Key findings in the Entertainment and Media industry€¦ · results of the 16th Annual Global...

Dealing with disruption 16th Annual Global CEO Survey

Key findings in the Entertainment and Media industry

www.pwc.com/ceosurvey

January 2013

PwC

Welcome

Far-reaching changes are taking place, and they’re taking place faster than ever. In this new era of ‘stable instability’, risks that once seemed improbable and even remote have become the norm and for CEOs across the world, ‘expect the unexpected’ has become the mantra. The only solution is to build organisations that can thrive amidst disorder: organisations that are agile and adaptable, able to cope with disruption and emerge stronger than before.

We polled 1,330 CEOs in 68 countries, and talked face-to-face with another 33 CEOs, in our 16th Annual Global CEO Survey, to find out how they’re creating resilient organisations that can flourish under stress. Dealing with disruption shows that CEOs are focusing on a few carefully selected initiatives to stimulate organic growth; explore new ways to attract and keep customers; and balance efficiency with agility. And to succeed in these three goals, CEOs are recognising the role that trust plays, and that they’ll have to work hard to repair the bridges between business and society.

This report is a summary of our key findings in the Entertainment and Media (E&M) sector, based on interviews with 56 E&M CEOs in 23 countries, as well as an in-depth interview with Peter Tortorici, CEO of GroupM Entertainment Global. To see the full results of the 16th Annual Global Survey, please visit www.pwc.com/ceosurvey.

16th Annual Global CEO Survey: Key findings in the Entertainment and Media industry January 2013

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Contents

Page

Introduction 4

The disruptive decade 6

What worries CEOs the most 9

How are CEOs responding?

• Targeting pockets of opportunity 15

• Concentrating on the customer 18

• Improving operational effectiveness 21

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January 2013 16th Annual Global CEO Survey – Key findings in the Entertainment and Media industry

PwC

Introduction


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Introduction

E&M CEOs are a lot like their peers across industries. They remain confident about revenue growth over the next three years though they’re less confident this year and they’re worried about threats like Government responses to fiscal deficit and debt burden, and volatile economic growth.

But there are some key differences too. For example, a lot more E&M CEOs see the shifting behaviour of consumers as a potential problem – 75% are concerned, compared to just 49% of the total sample. And 61% are concerned about the speed of technological change, 19% above the global cross-industry total – a reflection of the need for E&M companies to keep apace with consumers’ rapidly evolving demands.

E&M CEOs aren’t just waiting for issues like these to disappear before changing how their companies do business. They’re taking action around pockets of opportunity, improving operational effectiveness and forging a new social contract.

Let’s take a look at how.


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The disruptive decade

80% of E&M CEOs are confident about their company’s prospects for revenue growth over the next three years


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E&M CEOs remain confident over the next three years

E&M CEOs’ overall confidence in revenue growth over the next three years remains resilient with 80% feeling very or somewhat confident, with a year-on-year dip in confidence over the coming year, from 84% to 70% – reflecting a slight recalibration of expectations of the time that a return of investment will take.

Q: How confident are you about your company’s prospects for revenue growth over the next three years?

14

8

2

1

41

44

39

46

40% 20% 0% 20% 40% 60% 80% 100%

Entertainment and media

Total sample

Not very confident Not confident at all Somewhat confident Very confident

Base: All respondents (Total sample, 1330; E&M Sector, 56)

Source: PwC 16th Annual Global CEO Survey 2013


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What worries E&M CEOs the most?

“In an interconnected world you are exposed to a greater number of vulnerabilities and externalities. So, whether disruptions occur as a result of geopolitical, climate, or economic conditions, the consequences can ripple through the system and there’s no place to hide.”

Peter Tortorici, CEO GroupM Entertainment Global, US


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Threats to growth are looming

Of E&M CEOs are concerned about new market entrants – 12% higher than the total CEO sample

Of E&M CEOs cite government responses to fiscal deficit, debt burden as a major threat to growth

Of E&M CEOs are concerned about volatile or uncertain economic growth

52%

75%

84%


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Continuing focus on shifting consumer spending and behaviours The impact of shifting consumer spending and behaviours on growth continues to be a key concern for E&M CEOs, with 75% concerned or extremely concerned – higher than almost any other industry. And 88% of E&M CEOs anticipate some or major changes to their customer growth, retention or loyalty strategies, in response to this.

73% of E&M CEOs expect to increase their investments in technology over the coming year, while 61% are concerned about the speed of technological change, 19% above the global cross-industry total – showing that technology remains a key enabler for E&M companies to keep apace with consumers’ rapidly evolving demands.

Q: How concerned, if at all, are you about:

35

35

52

40

39

58

62

49

42

37

34

27

30

30

52

52

57

73

75

61

55

59

0% 10% 20% 30% 40% 50% 60% 70% 80%

Security of supply chain

Inadequacy of basic infrastructure

Energy costs

New market entrants

Inability to finance growth

Availability of key skills

Increasing tax burden

Shift in consumer spending and behaviours

Speed of technological change

Lack of trust in your industry

Inability to protect Intellectual Property and customer data

Entertainment and media Total sample

Base: All respondents (Total sample, 1330; E&M, 56)

Note: Respondents who stated ‘extremely’ or ‘somewhat’ concerned.



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So what are E&M CEOs doing?

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January 2013 16th Annual Global CEO Survey – Key findings in the Entertainment and Media industry

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Targeting pockets of opportunity

52% of E&M CEOs say growing their customer base is their top investment priority in the coming year


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E&M CEOs much more focused on new product or service development 38% of E&M CEOs see new product or service development as the key way to grow their business over the coming year, 13% above the global average for all industry CEOs surveyed.

Q: Which one of these do you see as the main opportunity to grow your business over the next 12 months?

18 38 20 16 7 17 25 32 17 8 0

5

10

15

20

25

30

35

40

New M&A/joint ventures and/or

strategic alliances

New product/service development

Organic growth in existing domestic

market

Organic growth in existing foreign market

New operations in foreign markets

Entertainment and media Total sample

Base: All respondents (Total sample, 1330; E&M, 56)



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Concentrating on the customer

“If we want a relationship with the consumer through media, we have to deliver content to them that’s relevant to where they are and what they're doing at any given time... We have to constantly be considering the end user focus - what they’re seeing, how they’re interacting with the content, what it means to them, and what reason do they have to come back to it again?”



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The power of customers, clients and social media users

Customers, clients and social media users are influencing business strategy and E&M CEOs are responding by strengthening their engagement programmes with these groups. 100% of E&M CEOs say customers and clients somewhat or significantly influence their business strategy, with 93% strengthening their engagement programmes with this stakeholder group. 70% report users of social media as being somewhat or significantly influential, with 95% of these CEOs strengthening their engagement programmes to this stakeholder group – 17% above the global cross-industry total.

Q: How much influence do the following groups have on your strategy?

70

34

29

50

18

38

9

30

11

0

23

27

22

25

39

34

48

39

32

12

5

38

48

23

41

21

41

29

55

88

80% 60% 40% 20% 0% 20% 40% 60% 80% 100%

Non Governmental Organisations (NGOs)

The media

Users of social media

Local communities

Providers of capital (e.g. Creditors and investors)

Your supply chain partners

Employees (including trade unions/ work councils)

Government and regulators

Industry competitors and peers

Customers and clients

Little or no influence Some influence Have significant influence

Base: All respondents (Entertainment & Media, 56)



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Using social media to drive creativity at GroupM

16th Annual Global CEO Survey: Key findings in the Entertainment and Media industry

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January 2013

“We use social network data the way we use research generally - as a guide to tell us about what’s working and what isn’t working. But then we take that data and use it to help drive our creativity and our imagination, which is the true source of breakthrough content. In the end, you have to be prepared to take risks.”


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Improving operational effectiveness

84% of E&M CEOs anticipate changes to their company’s strategy over the coming year


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E&M CEOs are changing how they manage their organisations

Of E&M CEOs expect an increase in technology investments to keep apace with customer demands

Of E&M CEOs anticipate changes to their customer growth/retention/loyalty strategy over the coming year

Of E&M CEOs expect changes to their talent management strategies over the coming year – talent scarcity, employee succession and retaining talented employees remain key priorities

73%

88%


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88%

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Cost reduction remains a key priority 77% of E&M CEOs have implemented a cost-reduction initiative over the past 12 months - and 70% expect to repeat this over the coming year.

Q: Which, if any, of the following restructuring activities have you initiated in the past 12 months?

16

19

19

19

24

31

36

77

20

23

21

20

29

29

48

77

0% 10% 20% 30% 40% 50% 60% 70% 80%

Ended an existing strategic alliance or joint venture

Completed a cross-border M&A

Divested majority interest in a business or exited a significant market

Insourced a previously outsourced business process or function

Completed a domestic M&A

Outsourced a business process or function

Entered into a new strategic alliance or joint venture

Implemented a cost-reduction initiative

Entertainment and media Total sample Base: All respondents (Total sample, 1330; E&M, 56)


.


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Building innovation into the organisational culture

16th Annual Global CEO Survey: Key findings in the Entertainment and Media industry

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January 2013

“For me, the key word is reinvention. You must constantly take what you have and find new ways of assembling it, packaging, and putting it back together to create greater value... So, the most important characteristic we look for in people is their ability to embrace change.”

Peter Tortorici, CEO, GroupM Entertainment Global, US

PwC

For more information, please contact:

Or visit www.pwc.com/ceosurvey

Acknowledgements

PwC gratefully acknowledges the contribution to the 16th Annual Global CEO Survey: Key findings in the Entertainment and Media industry provided by:

Peter Tortorici, CEO

GroupM Entertainment Global, US

Download the main report, access the results and explore the CEO interviews from our 16th Annual Global CEO Survey online at www.pwc.com/ceosurvey.

Marcel Fenez Global and Asia Leader, Entertainment and Media

Ken Sharkey US Leader, Entertainment Media and Communications

Phil Stokes EMEA Leader, Entertainment and Media

T: +852 2289 2628 E: [email protected]

T: + 1 (646) 471 5114 E: [email protected]

T: +44 (0)207 804 4072 E: [email protected]


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publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this

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refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2013 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for

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