The five forces for change
Much of our analysis focuses on five recurrent forces for change within the media and entertainment sectors.Technological Developments
These tend to drive long term trends in consumer behaviour and spending across the media sector. 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 dealing with these issues as they impact TV, radio and packaged and online entertainment.Regulatory Changes
They can be the most significant drivers of sudden valuation changes. 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 concerns 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.
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 changes to their marketing mix to achieve their desired impact on sales and image.The digital age could potentially see quite large scale shifts in advertiser preferences and spending as new media and new ways of interacting with consumers emerge.
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.
Consumer Tastes and Spending Preferences
These have become increasingly important drivers 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.
Click here to obtain a copy of 'Battling for the Media Consumer - Winners and Losers' study.
Competitive Dynamics
In any media sector these determine how the previous four forces for change impact 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.
