has helped the response based advertising sector (classified, directories, search advertising and direct mail) grow by almost 5 per cent a year recently in contrast to traditional display advertising (TV, radio, outdoor and newspapers) which has grown by just 1 per cent a year. This shift in marketing spend is having a profound impact across the whole media industry.
O&O has conducted a number of studies looking for evidence of current or future changing advertiser preferences and the potential
financial implications for different media owners.
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Consumer Tastes and Spending Preferences
Consumer spending has become an increasingly important driver of the global media and entertainment sectors. More specifically, with consumer spending now more important than advertiser or public funding to the media and entertainment sectors, consumers' willingness to pay is now just as important as their willingness to watch, listen or read.
O&O not only tracks general trends in consumer tastes and interests as they affect the media sector but also commissions specific
market research (quantitative and qualitative) to test specific consumer preferences as proposed by clients. O&O has a detailed
understanding of both changing consumer tastes and the implications for media company pricing policies and spending.
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Competitive Dynamics
In any media sector the competitive dynamics determine how the previous areas – technology, regulation, advertiser preferences and consumer tastes - impact on company revenues and profits.
Any successful strategy needs to be based on a thorough understanding of the relevant market supply chain, the potential bottlenecks that can arise, the bargaining leverage involved and the economics and likely reactions of competitors.
O&O specialises in building a sophisticated understanding of the competitive dynamics within any sector and in using game theory
to tease out both likely competitive reaction and the most sustainable and robust strategic option for clients.
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