PwC study: User experience as the key to success
With sales of CHF 14.6 billion, the Swiss media and entertainment market grew moderately last year. Compared with previous years, however, growth was less pronounced. Overall, the industry as a whole achieved sales growth of 2.1 percent in 2016. However, by no means all media genres are affected by this saturation. And the entertainment industry has a new magic word: user experience.
The "Swiss Entertainment & Media Outlook 2017-2021" paints a clear picture: growth in the industry is slowing down. In 2016, the growth rate of 2.1 percent was significantly lower than in the previous year, and in 2017 it is expected to fall further to 1.4 percent. "The reasons for this development have been evident for some time. The print media continue to post declining figures, and there are also signs of market saturation in the TV and Internet subscription market," notes Patrick Balkanyi, Partner and Industry Leader Technology, Information, Communication and Entertainment at PwC Switzerland.
Nevertheless, the CHF 16 billion revenue mark is expected to be within reach by 2021. A wave of new, customized content and entertainment, including in areas such as e-sports or virtual reality (VR), is conquering the market. This offers potential for the entire industry. Over the next five years, annual growth will level off at 1.5 percent (see chart above).
User Experience - Personal, more personal, most personal
In addition, successful providers are increasingly focusing on the quality of their customers' user experience to strategically differentiate themselves and drive growth. Flexibility and personalized content make all the difference. "The user should not simply be a customer, but rather a fan," emphasizes Bogdan Sutter, Head of Consulting Telecommunications, Media and Technology at PwC Switzerland. "This requires not only appealing content, but content that is just as easy and always accessible on various end devices and at an attractive price. The operation of the corresponding platforms must be as intuitive as possible." If these conditions are met, users are also willing to pay for this premium content.
The foundation for personalized content is user data. Providers generate vast amounts of valuable information on user behavior and preferences in their daily business. Data is therefore implicitly the new currency of the industry. With the use of intelligent analytics systems, target groups can be identified more precisely, advertisers can be attracted, and ultimately the user experience can be optimized.
Shift in advertising revenues continues to grow
Online advertising is still by far the fastest-growing segment of the Swiss media and entertainment industry, with a growth rate of 13 percent for 2016. Last year, the market share was 30 percent. Over the next five years, this trend will continue; by 2021, online advertising should already account for half of the market segments analyzed. By comparison, non-digital advertising continues to decline steadily, especially in the print sector. And much faster than expected. In 2016, advertising revenues in the newspaper market fell by a full 10 percent. TV and "out of home" advertising as established mass media, on the other hand, continue to hold steady. The following graphic impressively illustrates this development:
