A call to actionDisruptive technologies barometer:media sector

KPMG International—January 2017

2© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Disruptive technologies are impacting the media industry. Distribution channels are changing. Speed-to-market is increasing. The ways in which consumers access content continues to be in a state of flux.

3© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

A growing list of technologies continues to disrupt the media industry, presenting both threats and opportunities.

4© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

KPMG International commissioned Forrester Consulting to conduct a survey of media decision-makers to understand how they are prioritizing and investing in disruptive technologies and found the following insights…

5© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

A majority of media leaders express optimism about disruptive technologies, both in their companies and in their industry.

6© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

say disruptive technologies are having a positive impact on their organization.

say these technologies are having a positive impact on their industry as a whole.

68%

60%

7© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

However, less than 1/3 of media leaders…25%

33%

24%

are ‘very prepared’ with a strategic

vision

are ‘very prepared’ with respect to data management

are ‘very prepared’ when it comes to the

talent and skills of their personnel

8© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Disruptive technologies are affecting both the operating models and the ways media companies serve their customers.

9© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Media leaders are seeing an impact on operations

46%

said artificial intelligence/cognitive computing is helping them improve quality

50%

36%

said the internet of things is helping

them drive productivity

said the internet of things is helping

them reduce overall costs

10© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

…and the customer experience41%

30%

46%

said digital payments and currency is helping them monetize their products/services differently

said marketing platforms are helping them improve their customer experience metrics

said the internet of things is helping them market to customers more effectively

11© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

So how can media leaders make the best bets when investing in disruptive technologies?

12© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The most common investment areas are

69%

68%

61%

60%

Mobile Cloud Social media

D&A

Most are ‘hedging their bets’, making broad investments across the board

13© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Are media companies getting value from their investments in disruptive technologies?

14© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Document Classification: KPMG Confidential

Based on impact and investment, disruptive technologies fall into 5 stagesKPMG framework: Disruptive technology value map (Media sector)(Investment versus impact model)

Table stakesMaturing

Sunrise/sunsetStrategic

Nascent

TechnologiesTechnologiesTechnologiesTechnologiesTechnologies

D&ACloudMobile

Social media

Internet of thingsMarketing platforms

Wearable devices Virtual/augmented realityRobotics3D printing

On-demand market based platformsDigital payments & currencyArtificial intelligence & cognitive computing

Low

Impact

Investment Impact

Investment Impact

Investment Impact

Investment ImpactLow

Medium

MediumMedium

High

HighHigh

High

Low

Base: 580 business and IT decision-makers at technology companiesSource: A commissioned study conducted by Forrester Consulting on behalf of KPMG, January 2016

Investment

15© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Getting investment timing rightWhether media companies want to be first-movers or fast-followers, they need to be agile to ensure they don’t get left behind. Those that got it wrong…

35%

said they saw the new technology trend coming too late

44%

said they couldn’t invest

quickly enough to keep up

16© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Media companies need to reshape their organizations for disruptive technologiesSuccess will require taking a hard look at the company’s managerial focus, organizational structure, KPIs and workforce strategy.

Of respondents agree their C-suite executives are keeping a close eye on disruptive technology. Disruptive technology must be raised to a top-tier C-level concern.

31%Only

17© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

Reshaping your organization for disruptive technologies : five key takeawaysGet the timing right

Engage and involve C-suite executives

Hire/train the right workforce

Become more active innovators

Engage in robust scenario planning

18© 2017 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

For more information, please visit www.kpmg.com/tmtbarometer.

kpmg.com/socialmedia kpmg.com/app

© 2017 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

The KPMG name, logo are registered trademarks or trademarks of KPMG International.