Accenture Survey Finds Broad Agreement Within Media and Entertainment Industry on Direction of Digital Market

Media and entertainment companies are in broad agreement on the way the
digital market is evolving, where the opportunities lie and what will
drive revenues over the next five years, according to findings of an
Accenture (NYSE: ACN) survey released today.

Accenture’s 2008 Global Media Content Survey —
the company’s third annual survey of more than
100 senior executives in the media and entertainment industry --
examined the growth strategies of companies across the landscape of
advertising, film, music, publishing, radio, the Internet, videogames
and television.

The survey revealed that there appears to be strong consensus as to what
will drive future growth. The vast majority of respondents (70 percent)
indicated they derive some revenue today (albeit less than 10 percent)
from new alternate forms of media – such as
downloading or watching TV programs “on demand,”
digital advertising or user-generated content –
or can’t determine how much of their revenue
comes from these new sources. Based on the participating companies, that
small percentage of revenue actually represents tremendous growth and
substantial revenue streams are being derived today from these new forms
of media.

Four of the main sources of revenue growth cited by respondents in this
year’s survey are the same as those identified
in last year’s survey, which indicates
growing consensus about the potential of new platforms. These four
sources of revenue growth — predicted to be
the dominant business model five years from now —
are multi-platform distribution, short form video, social media /
user-generated content, and advertising.

• Multi-platform distribution. When asked to identify the largest
  drivers of revenue growth over the next five years, two-thirds (66
  percent) of respondents cited new platforms or new ways of delivering
  content — significantly more than the
  number who cited new content types (24 percent) or new geographies (10
  percent). And nearly two-thirds (63 percent) of respondents said they
  will pursue a “multi-screen”
  distribution strategy, which includes television, online and mobile
  delivery.
• Short-form video. When asked which content type will generate
  the greatest growth, the greatest number of respondents —
  38 percent —cited short-form video, with
  online portal/publishing second (23 percent) and video games third (18
  percent).
• Social media and user-generated content are high-growth
  opportunities. Two-thirds (68 percent) of respondents identified
  social media and user-generated content as a high-growth opportunity,
  and more than half (56 percent) said they are already involved in
  social media in some capacity.
• Advertising. When asked to identify what they believe will be
  the number one business model in five years, nearly two-thirds (62)
  percent of respondents selected advertising-supported business models,
  compared with 25 percent who cited subscription-based services and 11
  percent who cited pay-per-play services.

“It is great news that media organizations
are developing a consistent strategic view of the key growth areas, but
execution is slow,” said Gavin Mann, digital
media lead for Accenture’s Media &
Entertainment practice. “There clearly
remains a huge effort to put in place the necessary capabilities, and it
is apparent that the size of the task is still not fully understood. I
am not claiming it is easy to turn around some of the world’s
greatest media organizations, but I do believe it is essential if they
are to remain great.”

While half (50 percent) of the executives interviewed said they know
which capabilities they need to take advantage of in this new digital
market, Accenture believes that many have a false sense of their current
capabilities. Sixty-six percent of the respondents have less than 40
percent of required capabilities, a number that is unchanged since last
year’s survey, indicating that companies need
to implement new digital technologies or be left behind.

For example, nearly 80 percent of executives said that their
organizations have a consistent view of intellectual property rights
(i.e., have the same understanding of the rights associated with a
specific intellectual property across their entire business). In
Accenture’s experience, considerably fewer
organizations actually have the flexibility necessary to capitalize on
fast-developing opportunities.

“We interviewed executives at the very top of
their organizations, and at this level it might appear that they share a
consistent and flexible view of intellectual property,”
Mann said. “However, in many cases we believe
this will actually require inordinate manual efforts, or work-arounds,
throughout the organization each time a new distribution channel is
launched. Such a cost structure is not sustainable over the long run.”

Among the survey’s other key findings:

• Digital advertising will drive a large portion of future revenues.
  Almost every media company is trying to adapt to the reality of
  digital advertising as a major source of revenue. Fifty-two percent of
  respondents said they see digital advertising eclipsing traditional
  advertising within five years, and 62 percent said they believe that
  content will be supported by a variety of digital advertising methods,
  including branded content, search, sponsorships, performance and a mix
  of all of these within the next five years.

• The Web 2.0 phenomenon is here to stay. Two-thirds (66 percent)
  of respondents said there is no likelihood of the Web 2.0 “bubble”
  bursting during the next 24 months, and 71 percent said they do not
  see any risk in allowing their brands to be associated with social
  media.
• Uncertainty as to when the mobile market will take off. When asked
  when they believe the nascent mobile market will become a mass market,
  respondents were split, with slightly more than half (55 percent)
  saying within three years, while slightly less than half (45 percent)
  said they believe it will take longer.
• There are several barriers to the mobile market. Consumer
  readiness continues to be singled out as a barrier to the mass uptake
  of the mobile market, cited by half (51 percent) of the executives
  surveyed. Respondents also cited other barriers, including companies’
  ability -- or lack thereof -- to provide a consistent user experience
  (cited by 42 percent of respondents), as well as a lack of readiness
  among both content owners and mobile operators/networks (cited by 37
  percent).

More information on Accenture’s Global Media
Content Survey can be found at www.accenture.com/2008contentstudy.

Methodology

As part of its third annual Global Media Content Survey, Accenture
surveyed more than 100 senior leaders and decision-makers in the media
and entertainment industry -- spanning television, videogames, film,
music, radio, publishing, interactive entertainment and advertising --
in North America and Europe. The goal of the survey —
which was based on in-depth telephone and face-to-face interviews with
select executives in the United States, the United Kingdom, France,
Germany, Austria, Belgium, Switzerland, Italy and Brazil —
was to identify where industry executives believe the greatest
opportunities and challenges will come from over the next five years.

About Accenture

Accenture is a global management consulting, technology services and
outsourcing company. Combining unparalleled experience, comprehensive
capabilities across all industries and business functions, and extensive
research on the world’s most successful
companies, Accenture collaborates with clients to help them become
high-performance businesses and governments. With 178,000 people in 49
countries, the company generated net revenues of US$19.70 billion for
the fiscal year ended Aug. 31, 2007. Its home page is www.accenture.com