Content thumbnail Digital Agility Now

Digital Agility Now

Digital Leadership Study Series from EY’s Global Technology Center and Global Media & Entertainment Center Report No. 1 Digital agility no Creating a highelocity media and entertainment organiation in the age of transformatie technology

“ Mobile-social-cloud and big “ Media and entertainment data analytics technologies companies no longer lie in a are game-changers for M&E world where eerything lies companies. Together these in ‘their’ world. t’s a connected technologies can help the M&E ecosystem with consumer ‘digital leaders’ who broke technology leading the way.” ahead of the pack in the early stages of the digital era to etend their adantages. They also offer a new opportunity for those who fell behind to adapt uickly and catch up.” John Nendick Pat Hyek Global Media & Entertainment Leader and Global Technology Industry Leader Americas Media & Entertainment Leader EY EY rapidly evolving 

Contents 4 ­erie of the Digital Leadership Study Series 6 Digital is rapidly transforming media and entertainment 9 Digital leaders forge the agility ision 18 Creating agility and enabling a culture of innoation 21 Case studies€ deeloping agile organiations Foursuare’s startup culture etfli’s fleible approach poti­y’s suads and tribes 23 Competing for people and s‚ills in a fastchanging enironment 26 Enabling technology tools for agile organiations 31 ­utloo‚€ Insights ­rom our Agility Inde ƒc‚noledgments 33 Source notes 34 Contacts

„ho too‚ the surey… ƒvervie‚ o­ the ¦igital Leadership EY€ ‚ith the help o­ ƒ­ord Economics€ tudy eries conducted a global survey o­ more than „„… M&E eecutives during the first uarter o­ ‡…ˆ‰Š ‹espondents came ­rom Turbulence and disruptive change continue to define today’s media a ‚ide s‚ath o­ M&E industry segments€ and entertainment ˜M&Eš ‚orldŠ Early leaders in M&E’s digital including advertising€ broadcast and trans­ormation are challenged ane‚€ as social media€ ‚idespread cable€ publishing and in­ormation services€ filmed entertainment€ broadband availability€ ­aster internet connections and the rapid interactive gaming€ music and social spread o­ smartphones and tablets have changed the demands and media€ as ‚ell as ­rom the technology epectations o­ media audiences and created an astounding variety industryŠ ‹espondents ‚ere asŒed to o­ ne‚ digital products and servicesŠ e‚ companies are crossing the report their primary segment€ as ‚ell divide bet‚een content providers and distributors• product li­e cycles as their secondary segment€ i­ anyŠ are radically compressing• traditional business and distribution models Figure 1: Žespondents by continue to trans­orm• and customer demands are shi­tingŠ Companies industry segment must pursue organiœational agility€ i­ they are to respond competitivelyŠ Enabling 12% technology 8% To better understand the comple ­or eample€ is that ™ž” o­ M&E companies Social networking/ 11% challenges M&E companies ­ace as they see the potential o­ smart mobility to drive social media 12% Music 12% seeŒ to master mobilesocialcloud and big revenue gro‚th over the net ‡–‰ years€ 4% data analytics technologies€ EY enlisted but only ‡ˆ” have secondgeneration Interactive gaming 12% ¡ 6% ƒ­ord Economics to survey eecutives mobile technology deployments ­or ne‚ Publishing and 12% ­rom more than „„… M&E and technology product and service development — ‚hich€ information services 10% Broadcast and 12% companies across the globeŠ Že combined in the contet o­ M&E€ o­ course€ means ne‚ cable networks 5% the survey data ‚ith intervie‚s o­ selected content€ so­t‚are or intellectual property ˜I£šŠ Filmed entertainment 12% 8% eecutives€ secondary research and our Advertising and 12% o‚n analysisŠ Že’re sharing the results in ƒur study uncovered five Œey areas ‚here measurement 8% a series o­ five indepth reports€ o­ ‚hich M&E companies must actively rethinŒ their Primary industry Secondary industry this is the firstŠ ‘ere are a ­e‚ topline strategies as they undergo their digital Figure 2: Žespondents by country data points’ more than “„” o­ all survey trans­ormations ˜see Figure ‰€ page „š’ headŒuarters respondents are engaged in digital trans­ormation• their top strategic priority • The comple‡ challenges of the digital is “creating a culture o­ innovation” era ill demand that M&E companies ROW US ˜„™”š• and their top digital trans­ormation become more agileˆ As technologies€ 14% 20% challenge is “coping ‚ith ne‚ digital plat­orms and distribution models change€ HK business models” ˜‰“”šŠ M&E companies are rethinŒing the very 4% Germany structure o­ their organiœations to improve 5% These ne‚ technologies do more than agility — allo‚ing them to anticipate and Mexico China 12% change customer epectationsŠ They also nimbly respond to rapid shi­ts in customer 7% o­­er M&E companies po‚er­ul tools to demand and uicŒly seiœe emerging Italy better understand and connect ‚ith their opportunitiesŠ For eample€ some ¥‡” 7% India 12% customersŠ Advances in smart mobility€ o­ those M&E companies ‚e identified as France social media€ cloud computing and data ahead o­ the technology adoption curve 9% UK analytics give M&E companies the potential ˜see “Identi­ying digital leaders€” page „š 9% to gain detailed insight into their customers’ cite the shortening li­e cycles o­ products Ž­„ includes€ ƒustralia‰ ‘rail‰ Canada‰ ’inland‰ behaviors and pre­erencesŠ ›y realiœing and services as the Œey challenge ­aced in “ndonesia‰ “srael‰ ”apan‰ •e –ealand‰ Žussia‰ that potential€ M&E companies can o­­er the their digital trans­ormationsŠ South ƒfrica‰ South —orea‰ Spain‰ Seden and personaliœed€ any‚here€ al‚ayson content Taianˆ that media consumers no‚ demandŠ • Managing digital groth‰ including £ercentages in Figure ‡ do not total ˆ…… due properly pacing inestment in legacy to roundingŠ Yet our research reveals gaps bet‚een products and serices as they “sunset” current reality and the promise o­ these or eole‰ reŒuires M&E companies to trans­ormative technologies to build accept greater and more dierse ris‚s revenues€ reanimate legacy o­­erings€ as they see‚ to e‡pand their reachˆ Throughout this report€ all dollar amounts are develop ne‚ products and services and Žhether it’s using social net‚orŒing to § dollars€ unless other‚ise indicatedŠ get to marŒet more rapidlyŠ ƒne such gap€ capture audiences or adapting digital Throughout this report€ “secondgeneration” denotes technology deployments that incorporate lessons learned ¡ † ­rom initial deployments and go beyond to achieve more advanced ­unctionalityŠ

content to attract smartphone users€ products and services€ reanimate eisting “dentifying digital leaders M&E companies ‚ill be ­orced to thinŒ ones€ and reimagine business models about — and manage — more risŒ in ne‚ to o­­set declines in traditional revenue Among the more than „…… global ‚aysŠ ome ™¥” o­ all respondents say channelsŠ In a ‚orld ‚here so many respondents to our survey€ ‚e identified they are investing in digital sta­­ ­aster than customers epect their digital products and and categoriœed ™“ companies as digital digital revenue is gro‚ing€ and „…” say services to be ­ree€ a more complicated leaders based on certain criteriaŠ In they can accept shortterm revenue losses ‚eb o­ revenuegenerating e­­orts has these companies’ as they move up the digital learning curveŠ emerged€ including micropayments and ƒ­ course€ that means another „…” are ­reemium contentŠ All respondents indicate • ¦igital revenue already eceeds „…” reluctant to accept that tradeo­­€ ‚hich that “personaliœation” ˜™¥”š€ “anytime€ o­ their company revenueŠ suggests a di­­erent risŒ€ that o­ ­alling any‚here access” ˜™‰”š and “creating • Customer profile data is integrated behind othersŠ uniue content” ˜™ˆ”š ‚ill be the Œeys across at least t‚o channelsŠ that ensure customers pay ­or digital • econdgeneration or better solutions • Transformatie technologies such as products and services in the ­utureŠ are in place in at least t‚o o­ ­our Œey smart mobility‰ social netor‚ing‰ technologies ˜smart mobility€ social cloud computing and big data analytics • Technology and M&E companies can media€ big data analytics and cloud offer M&E companies unprecedented partner more closely ith one another to computingš to increase revenue or opportunities to meet their customers meet the digital challenges‰ but develop ne‚ products or servicesŠ hereer they areˆ £ersonaliœation is they need to better understand the a Œey trend in the digital ­utureŠ These “disconnects” that separate themˆ Žhile These digital leaders tend to have ne‚ technologies can o­­er M&E ­ar technology companies can help M&E di­­erent characteristics than all other more granular and nuanced insights into companies climb the digital learning curve€ survey respondentsŠ They are’ the pre­erences and behavior o­ their especially in the areas o­ cloud computing audiences — insights that can be used and data analytics€ many M&E companies • More li‚ely to hae been in business to refine eisting products and services€ are reluctant to seeŒ partnerships ‚ith longer™ ™‡” o­ digital leaders have create ne‚ ones and e­­ectively ensure that outside companiesŠ For eample€ ™¥” o­ been in business more than ˆ… years€ customers see your content ˜or access all respondents insist on inhouse sŒills compared ‚ith „‰” ­or all other their content over your net‚orŒšŠ ›ut only to process€ collect and analyœe data€ but respondentsŠ about ‡…” o­ all companies responding ¥ˆ” say they are not yet obtaining any • ƒre more enthusiastic about the have gone beyond studying and piloting insights and ‰¥” say that developing a potential of smart mobility to or initially deploying these technologies to data strategy to ensure the right people generate significant revenue over secondgeneration deployments that build get the right data so they can act on it is the net ‡‰ years versus all other on their initial eperiencesŠ a big obstacle to achieving their big data respondents ˜ž‰” versus ™¨”šŠ analytics goalsŠ • •ot necessarily ery large companiesŠ • M&E companies recognie that they must In ­act€ ¥ˆ” o­ digital leaders have accelerate digital product and serice This paper ­ocuses on the first o­ the revenues bet‚een ©„……m and ©ˆbŠ deelopment or face the possibility that five Œey areas’ ho‚ M&E companies are digitalsay leaders ill get there first reorganiœing to become more adaptive and usurp their mar‚etsˆ There­ore€ and responsive to shi­ting marŒetplace nnua igita  M&E companies must rapidly create ne‚ opportunities and risŒsŠ reenue eader other Figure 3: Media and entertainment transformation frameor‚ ©‡„m–©¥““m ‡“” ‰¥” ©„……m–©“““m ¥ˆ” ‰‡” ©ˆb–©„b ‡…” ‡„” n C o u i t C s ˆ…” “” a o t ª©„b z n o i Content t m n Vision e a y n e g t discovery t r r i l c i u O g r A a t ote’ our revie‚ o­ the digital leaders’ survey Targeting and i o n Culture engagement responses o­ten yielded additional valuable insightsŠ There­ore€ throughout this report ‚e ‚ill re­er to Enabling Customization/ three di­­erent types o­ responses€ as appropriate’ tools Cloud personalization • All survey respondents Social Data • ¦igital leaders Product Mobile Pace of • All others ˜all survey respondents minus the development investment digital leadersš Relationships/ th M Distribution partnerships ow r B one g g usin tiza Payment Risk agin egy es tio models an at s m n M Str ode l ource’ EY analysis€ ‡…ˆ‰Š š

¦igital is rapidly trans­orming “ ring your own deice media and entertainment has translated into  ­ software€ which has translated into  ­ data. “Every day we’re playing three-dimensional chess.” ‚onsumer technology o said an M&E eecutive ‚ith ‚hom ‚e discussed our researchŠ is transforming how M&E ‘e ‚as commenting on the incredible speed ‚ith ‚hich digital companies produce€ technologies continue to change M&E content€ marŒeting€ distribution€ distribute€ track and business models€ supporting in­rastructure and organiœational monetiƒe their content structure — even no‚€ t‚o decades into the age o­ digitiœationŠ and „.” ark orao Global Media & Entertainment ƒdisory Serices Leader The speed o­ that technologyenabled change o M&E companies are rethinŒing the EY is still accelerating€ ‚hile average revenue o­ very structure o­ their organiœations to M&E companies is poised to cross the „…” improve agilityŠ They are embracing ne‚ marŒ ­rom ma«ority traditional to ma«ority and emerging technologies to support digitalŠ ƒur research sho‚s that revenue organiœational structures that enable a ­rom digital is epected to average ¥¨” o­ nimble response to rapid shi­ts in customer all respondents’ revenue in ‡…ˆ‰€ and gro‚ demand• that let them uicŒly seiœe emerging to „¨” by ‡…ˆ„ — maŒing digital the primary opportunities• that flatten hierarchies source o­ revenue ­or M&E companiesŠ and eliminate silos• and that accept risŒŠ These companies are also shi­ting ­rom Mean‚hile€ M&E consumers are continuously “maŒe and sell” to “sense and respond” Among all respondents assimilating ne‚ smart mobility or social business models€ as technology enables media technologies ˜thinŒ€ ­or eample€ them to get closer than ever be­ore to o­ the sudden initial rise o­ tablets and the their customersŠ šœž of subseuent rapid success o­ subžinch tabletsš€ ‚ith conseuent changes in their media consumption behaviorŠ ome even topline become doityoursel­ producers o­ their o‚n ne‚s€ music€ videos and gamesŠ Mean‚hile€ —ey characteristics of agile M&E unprecedented insights into customer tastes companies include€ reenue and behavior patterns are a­­orded to M&E companies by those same technologies€ • Advanced social listening programs ‚ill be derived ­rom acting in concert ‚ith others such as cloud to Œeep on top o­ changing computing and big data analyticsŠ customer sentiment digital channels by • Leadingedge analytics that identi­y — Že believe this landscape o­ ­astchanging in realtime — ne‚ customer ‡…ˆ„ — up ­rom ¥¨” compleity is ‚hy all respondents’ top serving opportunities o­ revenue todayŠ strategic priority ­or digital trans­ormation • ‹apid resource or ne‚ product is “creating a culture o­ innovationŠ” This deployment in response to those ‚as chosen by ™¥” o­ digital leaders and opportunities „¥” o­ all others ˜see Figure ˆ¥€ page ˆžšŠ • Cloudbased in­rastructure ˜‚here ƒnly a true culture o­ innovation ‚ill yield appropriateš to enable lo‚errisŒ the steady stream o­ ne‚ ideas ­or products rapid deployment and scalability and services€ business models€ distribution€ as conditions change etcŠ€ reuired by M&E’s constant state o­ • The ability to “­ail ­or‚ard€” ­ast — technologyinduced changeŠ iŠeŠ€ learn ­rom inevitable missteps€ fi them rapidly and move on ›ut a steady stream o­ brilliantly innovative ideas demands an etraordinarily agile organiœation to bring them to marŒetŠ ›

›Ÿž of all respondents say smart mobility ‚ill “moderately” or “substantially” drive revenue gro‚th in the net ‡–‰ yearsŠ In terms o­ the ability to “­ail ­or‚ard€” ­ast€ ƒther M&E industry segments ­eel the etfli’s acŒno‚ledged mid‡…ˆˆ misstep — pressure to adapt to rapidly changing “ ­nly the most agile M&E and agile response — is destined to become customer demands «ust as pro­oundlyŠ organiƒations will be able to a tetbooŒ case studyŠ Announcing a ™…” “It’s no longer good enough to identi­y a keep up with the etraordinary price increase ­or a combined ¦¬¦ rental problem at “ aŠmŠ€ and have it fied at the pace of technology change.” and streaming video service ˜as a prelude to end o­ the business day€” says icŒ Earl€ splitting the t‚o into separate businessesš enior ¬ice £resident ­or games publisher ­uy €anger initially cost the company ž……€……… Electronic ArtsŠ “In the mobile ‚orld€ i­ you Deputy and ƒmericas subscribers and ž‰” o­ its share priceŠ CEƒ discover the problem at “’……€ you need to Technology “ndustry Leader ‹eed ‘astings uicŒly apologiœed€ on his fi the problem by “’…„ and have it ready EY blog• the company responded by electing not to go into the field at “’ˆ…Š That’s «ust to separate the businesses€ but it did Œeep ho‚ it ‚orŒs no‚Š” the pricingŠ ubscriber and share price gro‚th returnedŠ As o­ its ‡…ˆ‰ first uarter€ etfli’s subscriber numbers matched ‘›ƒ’s€ the most ‚atched cable net‚orŒ in the § € and its share price had more than uadrupled ˆ€‡ ­rom its ‡…ˆ‡ lo‚Š The ­ollo‚ing sections o­ this report ‚ill eplore insights ­rom our research about the role o­ technology in enabling agile M&E organiœationsŠ The sections are€ • ¦igital leaders ­orge the agility vision • Creating agility and enabling a culture o­ innovation • Competing ­or people and sŒills in a ­astchanging environment • Enabling technology tools ­or agile organiœations • An ƒutlooŒ section that includes our Agility Inde identi­ying those industry segments displaying the most€ and least€ agility ˜see Figure ‡‰€ page ‰‡š œ

­pportunities for technology companies ­pportunities for M&E companies In a turbulent marŒetplace ‚here agility is critical€ M&E customers are taŒing evermore control over their M&E companies must rapidly develop and roll out ne‚ media habits€ becoming their o‚n “editorsinchie­Š” technology tools to meet the increasingly changing And they are getting more in­ormation ‚ith ‚hich to dynamics o­ their audiencesŠ Žhat are the opportunities in­orm their choices€ ‚hile media consumption devices ­or technology companies to help M&E companies proli­erate in unprecedented numbers — both inhome become more nimble® and mobileŠ Thus€ the imperative ­or a clear vie‚ o­ customers and the marŒet has never been greaterŠ e‚ ¡uestions to consider€ technologies are enabling M&E companies to rethinŒ and • ‘o‚ ‚ell does your company understand the uniue retool€ to be more agile and more responsive€ and to challenges ­acing M&E companies€ and the nuances o­ allocate sŒills and resources accordinglyŠ each sector® • ¦oes your company have the capabilities to rapidly ¡uestions to consider€ deploy o­­erings and assist M&E companies in a dynamic • To ‚hat etent does your approach to investment in anytime€ any‚here digital marŒet® ne‚ technologies reflect business as usual versus the • ‘o‚ ‚ell can your company help M&E companies opportunity to maŒe cultural and operational changes integrate mobilesocialcloud and big data analytics to your organiœation® technologies® • Are your relationships ‚ith technology providers • ¦oes your company o­­er coste­­ective and fleible tools collaborative® ¦o you ‚orŒ together to better to help clients better understand customer interactions understand ho‚ mobilesocialcloud and big data across all channels ˜digital and physicalš® analytics technologies can enable your business • Žhat assurances ˜eŠgŠ€ privacy€ securityš can your ˜versus procuring o­­theshel­ solutionsš® company o­­er M&E companies that cloudbased • In ‚hat ‚ays is your company using technology to alternatives ­or hosting content and big data can be capture in­ormation that helps you better understand su­ficiently fleible and reliable€ yet o­­er the control your customers’ ‚ants® The competitive landscape® • M&E companies demand® ‘o‚ have you used technology to breaŒ do‚n traditional organiœational silos€ thereby ensuring you can deploy the best available resources ‚hen you identi­y an opportnity® Ÿ

¦igital leaders ­orge the agility vision ›ecause it is the leaders in an industry ‚ho define the ‚inning vision€ ‚e looŒed closely at the survey results o­ our digital leadersŠ Že ­ound a group ‚ith great conviction Figure 4: £o ill digital technologies ¤mobilesocialcloud and big data analytics¥ that smart mobilesocialcloud and big affect your reenue oer the ne‡t  years…¦ data analytics technologies ‚ould drive revenue gro‚th ˜see Figure ¥š€ as ‚ell as an increased emphasis on social and Mobile technology 28% 55% cloud technologies ‚ithin and across their 34% 33% o‚n organiœationsŠ Že also discovered the leaders ‚ere much more ­ocused on ne‚ product development than evolving eisting Cloud computing 29% 48% products and services€ and more concerned over evershortening product li­e cycles 34% 28% than everyone else ˜see Figure „šŠ Big data analytics 45% 28% In other ‚ords€ the digital leaders recogniœe that ne‚ technologies are altering 37% 19% customer behaviors and trans­orming marŒet opportunities at ‚arp speedŠ They 45% 25% realiœe they must build more agile€ nimble Social networking organiœations to meet the challenge o­ 39% 17% serving such a ­astmoving marŒetŠ And so they are looŒing ­or the most e­­ective Moderately (digital leaders) Substantially (digital leaders) technologies to deploy ‚ithin their companies to enable customerdriven Moderately (all others) Substantially (all others) course corrections that are both rapid and ¡£ercentages sho‚n represent respondents ‚ho chose “moderately increase” or “substantially increaseŠ” adaptive€ and to support smarter — and much ­aster — management decisionsŠ Figure ‚: „hat are the ‚ey challenges your company faces in its digital transformation…¦ Implementing this vision o­ an agile ¤Select the top three) organiœation constantly delivering ne‚ products and services to match the rapid evolution o­ customer tastes and habits is Shortening life cycle of 42% a tall orderŠ Conseuently€ our research our products/services 28% reveals gaps bet‚een the vision and its eecution€ even among the leaders and Operating in new 38% certainly among the restŠ geographic markets 32% Incorporating new digital 38% technologies into our products and systems 26% Coping with new digital 32% business models 40% Increasing competition 26% from firms with superior digital capabilities 32% Digital leaders All others ¡£ercentages sho‚n represent respondents ‚ho ranŒed each choice first€ second or thirdŠ ¢

CT­s ¤†ž¥ and CE­s ¤ ž¥ have the most responsibility ­or digital vision and strategyŠ ƒ„… or ƒ†… “oˆn” digita iion ›ut it is the prevalence o­ CEƒs taŒing direct and trategy responsibility ­or digital vision¯strategy It is a testament to the critical importance that is most notableŠ It correlates to o­ digital trans­ormation that companies’ the organiœation‚ide cultural change CEƒs ‚ere named as responsible ­or the that is reuired ­or success in digital digital vision and strategy almost as o­ten trans­ormation ˜discussed in the net as chie­ technology o­ficers ˜CTƒsš — ‡‰” sectionš€ because such ‚idespread change versus ‡¥” ˜see Figure ™šŠ And among typically is not possible unless it is led ­rom€ digital leaders€ in ­act€ CEƒs and CTƒs ‚ere or vigorously supported by€ the topŠ tied€ at ‡™” eachŠ Another ˆ‡” o­ digital leaders give the responsibility to a chie­ digital o­ficer ˜C¦ƒš and ˆˆ” to their chie­ in­ormation o­ficer ˜CIƒšŠ Figure 6: „ho is responsible for the digital technology ision and strategy ithin your company…¦ ¤ƒll respondents¥ Function †ota Advertising Film ›roadcast £ublishing and Gaming Music ocial media Technology in­ormation services CTƒ or ¬£ Technology ‡¥” ˆ™” ‰…” ‡ž” ‡ž” ‡…” ˆ¨” ‡„” ‡ž” CEƒ€ £resident€ or ¬£ ‡‰” ‡‰” ‡ˆ” ˆ“” ‡ˆ” ‰„” ‡ž” ‡‡” ˆ¨” C¦ƒ or ¬£ ¦igital ˆ‡” ˆ™” ˆ…” ˆ¨” ˆˆ” ˆ¥” ™” ˆ¥” ™” CIƒ or ¬£ IT ˆˆ” ¥” ˆ…” ¨” ˆˆ” ˆ…” ‡…” ˆ‰” ˆ¨” CFƒ or ¬£ Finance ž” ˆ™” “” ¨” ‰” ‰” ˆˆ” ™” ˆ…” CMƒ or ¬£ MarŒeting ™” ˆˆ” ¨” ˆ” ˆ…” …” „” ™” ™” Cƒƒ or ¬£ ƒperations ¥” ˆ…” ˆ” ‰” ¨” ‰” ™” ‡” ‰” C ƒ or ‘ead o­ ›usiness trategy ¥” ‰” ¥” ¨” ™” ‰” ‡” ‰” ¥” ¡£ercentages sum to less than ˆ…… because “other” and several verylo‚scoring choices ‚ere not includedŠ §¨

Neˆ product and erice any‚hereš and are more ‚illing to let “ …martphones€ tablets and deeopŠent ‹ocu legacy products and services languishŠ Žhen asŒed to ranŒ the top three ‚ays They choose to leverage eisting strengths social media are all catalysts in ‚hich technology ‚ill drive gro‚th ­or in brand€ I£€ customer base€ etcŠ€ in the for accelerated change in the their organiœations€ „¨” o­ all respondents support o­ these ne‚ products and services€ way people create€ discoer chose developing ne‚ product and service ‚hich customers have embraced ‚illinglyŠ and consume content. †nd this o­­erings first€ second or third€ more than They are introducing ne‚ products and any other selection ˜see Figure ¨šŠ Evolving services iteratively€ learning ­rom each o­ is ‡ust the beginning.” eisting products and services ‚as the their iterationsŠ And they are iterating ‚ith second most popular choice€ ranŒed by „…” increasing ­reuency€ rather than ‚aiting to Hoˆard a o­ all respondentsŠ LooŒing more closely do it once or t‚ice a yearŠ This correlates •ortheast Media & Entertainment at only top ranŒings€ digital leaders sho‚ ‚ith their concern over shortening product ƒdisory Serices Leader greater ­ocus on ne‚ product development€ li­e cycles seen in Figure „€ page “Š EY ‚ith ‰…” ranŒing it number one versus ‡„” o­ all others ˜see Figure žšŠ Even Gaming companies are ‚idely seen at more interesting is ho‚ little digital leaders the leading edge o­ iterative product care about evolving eisting products and developmentŠ ƒur data confirms services — only ˆ“” ranŒed it number oneŠ this€ ‚ith ™™” o­ interactive gaming segment respondents citing ne‚ product Že believe digital leaders are recogniœing development and only ‰“” ­ocused on their customers’ embrace o­ ne‚ evolving products and servicesŠ ƒ­ note€ al‚aysavailable digital products and the gaming respondents are even ahead o­ services ˜‚hether broadcast€ streamed the digital leaders on this point€ ‚ith ‰¥” or do‚nloaded to the living room or to ranŒing ne‚ product development number a smartphone or tablet that could be one ˜compared ‚ith ‰…” o­ digital leadersšŠ Figure Œ: “n hat ays ill technology drie groth for your organiation…¦ ¤ƒll respondents¥ (Top three rankings) ­roˆth drier †ota Advertising Film ›roadcast £ublishing and Gaming Music ocial media Technology in­ormation services ¦evelop ne‚ products¯service o­­erings „¨” „¥” ¥“” ™…” „™” ™™” ™¥” ¥“” „™” Evolve eisting products¯service o­­erings „…” ™“” „ˆ” ¥“” ¥¨” ‰“” „‡” ¥‰” ¥¨” Get to marŒet ­aster ‚ith ne‚ or evolved ¥…” ‰ˆ” ¥‡” ‰ž” ‰‡” „„” ‰¥” ¥ˆ” ¥ˆ” products¯services ¡£ercentages sho‚n represent all respondents ‚ho ranŒed each choice first€ second or thirdŠ Figure 8: “n hat ays ill technology drie groth for your organiation…¦ (Top rank only) Develop new products/ 30% service offerings 25% Evolve existing products/ 19% service offerings 30% Get to market faster with 13% new or evolved products/services 12% Digital Leaders All others ¡£ercentages sho‚n represent respondents ‚ho ranŒed each choice number oneŠ §§

Music segment respondents matched be­ore because o­ technology that enhances gaming’s ‰¥” number one ranŒing ­or organiœational agilityŠ Yet our analysis o­ ho‚ ne‚ product development€ and ™¥” these technologies are being adopted sho‚s ššž ranŒed it first€ second or thirdŠ imilarly€ that many companies have a long ‚ay to go broadcasting companies’ ™…” first€ second be­ore obtaining the ­ull benefitsŠ o­ all respondents or third ranŒings ‚as higher than the overall averageŠ These segments are reacting to ‘Šart Šo’iity rate internal use o­ radical changes in the cycle time o­ their Žhen asŒed ho‚ mobilesocialcloud traditional products and services€ as the rapid and big data analytics technologies ‚ould mobile technology adoption o­ mobile phones€ video streaming a­­ect their revenue in the net ‡–‰ years€ “very” or “etremely” and tablets spurs demand ­or “al‚ays respondents ‚ere most positive about available” accessŠ It’s interesting to note that smart mobility’ ™ž” o­ all respondents importantŠ advertising€ film and social media companies and ž‰” o­ digital leaders said it ‚ould ranŒed ne‚ product development belo‚ the “moderately” or “substantially” increase overall averageŠ their revenue ˜see Figure ¥€ page “šŠ mart mobile technology supports M&E companies’ †echnoogy depoyŠent upport ability to deliver the anytime€ any‚here Ž„ agiity content access customers no‚ epectŠ I­ digital leaders are ­ocused on ne‚ product ›ut looŒing ­urther€ M&E companies are development€ technology is enabling them using smart mobility internally as ‚ell to create agile organiœations to do this more as eternally’ providing employee access e­ficiently and e­­ectivelyŠ M&E companies to corporate in­ormation ‚as the top use€ are deploying the digital technologies o­ ‚ith „„” o­ all respondents rating it “very” smart mobility€ cloud computing€ social or “etremely” important€ ‚hile acting on net‚orŒing and big data analytics to help customer location data analysis ranŒed them achieve their digital agility visionŠ avvy second ‚ith „‰”Š It’s ‚orth noting that the adopters are continuously ad«usting their digital leaders emphasiœe both sides o­ that marŒeting and product development plans euation’ ¨ˆ” rated employee access to based on continually updated Œno‚ledge and in­ormation as very or etremely important insight into their audiencesŠ And they are and ¨¥” gave that rating to enhancing able to maŒe those ad«ustments ­aster than customer o­­erings ‚ith location in­ormationŠ Figure 9: “n hat stage of deelopment is your company in deploying mobile technology to help achiee your distribution business goals… ¤ƒll respondents¥ 60 41% 50 38% s 40 spondent30 re of % 20 14% 7% 10 0 Not deploying Studying/piloting Beginning deployment/ Second-generation first generation deployment or later Advertising and measurement Publishing and information services Social networking/social media Filmed entertainment Interactive gaming Enabling technology Broadcast and cable networks Music Average of all respondents §

Clearly€ M&E companies understand that pattern remained the same and “ Today’s workforce is also smart mobility o­­ers ne‚ ‚ays to deliver the percentage that has gone beyond personaliœed content that is constantly firstgeneration deployments is consistent’ today’s digital consumer — re­reshed and even “in the momentŠ” ­or marŒeting and product and service their media eperience is onetheless€ even some leading media development€ ‡ˆ”• ­or revenue optimiœation€ across multiple deices — companies ‚ere surprised by ho‚ rapidly ˆ¨”• ­or research€ ˆ™”• ­or employee it’s social. They epect their their audience migrated to the smartphone engagement¯communication€ ˆ„”• and and adopted it in a variety o­ innovative ­or customer engagement€ ˆ‡”Š organiƒation to mirror this — ‚aysŠ Tim Žestergren€ Founder and Chie­ and uickly.” trategy ƒ­ficer o­ the music service ¦igital leaders appear to have accurately £andora€ eplains’ “The smartphone ‚as the anticipated the rapid transition to mobile artyn €hiter biggest surprise ­or usŠ ƒnce the smartphone enabled content and are prepared to respond Media & Entertainment came out€ people began plugging it into rapidly ˜see Figure ˆ…šŠ For eample€ ¥“” Lead ƒnalyst thingsŠ o the home stereo system became have secondgeneration or later deployments EY a £andora device€ and your car became a ­or product and service development€ ¥¥” £andora device€ etcŠ That triggered a domino ­or marŒeting€ ‰ž” ­or revenue optimiœation e­­ect across consumer electronics€ and our and ‰…” ­or customer engagementŠ engineering e­­ort completely re­ocused on onetheless€ this indicates a real gap the device distributionŠ” bet‚een the demands o­ the M&E agility vision and ‚here the ma«ority o­ Figure “ illuminates ‚here M&E companies M&E companies stand in terms o­ deploying lie on the adoption curve ­or smart mobile needed mobile technology to achieve that technologyŠ Že find it surprising that the visionŠ A­ter all€ smart mobility enables an vast ma«ority in every M&E segment are entirely ne‚ plat­orm o­ M&E possibilities still studying and piloting or «ust beginning that are locationbased€ contet a‚are and their firstgeneration deployments o­ mobile physically a‚are€ and that can monitor technology ­or product distributionŠ ƒnly ˆ¥” customer behavior and allo‚ them to have gone beyond these stages to second provide instantaneous ­eedbacŒŠ This ‚ill generation deploymentsŠ Že asŒed this same be eplored ­urther in ­uture reports o­ uestion ­or numerous ­unctions€ but the this seriesŠ Figure 1“: Žespondents employing secondgeneration or later mobile solutions to help achiee the folloing business goals †¢ž Product/service 49% Product/service 49% development 16% development 16% o­ digital leaders Marketing 44% Marketing 18% 43% 18% say they are using Revenue optimization 38% Revenue optimization 14% 38% secondgeneration 14% Employee engagement/ 32% Employee engagement/ 13% 32% communication 13% mobile technology communication Customer engagement 30% Customer engagement 10% 30% to develop products 10% Distribution 26% and servicesŠ Distribution 13% 26% 13% Digital leaders Followers Digital leaders All others §

ig data anaytic and ma«or opportunities eist ­or companies ›ig data analytics technology has been to employ more sophisticated analytics to adopted even less by M&E companies than boost revenuesŠ Considering all respondents€ smart mobile€ ‚hich maŒes sense because Figure ˆˆ sho‚s the same pattern seen in its importance ‚as amplified a­ter smart Figure “ on page ˆ‡€ ‚ith an average o­ mobile devices achieved critical massŠ o «ust ˆ“” having gone beyond the first ‚hile digital leaders are three times more generation stageŠ liŒely than other respondents to use second generation big data analytics techniues Yet it is clear that big data analytics o­­ers to improve customer engagement ˜‡™” media companies enormous opportunity to versus “”š€ there is enormous potential ­or segment their customers€ understand their all companies to do moreŠ ƒnly onethird pre­erences and buying habits and develop o­ digital leaders use secondgeneration relationships that deepen over time and techniues to improve their marŒeting€ across multiple plat­ormsŠ Figure 11: “n hat stage of deelopment is your company in deploying big data to help achiee your reenue generating business goals… ¤ƒll respondents¥ ­nly §¢ž 60 o­ all respondents 50 43% have deployed second generation big data s 40 30% analytics solutions in 30 spondent re 19% generating revenueŠ of % 20 8% 10 0 Not deploying Studying/piloting Beginning deployment/ Second-generation first generation deployment or later Advertising and measurement Publishing and information services Social networking/social media Filmed entertainment Interactive gaming Enabling technology Broadcast and cable networks Music Average of all respondents §†

‘ocia netˆorking Further€ slightly more than „…” o­ all Figure ˆ‡ repeats the pattern ‚e’ve seen€ respondents are at least using social ¦igital leaders are this time ­or social net‚orŒing€ ‚here net‚orŒs ­or product and service on average «ust ˆ„” o­ respondents are development and distribution€ or are more than t‚ice as beyond the firstgeneration stage ­or actively monitoring sentiment in social liŒely as others customer engagementŠ Že epect this net‚orŒsŠ ›ut «ust ¥„” say it is “very” to change rapidly€ ho‚ever€ as digital or “etremely” important to use social leaders are more than t‚ice as liŒely as all net‚orŒing techniues ­or internal others ˜‡“” versus ˆ‰”š to use second communication€ even though the Œind o­ ¤¢ž generation social media to boost customer rapid collaboration that occurs in social engagementŠ A­ter all€ storytelling ˜M&E’s net‚orŒs is a characteristic o­ an agile coreš and collaborating to create uniue organiœation€ ‚here silos are broŒen do‚n ersus content ˜a Œey element o­ M&E’s ­utureš by the ready flo‚ o­ in­ormation and are inherently “socialŠ” collaborationŠ ‘ere again€ digital leaders are€ ‚ell€ leading’ ™¨” consider the use o­ social § ž¥ net‚orŒing ­or internal communication and ¨…” say the same about actively monitoring to use second eternal social net‚orŒsŠ generation social media to boost customer engagementŠ Figure 12: “n hat stage of deelopment is your company in deploying social netor‚ing to achiee your customer engagement business goals… ¤ƒll respondents¥ 60 50 44% 37% s 40 spondent30 re of 15% % 20 10 4% 0 Not deploying Studying/piloting Beginning deployment/ Second-generation first generation deployment or later Advertising and measurement Publishing and information services Social networking/social media Filmed entertainment Interactive gaming Enabling technology Broadcast and cable networks Music Average of all respondents §š

ƒoud coŠputing computing implementation across M&E Figure ˆ‰ sho‚s the no‚­amiliar pattern companiesŠ ¦igital leaders€ though€ are o­ lo‚ adoption beyond the firstgeneration ahead o­ the curve’ ¨¥” say it’s important œ†ž stage ­or cloud computing’ less than one to host business tools in the cloud€ in five companies are deploying advanced compared ‚ith ¥“” o­ all othersŠ o­ digital leaders cloud computing ­or revenue optimiœationŠ This is the case even though cloud Žhile M&E companies clearly understand say it’s important to services support the Œind o­ in­rastructure the role o­ technology in their vision to fleibility M&E companies reuire to be become agile organiœations€ continuously host business tools constantly iterating products and services€ iterating ne‚ products and services to in the cloudŠ and upgrading so­t‚are and servicesŠ match the rapid evolution o­ customer Yet€ despite the significant opportunities behavior€ they have some distance to go to cloud computing o­­ers to support mobile ­ully incorporate itŠ £roperly deployed€ M&E strategies€ trans­orm content distribution companies’ integration o­ big data analytics€ channels and maŒe internal in­rastructure social and mobile technologies€ enabled more scalable€ adoption remains slo‚Š by cloud computing€ ‚ill allo‚ them to develop a virtuous cycle o­ contact€ content€ ‹eluctance to hand over control to a third personaliœation and rapid iteration that party ˜¥…”š€ lacŒ o­ an understanding o­ gro‚s the business and increases the value the cloud’s benefits ˜‰¨”š and a lacŒ o­ o­ the relationship ‚ith customers€ all in internal cloud sŒills ˜‰™”š ‚ere the “real timeŠ” topcited inhibitors to ‚idespread cloud Figure 13: “n hat stage of deelopment is your company in deploying cloud computing to achiee your reenue optimiation business goals… ¤ƒll respondents¥ 70 48% 60 50 s 40 re spondent 30 24% of % 19% 20 9% 10 0 Not deplo ying Studying/ piloting Beginning deplo ymen t/ Second-gener ation first gener ation deplo yment or lat er Ad vertising and measur emen t Publishing and in formation servic es Social networking/ social media Filmed en tertainmen t In teractiv e gaming Enabling t echnology Br oadc ast and cable ne twork s Av Music erage of all respondents §›

­pportunities for technology companies ­pportunities for M&E companies As M&E companies adapt to a digital ‚orld€ they must Enabling technologies have created an opportunity ­or appreciate ho‚ mobilesocialcloud and big data analytics M&E companies to rethinŒ ho‚ they ingest in­ormation€ technologies impact and shape their products and share it around their organiœation and translate it into services€ organiœational structure and longterm goalsŠ products and services and distributionŠ ›ut technology ›ut M&E companies are generally reluctant to partner alone is not enough• a clear organiœational vision is ‚ith technology companies€ pre­erring to develop reuired to use it e­­ectivelyŠ internal solutionsŠ ¡uestions to consider€ ¡uestions to consider€ • In ‚hat ‚ays ‚ill your organiœational model evolve • In ‚hat ‚ays can your company help M&E companies over the net ‡–‰ years® ‘ave you outlined the role develop a technology road map to implement their technology ‚ill play in realiœing your vision® digital vision® • ‘ave you prioritiœed areas ­or technology investment • ‘o‚ can your products and services help accelerate over the net ‡–‰ years® M&E product development and time to marŒet® • As content consumption volumes increase and • In ‚hat ‚ays can you help M&E companies turn consumer choices proli­erate€ to ‚hat etent have you in­ormation into insight to enable them to better react challenged your business to use technology to absorb to changing customer demand and real time epectations® in­ormation€ generate insights and act on them® • Can you communicate the business benefits o­ mobile socialcloud and big data analytics to M&E customers® • ‘o‚ many ‚ays can your technology be used to help reanimate M&E clients’ eisting products and services — or create ne‚ products altogether® §œ

Creating agility and enabling a culture ›†ž o­ innovation o­ digital leaders As their businesses undergo digital trans­ormation€ the top priority cite “creating ­or ™¥” o­ digital leaders is “creating a culture o­ innovation ˜‚ith a culture o­ collaboration tools€ innovation labs€ etcŠšŠ” It also ‚as chosen by „¥” innovation” as o­ all other respondents ˜see Figure ˆ¥šŠ a top strategic priority ­or digital trans­ormationŠ M&E companies recogniœe that to achieve For eample€ borro‚ing the phrase “loosely the culture o­ innovation they desire€ they coupled” ­rom so­t‚are architecture€ etfli must structure their organiœations ­or labels its o‚n organiœational approach agilityŠ M&E companies’ vision o­ meeting “highly aligned€ loosely coupledŠ” That highvelocity€ continuous change ‚ith a means strategy and goals are clear€ and steady stream o­ innovative product€ management ‚orŒs hard to ensure they service€ distribution€ marŒeting and are ‚ell articulated and broadly understoodŠ business model ideas can only be achieved ›ut tactics are eecuted ‚ith minimal through organiœational agilityŠ ƒur research cross­unctional discussion or approvals€ indicates that M&E companies epect to use replaced by trust among groups€ and technology to enable agility and a culture leaders ‚ho reach out proactively ­or ad o­ innovationŠ Their goal is to breaŒ do‚n hoc coordination as appropriateŠ‰ This organiœational silos so the business can attracts topflight talent and a­­ords ‚orŒ synergistically — and rapidly — to significant po‚er to solve problems deliver products and services that are highly ‚ithout etensive chains o­ command integrated and meet customer epectationsŠ that slo‚ decisionmaŒingŠ Figure 14: „hat are your strategic priorities as you digitally transform your organiation… (Select top three) Creating a culture of innovation 64% 54% Listening to customers and 57% analyzing customer interactions 48% Building alliances with media, 51% entertainment and technology partners 30% Acquiring digital skills through 33% hiring, training or acquisitions 44% Undertaking competitive analysis 28% to understand the digital activities of other companies 29% Making venture capital investments in 25% digital companies and/or technologies 29% None, we are not undergoing 4% digital transformation 4% Digital leaders All others §Ÿ

Ž„ coŠpanie e”pore di‹‹erent • Asia£acific companies ‚eighed heavily tructura approache to‚ard the central visionary¯team As companies trans­orm their organiœational approach ˜¥ˆ”š€ EMEA companies structures ­or agility and digital innovation€ chose it but less than the average ˜‰…”š they are trying out di­­erent approaches and Americas companies rated individual depending on the needs o­ their specific leaders in central roles on top ˜‰ˆ”šŠ segment or even their o‚n uniue cultureŠ Že ­ound no onesiœefitsall approach but o’ie•ocia•coud technoogie een a rather di­­erent distributions depending on critica to coa’oration and acceerated segment€ company siœe and region deciion•Šaking ˜see Figure ˆ„šŠ Among all respondents€ „™” say it is “very” or “etremely” important to “use cloud • ƒverall€ the largest plurality ˜‰‡”š computing ­or collaboration to enable sta­­ ­avored driving digital trans­ormation to ‚orŒ together ‚ith eternal partners on using a central visionary¯team or digital the same products and servicesŠ” Among center o­ ecellenceŠ digital leaders€ it ‚as chosen as “very” or • ‡ž” ­avored individual leaders in central “etremely” important by ¨ˆ” ˜see Figure Among digital leaders€ roles€ ‚hich ‚as the top choice ­or the ˆ™€ page ‡…šŠ Fi­tyt‚o percent o­ all advertising€ broadcasting and technology respondents say it is important to use segments€ and tied ­or top among cloud technology to enable geographically œ§ž publishing respondents ˜‚ith the dispersed sta­­ to collaborate€ as do ™ž” central visionary¯team approachšŠ o­ the digital leadersŠ T‚othirds o­ digital • ‰¥” o­ smaller companies ˜©‡„m–©¥““mš leaders ˜™¨”š say using social net‚orŒing say it is “very” or chose individual leaders in central rolesŠ techniues ­or internal communication “etremely” important • ¥ˆ” o­ companies ­rom ©„……m©“““m among employees is “very” or “etremely” chose central visionary¯team or digital important€ compared ‚ith ¥‡” o­ all othersŠ to use cloud computing center o­ ecellenceŠ And some ‰‡” o­ leaders use second to collaborate ‚ith • Žhile larger companies ˜above ©ˆbš also generation or later techniues in mobility rated the central visionary¯team approach to enhance employee engagement and eternal partnersŠ on top€ their ratings ‚ere distributed communication€ versus only ˆ‰” o­ all among all the choices seen in Figure ˆ„Š othersŠ Figure 1‚: „hich best describes ho your company dries digital transformation ¤mobilesocialcloud and big data¥ throughout the organiation… One central visionary/ 27% team or digital center of 33% 25% 41% excellence is responsible 32% 30% 27% for all digital strategies 41% 29% Individual leaders in 34% central roles oversee 22% 31% 27% digital technologies 29% 29% 24% across the organization 24% 19% Each line of business (LOB) is responsible for 18% 19% its own strategy 20% 18% 15% development around 18% 18% 20% digital technologies 19% Cross-functional teams 13% 14% work across the 17% 11% enterprise in an integral 16% 8% 11% fashion, coordinating 12% 17% individual LOB activity 3% Individual teams execute 9% 4% digital strategy within 4% 4% 13% each functional area 7% 5% 8% All respondents All respondents $25m–$499m Corporate marketing 5% Americas 3% $500m–$999m directs, manages and 4% Digital leaders 2% EMEA 2% controls our digital 3% 5% $1b–$5b strategy All others 3% Asia-Pacific 8% >$5b §¢

uch collaborative mobilesocialcloud interaction as part o­ product development€ “There’s a lot of discussion technologies help create an inclusive€ fleible including ™ž” o­ digital leadersŠ This time€ among M&E eecuties about environment and allo‚ ideas to flo‚ across the gaming segment’s emphasis ˜™™”š ‚as disruptie technology but the organiœationŠ They help eecutive leaders second to that o­ social media companies ultimately they must realiƒe the ‚iden lines o­ communication and maŒe themselves ˜¨…”š and advertising’s€ again€ them more transparent€ thus flattening ‚as lo‚est€ at ¥‡”Š alue of technology is the role it organiœational hierarchies and accelerating plays in helping them to better decisionmaŒingŠ For these reasons€ it is liŒely ›eing open to ­eedbacŒ ­rom social sere their customers.” that more companies ‚ill embrace these net‚orŒing channels helps M&E companies sorts o­ rapid€ conversational approaches gro‚ closer to their customers€ ‚hich can Farokh aara to deeper€ highervalue communication as help them collapse the cycle time bet‚een EME“ƒ Media & Entertainment Leader they seeŒ to create “senseandrespond” products and services€ or allo‚ them to EY organiœations that can deliver continuous change on the fly ‚hen they realiœe a product innovationŠ o­­ering needs to be revised or re­reshedŠ ƒ­ course€ it is the technologyinduced€ Žhile marrying big data analytics to the rapid evolution o­ customer behavior to large volume o­ data generated by social ‚hich increasingly agile M&E organiœations net‚orŒs seems a clear opportunity to gain must respondŠ ƒur research sho‚s that social customer insight that leads to competitive net‚orŒing technology has an important advantage€ M&E companies appear behind role to play on the “sense” side o­ the sense in this regardŠ ƒnly ˆ„” o­ respondents andrespond modelŠ For eample€ „‡” o­ all have gone beyond firstgeneration use respondents say it is “very” or “etremely” o­ big data analytics ­or product and service important to actively monitor social net‚orŒs developmentŠ ‘o‚ever€ that includes to understand customer sentiment€ including ¥ˆ” o­ the digital leadersŠ This suggests ¨…” o­ digital leadersŠ Across the segments€ increasing ­uture adoption o­ big data gaming ˜™ˆ”š emphasiœed it the most analytics by M&E companies to help provide and advertising ˜‰ž”š the leastŠ Fi­ty the insights they need to drive innovation ­our percent say they use social net‚orŒ ‚ith more certainty€ and less risŒŠ Figure 16: Digital leaders leerage technology to support an innoatie culture Use second-generation cloud 43% ...use second-generation cloud 43% solutions to speed products/ solutions to speed product/ 12% services development 12% services development Use second-generation 49% ...use second-generation 49% mobile technologies to mobile technologies to 16% develop products/services 16% develop product/services Say it is important to ...use cloud computing use cloud computing 71% for collaboration to enable for collaboration to enable 71% staff to work together with staff to work together with 53% external partners on the 53% external partners on the same products and services same products/services Digital leaders All others Digital leaders All others ¨

Case studies’ developing agile organiœations Foursuare’s startup culture etfli’s fleible approach poti­y’s suads and tribes More than ‰„ million people use etfli€ the video streaming service€ says “ThinŒ it€ build it€ ship it€ t‚eaŒ itŠ” That Foursuare ‚orld‚ide€ the mobile location its goal is to be “big€ ­ast and fleibleŠ” mantra€ together ‚ith its agility­ocused sharinganddiscovery application€ to learn Indeed€ in the first uarter o­ ‡…ˆ‰€ organiœational structure€ has helped build about areas they are visiting€ “checŒ in” its vie‚ership eceeded that o­ many musicstreaming service poti­y to more ‚ith ­riends or find deals ­rom merchants or conventional cable T¬ channels ‚hen than ™ million subscribers in ‡… countriesŠ restaurants in their vicinityŠ Its CEƒ€ ¦ennis subscribers streamed some ¥ billion hours ¥ Cro‚ley€ believes the company is per­ectly o­ content€ a remarŒable turnaround ­rom poti­y rapidly releases so­t‚are solutions positioned to become the locationdata a very public ‡…ˆˆ misstep ‚hen it uicŒly it improves iteratively therea­terŠ Its ­ocus plat­orm o­ choice ­or the internetŠ lost ž……€……… customers a­ter a poorly on rapidfire development influences not communicated attempt to separate video only ho‚ it designs and releases products€ The mobile ‚orld changes rapidly€ streaming ­rom ¦¬¦ rental servicesŠ but also ho‚ it organiœes its ‚orŒ­orceŠ The ho‚ever€ and Cro‚ley is determined to basic ‚orŒ unit at poti­y is the “suad” — Œeep Foursuare’s startup ­eel€ even as the Most small companies inevitably become a sel­organiœing team ‚hose members head count has gro‚n ­rom «ust a hand­ul o­ bureaucratic and hierarchical as they gro‚ have autonomy to design€ develop€ test employees to more than ˆ™…Š ‘is eecutive largerŠ etfli€ by contrast€ aspires to gro‚ and release productsŠ Members o­ a suad management committee consists o­ «ust ­ast ‚ithout becoming comple or chaotic€ sit in the same o­fice€ and «ointly decide ho‚ five peopleŠ according to company eecutivesŠ In ­act€ they ‚ill ­ulfill their specific missionŠ A the company’s recruitment materials note suad doesn’t have a ­ormally appointed “A lot o­ the ‚orŒ ‚e do is consensus that it doesn’t ‚ant to hire “«erŒs” but high leaderŠ It does have a product o‚ner ‚ho driven€” he eplainsŠ “Že’ll taŒe the ˆ… per­orming individuals ‚ho don’t “‚ait to be is responsible ­or prioritiœing the ‚orŒ — smartest people on mobile and asŒ€ ‘ hould told ‚hat to do€” and ‚ill also “picŒ up the but not ho‚ the ‚orŒ is doneŠ ‚e do this or not®’” I­ a Œey decision trash lying on the floorŠ” reuires a tiebreaŒer€ then an inperson To help identi­y impediments and improve meeting taŒes placeŠ “There is no CTƒ that Instead o­ creating lots o­ rules and their development methods€ suads also is maŒing the call€” Cro‚ley saysŠ “A lot hierarchy€ it believes in trusting its people meet regularly ‚ith an “agility coachŠ” o­ times these guys ‚ill duŒe it out€ and i­ to maŒe their o‚n decisionsŠ “Že have “Autonomy is one o­ our guiding principles€” the argument goes on longer than a couple a very nonhierarchical approach that eplains ‘enriŒ ²niberg€ an agility coach at o­ days€ then I’ll step in and maŒe the stresses ­reedom and responsibility€” poti­yŠ “Že aim ­or independent suads decisionŠ” eplains °onathan Friedland€ Chie­ that can build and release products on Communications ƒ­ficer and a member o­ their o‚n ‚ithout having to be tightly ‘is company€ he says€ doesn’t have time ­or the etfli eecutive committeeŠ Eecutives coordinatedŠ” ³uarterly audits o­ its teams ­ormal committee meetingsŠ “Everyone is spend a lot o­ time “maŒing sure everybody identi­y ‚hich suads are ‚orŒing ‚ell€ and ‚eighing in on these critical decisions all the has the right contet to ­orge ahead ‚ith ‚hich might reuire additional supportŠ time€” he says€ “because ‚e’re maŒing ‡„ ‚hat they’re doing” by laying out specific o­ them every single dayŠ” strategic goals and timetables€ but ‚ithout To coordinate ‚ithin the company€ suads micromanaging or asserting controlŠ In are aligned into “tribes” that meet to share ‘e also believes small€ innovative essence€ the company tells its sta­­ that in­ormation and identi­y development companies liŒe his need to rely on their over the long run€ fleibility is ŒeyŠ roadblocŒsŠ The number o­ ‚orŒers o‚n “gut instincts” in order to maintain belonging to a tribe is held at about ˆ……Š their momentumŠ ›uilding a technology Žhat does that mean in practice® There In addition€ poti­y organiœes its employees in­rastructure is the “easy part€ and are no limits on vacation or sicŒ days at into “guilds” and “chapters” to support assembling the user base and getting etfliŠ o one tells ‚orŒers ‚hen to come crosstribe Œno‚ledge sharingŠ something that people are passionate and go€ or clocŒs ‚hen they doŠ ›ut doing about and really ­eel strongly about€ ›level ‚orŒ ‚ill liŒely earn you a severance uads are told to release products “early that’s the part that is really di­ficultŠ” pacŒageŠ ˜Indeed the annual attrition is and o­tenŠ” ‹ather than distribute “per­ect” a chilling ‡…”Šš Alevel ‚orŒ results in more upgrades or ne‚ services€ poti­y ­ocuses The shared goal is to maŒe each individual money and responsibilityŠ instead on achieving simple results that customer eperience a uniue and personal can be subseuently per­ectedŠ Leaders one and to maintain a strong bond ‚ith The company calls this strategy “‘ighly establish a “minimum viable product” ­or each customerŠ Aligned€ Loosely CoupledŠ Each o­ us is each product or upgrade being released responsible ­or our o‚n particular areas€” then gather customer ­eedbacŒ to Friedland eplainedŠ “I­ ‚e do a good «ob iteratively improve itŠ ›y testing€ t‚eaŒing on it€ ‚e Œeep our «obsŠ I­ ‚e don’t€ ‚e and releasing constant upgrades€ poti­y get firedŠ” epects to remain agile and continuously „ improve the customer eperienceŠ §

­pportunities for technology companies ­pportunities for M&E companies As M&E companies drive to create a culture o­ Creating an innovative culture reuires balancing core innovation€ they must embrace collaborative decisionmaŒing ‚ith empo‚erment o­ individuals€ teams technologies€ accelerate internal decisionmaŒing and communities ‚ithin an organiœationŠ It necessitates and speed deployment o­ digital contentŠ a move a‚ay ­rom traditional silos to communities o­ interest based around specific products and services ¡uestions to consider€ or customer groups that come together to achieve • Is your company positioned as an industry innovator® shared goalsŠ • ‘o‚ can your solutions o­­er M&E companies the speed and fleibility they ‚ill demand to rapidly innovate their ¡uestions to consider€ organiœations® • Žho creates your digital vision€ ‚ho “o‚ns” it and ho‚ • In ‚hat ‚ays does your company support the is it shared around the company® To ‚hat etent does numerous approaches to digital innovation ­ound it balance centraliœed decisionmaŒing ‚ith unit or across the M&E sector® teambased entrepreneurialism® • ‘o‚ do your o­­erings help M&E companies to ensure • ‘o‚ e­­ectively does your company utiliœe technology their internal processes are adaptive® to collaborate® Is technology in place to enable easy in­ormation sharing and rapid convening o­ groups€ particularly across team and silo boundaries® • ‘o‚ do you attempt to ­uture proo­ your digital strategy and investments in technology so that they can evolve and adapt as your company responds to the customer and marŒet® 

Competing ­or people and sŒills in a ­astchanging environment Žhen it comes to the people and sŒills challenge ­acing M&E companies€ our survey data is clear’ there’s a siœable gap bet‚een the level o­ “ ‰igital leaders are fully eploiting technology sŒills companies reuire and those they possessŠ ›ut this is the fleibility€ speed and cost not big ne‚sŠ A­ter all€ ¥‰” o­ all survey respondents ranŒed “acuiring benefits of cloud computing to digital sŒills” as a top strategic priority• the only strategies that surpassed create real agility adantages it ‚ere “creating a culture o­ innovation” and “listening to customersŠ” for their M&E companies.” e” ender ‘o‚ever€ ‚idespread recognition o­ this ƒ­ note€ the competition ­or talent is liŒely „est Žegion Technology “ndustry Leader challenge does not diminish itŠ Že believe to ‚orsen in the short term€ as more EY many M&E business opportunities ‚ill be companies vie ­or the same people and ‚on or lost based on companies’ ability to the lines bet‚een M&E and technology hire the right talent and — «ust as critically — companies continue to blurŠ At £andora€ to put it to ‚orŒ in the right environmentŠ Founder and C ƒ Žestergren agrees that † ž In both cases€ the Œey‚ord ­or M&E recruiting ne‚ talent ­or Œey technical «obs companies is changeŠ They must realign “is one o­ the biggest challenges right no‚€” o­ all respondents cite the sŒills profiles o­ their people€ they must especially as his company€ headuartered reimagine their organiœational structure near ilicon ¬alley€ must regularly “acuiring digital sŒills” and culture ˜as discussed in the section on compete ­or talent ‚ith highprofile as a top strategic culture o­ innovation€ page ˆžš and they technology companies and the plethora must rethinŒ their hiring and retention o­ startups continuously emerging thereŠ priority ­or digital strategies to ad«ust ­or more intensive Companies must ‚eigh the advantages and trans­ormationŠ competitionŠ disadvantages that come ­rom locating near a talent hub such as ilicon ¬alleyŠ Figure 1Œ: ©ercent of each industry segment e‡pressing “lac‚ of s‚ills” as a ‚ey obstacle to “buildªmaintain” cloud computing systemsˆ¦ ¤ƒll respondents¥ Advertising and 42% measurement Filmed entertainment 42% Music 42% Interactive gaming 39% Social networking/ 37% social media Enabling technology 34% Broadcast and 25% cable networks Publishing and 25% information services ¡£ercentages sho‚n are o­ all respondents in each industry segment ‚ho chose “LacŒ o­ sŒills to build¯maintain cloudcomputing systems” as their first€ second or third top obstacleŠ 

Eacerbating the issue€ certain technology o­ responses is that the sta­­ o­ many M&E companies are driving technologyenabled companies simply don’t Œno‚ ho‚ to distill trans­ormationŠ everal technology insight ­rom the data they’re gettingŠ ›†ž companies€ ­or eample€ are developing original content o­ their o‚n or ­ostering imilarly€ some ‰™” o­ all respondents o­ all respondents content development ­rom third parties€ say they lacŒ the sŒills to build or maintain putting them into competition ­or creative€ cloudbased computing systemsŠ As rely on inhouse sŒills as ‚ell as technical€ talentŠ Figure ˆ¨ ˜see page ‡‰š sho‚s€ this percentage is even higher ­or advertising€ to analyœe dataŠ ƒverall€ M&E eecutives must identi­y sŒill music€ film and gaming companies€ ‚hose deficits and determine ho‚ best to move digital trans­ormations o­ten reuire cloud resources into the right areas in a ‚ay that technology to improve agility and respond is timely and e­ficientŠ Among the gaps more rapidly to changes in customer yet€ †§ž indicated by all survey respondents is one behaviorŠ in big data analyticsŠ For eample€ ™¥” say they rely on inhouse sŒills to analyœe Clearly understanding the opportunities o­ all respondents data but a surprisingly high ¥ˆ” also say specific technologies o­­er and ho‚ they have yet to gain they have not yet obtained insight ­rom can be used most e­­ectively is imperative the analysis o­ customer dataŠ For music as M&E companies generate a road map ­or customer insight companies€ the figure rises to „‰” ˜see determining ‚hich sŒills need to be brought ­rom their data Figure ˆžšŠ Among the many possible into the organiœation and in ‚hat priorityŠ conclusions to dra‚ ­rom this «utaposition analysisŠ Figure 18: ©ercent of each industry segment stating they are not yet obtaining insight from the analysis of customer dataˆ¦ ¤ƒll respondents¥ Music 53% Social networking/ 43% social media Interactive gaming 42% Advertising and 41% measurement Filmed entertainment 41% Broadcast and 38% cable networks Enabling technology 35% Publishing and 35% information services ¡£ercentages sho‚n are o­ all respondents in each industry segment ‚ho chose “agree” or “strongly agree” ‚hen asŒed to rate their agreement ‚ith this statement on a ˆ–„ scaleŠ †

­pportunities for technology companies ­pportunities for M&E companies M&E companies need to acuire ne‚ technology sŒills as Many o­ the creative sŒills reuired in M&E remain ‚ell as “ne‚ media” sŒillsŠ Technology companies o­ten unchanged — but the impact o­ technology cannot be ­ocus on developing the most advanced and sophisticated underestimatedŠ Technologyenabled innovation has tools to solve emerging issues but may not match the changed the M&E business system€ ­rom understanding the solutions they’re o­­ering to the sŒills and capabilities o­ customer to creating€ curating and distributing contentŠ their M&E clientsŠ ›y necessity€ the sŒills profile ‚ithin M&E companies is evolvingŠ ¡uestions to consider€ • ¦oes your company have the right balance o­ technical ¡uestions to consider€ sŒill and industry understanding to e­­ectively implement • ‘o‚ do you balance the creative needs o­ your M&E or integrate digital technologies ­or M&E clients® company ‚ith the technical sŒills reuired to master • In ‚hat ‚ays can your company help identi­y technical ne‚ technologies® ‘o‚ do you identi­y sŒills gaps and sŒills gaps ­or M&E clients and o­­er the right level o­ then build capabilities or evolve the sŒills profile® complementary epertise® • An increasing proportion o­ your ‚orŒ­orce ˜«ust liŒe • ¦oes your company understand the sŒills obstacles M&E your customersš is tech savvy — ‚ell versed in social€ companies must address to taŒe advantage o­ the latest mobile€ search and other technologiesŠ ‘o‚ does your technologies and tools® Žhat roles can you play to organiœation and its technology strategy cater to and mitigate these and bridge the gaps® taŒe advantage o­ this gro‚ing resource® • ¦oes your company o­­er M&E companies enough guidance and training so they can achieve the best per­ormance ­rom the tools and systems delivered to them® š

Enabling technology tools ­or “ †gile M&E companies are agile organiœations using mobile-social-cloud and big data analytics technologies to sere As companies rapidly rethinŒ their organiœational structure to become customers in new ways more agile€ they must also reimagine their company’s underlying and to pull away from technology in­rastructure to support greater speed and fleibilityŠ competitors that respond slowly.” aid Nicho M&E companies are concerned ‚ith three “Žhy€ a­ter ‚e ‚ent through the ‘ impsons€’ ƒmericas “T types o­ technology in­rastructure’ ­ront did ‚e go through the same problems ‚ith Transformation ©ractice Leader o­fice€ bacŒ end and bacŒ o­ficeŠ Fronto­fice ‘ imCity®’” asŒs EA’s icŒ Earl€ rhetoricallyŠ EY systems support the ­ull range o­ interactive The problems€ he says€ reflected specific customer touch points and ‚ill be eplored but distinct in­rastructure issues around in a ­uture report in this seriesŠ ›acŒend putting games online ­or either £C or mobile systems enable products and services plat­ormsŠ As a result€ he says€ EA has and include technology such as so­t‚are “changed the state o­ readiness” it demands development tools€ content management o­ its bacŒend servers ‚hen it launches systems and digital rights managementŠ ne‚€ live gamesŠ ›acŒo­fice systems enable company operations and include enterprise resource Foursuare€ mean‚hile€ decided to planning ˜E‹£š€ supply chain management launch its service on a cloudbased bacŒ ˜ CMš and customer relationship end€ as do many startupsŠ The launch management ˜C‹MšŠ Mobilesocialcloud used Amaœon Žeb ervices€ but eventually and big data analytics technologies have the company built its o‚n data centerŠ roles to play ­or both bacŒend and bacŒ “Everyone builds their stu­­ on Amaœon at o­fice systemsŠ the beginning€” says Foursuare’s Cro‚leyŠ “›ecause i­ you need to scale it up really ack•end technoogy yteŠ uicŒly€ you «ust thro‚ some more money As already discussed€ ­or eample€ at them every month and suddenly you have leading M&E companies are using all o­ itŠ” ƒnce the company reaches a certain these technologies to help them rapidly siœe€ ho‚ever€ “it’s cheaper to build out your “sense and respond” to changing audience o‚n data centersŠ” pre­erences and behavior patternsŠ The cloud€ ­or instance€ has become a proven Žhile Cro‚ley may be right in saying solution ­or managing the launch o­ ne‚ that every ne‚ startup uses the cloud ­or content o­­erings — maŒing it easier and bacŒend systems€ our research sho‚s more e­ficient to manage demandŠ that established M&E companies are not universally convincedŠ For eample€ ‡¥” o­ Electronic Arts ˜EAš learned this the survey respondents are still studying and hard ‚ay€ ‚hen its March ‡…ˆ‰ release piloting their use o­ cloud ­or product and o­ the highly anticipated online version service development€ „¥” are in the process o­ “ imCity” resulted in multiple crashed o­ their first deployments and «ust ˆ™” have servers and thousands o­ angry customersŠ gone on to secondgeneration deploymentsŠ EA underestimated the in­rastructure that Further€ „” aren’t considering it ˜see Figure ‚ould be needed to support the game’s ˆ“€ page ‡¨šŠ immediate rush o­ ­ansŠ More embarrassing ‚as that the incident tooŒ place less than a year a­ter the similarly un­ortunate roll out o­ a ­ree mobile game€ “The impson’s’ Tapped ƒut€” ‚hich crashed the company’s servers and caused users’ data and game progress to be erasedŠ ›

‹esponses to the similar uestion about gain insight ­rom the increasing volume€ using big data analytics ­or product and velocity and variety o­ data they no‚ have “ Today’s digital consumer service development are comparable€ but at their fingertipsŠ looks for the content they sŒe‚ed to‚ard even less usage’ ¨” are not want€ when they want it considering it€ ‰‰” are still studying and Certain M&E companies€ ho‚ever€ have built and on whateer deice is piloting€ ¥„” are in the process o­ initial their business model on big data analyticsŠ deployments and only ˆ„” have moved ´ynga€ ‚hich o­­ers ­ree games through most conenient. † digital on to secondgeneration deploymentŠ The its o‚n ‚ebsite and FacebooŒ€ IncŠ’s social organiƒation must not only obstacles respondents cite are basic ones’ net‚orŒ€ studies data on audience behavior respond to such shifts in topping the list ‚as ensuring data accuracy patterns to determine ho‚ to lengthen user behaior and demand€ it and reliability ˜¥…”š€ ­ollo‚ed by delivering playing times€ encourage recommendations the right data to the right people at the to ­riends and increase sales o­ virtual must anticipate them.” right time ˜‰¥”š€ determining ‹ƒI ˜‰ˆ”š goodsŠ As one eecutive told The Œall …treet and lacŒing data analysis sŒills and tools Žournal€ “Že’re an analytics company –ein Price ˜‡™”šŠ This highlights the challenges M&E ™ Global Technology “ndustry masuerading as a games companyŠ” companies are eperiencing as they try to ƒdisory Serices Leader EY Figure 19: “n hat stage of deelopment is your company in deploying cloud computing to achiee your product and serice deelopment business goals… ¤ƒll respondents¥ 70 54% 60 †¨ž 50 s o­ all respondents cite 40 24% data accuracy and spondent re 30 of reliability as the biggest % 16% 20 obstacle to their big 5% 10 data analytics goalsŠ 0 Not deploying Studying/piloting Beginning deployment/ Second-generation first generation deployment or later Advertising and measurement Publishing and information services Social networking/social media Filmed entertainment Interactive gaming Enabling technology Broadcast and cable networks Music Average of all respondents ote’ percentages do not total ˆ…… due to roundingŠ œ

†echnoogy in the ’ack o‹fice imilarly€ „„” say they provide employees Mean‚hile€ bacŒo­fice systems such as access to systems€ applications and E‹£€ CM and C‹M must also become more net‚orŒs over mobile devices€ leaving †¨ž fleible to support agile M&E organiœationsŠ ¥„” that are not yet using mobility as an ƒur survey indicates that M&E companies e­­ective internal toolŠ Gaming and music o­ all respondents currently place a high value on o‚ning and companies are ahead o­ the curve here€ controlling their technology in­rastructure along ‚ith publishing companies ˜see Figure say un‚illingness to — yet they might achieve their goals more ‡ˆ€ page ‡“šŠ rapidly i­ they partnered ‚ith trusted relinuish IT control technology providersŠ In terms o­ social media€ «ust ¥„” o­ is an obstacle to respondents say it is “very” or “etremely” For eample€ „‡” o­ all respondents say it is important to use the technology ­or internal cloud useŠ “very” or “etremely” important that their collaboration and sharing€ leaving „„” business tools and so­t‚are are hosted in that do notŠ aturally€ social net‚orŒing the cloud — leaving ¥ž” that are not companies ˜™¨”š are ahead o­ the curve ˜see Figure ‡…šŠ The top obstacle€ cited by here€ as are gaming companies ˜„‡”š• ¥…” o­ respondents€ ‚as un‚illingness to ‚hile film ˜‰“”š and the advertising relinuish control o­ IT in­rastructureŠ ›ut industry ˜‡ž”š lagŠ Asian companies have ‰¨” also said they don’t even understand proven themselves to be uicŒer adapters€ the benefits cloud technology can o­­er€ ‰™” ho‚ever€ as „ˆ” o­ Asia£acific firms use lacŒ cloud sŒills€ and others are concerned social net‚orŒing€ compared ‚ith ‰¨” ‚ith an inability to customiœe cloud services o­ companies in EMEA and ¥™” in the ˜‡ž”š or figure out ‚hat so­t‚are to host AmericasŠ ocial net‚orŒing may prove in the cloud ˜‡ž”š€ among other concernsŠ to be a particularly valuable internal This suggests that M&E eecutives may technology ­or advancing M&E companies’ ‚ant to ­urther eplore ho‚ maŒing bacŒ organiœational agility€ as it enables o­fice systems accessible through the cloud “communities o­ interest” to ­orm around could help enable greater fleibilityŠ important conversations€ cutting across geographies and corporate silosŠ Figure 2“: „hat are the biggest obstacles to achieing your cloud computing goals…¦ ¤ƒll respondents¥ (Rank the top three) It is “very” or “extremely” important that our organization’s 52% business tools and software are hosted in the cloud But there are several obstacles: Unwillingness to relinquish direct control of our IT infrastructure 40% Lack of understanding of the benefits of cloud computing 37% Lack of skills to build/maintain cloud-computing systems 36% Concerns about resiliency of cloud-based systems (i.e., downtime) 34% Determining ROI of cloud computing efforts 33% Inability to customize the solution to fit our needs 28% Determining what content, software and processes should be enabled in the cloud 28% Concern over information security/privacy issues in the cloud 28% Concern over losing control of our intellectual property 20% Finding ways to monetize cloud computing 11% £ercentages sho‚n ­or cloud hosting represent all respondents ‚ho chose “very” or “etremely” important• percentages sho‚n ­or obstacles represent respondents ‚ho ranŒed each choice first€ second or thirdŠ Ÿ

For every technology ‚e asŒed about€ Figure 21: „e proide access to company netor‚s or information ¤beyond email¥ ia the most pre­erred approach that M&E mobile deices to enhance our employees’ ability to do their «obsˆ¦ ¤ƒll respondents¥ companies use to access the technology ‚as to build it themselvesŠ ‘o‚ever€ Interactive gaming not all such systems provide the Œind o­ 63% di­­erentiating value that merits such a customiœed€ proprietary development Music 61% e­­ort ˜as opposed to a standardiœed Publishing and cloudbased solution€ ­or eamplešŠ information services 58% And€ given the ne‚ness o­ certain technologies and their current state o­ Enabling technology 56% rapid evolution€ M&E companies may create more value by partnering ‚ith Filmed entertainment 55% technology companies to leverage those Social networking/ companies’ Œno‚ledge and sŒillsŠ In ­act€ social media 52% i­ you looŒ bacŒ to Figure ˆ¥ on page Broadcast and ˆž€ you’ll see that’s ‚hat digital leaders cable networks 50% do’ „ˆ” have it as a strategic priority to build alliances ‚ith technology ˜and Advertising and 45% measurement other M&Eš partners€ compared ‚ith ‰…” o­ all othersŠ All respondents ¡£ercentages sho‚n are o­ respondents in each industry segment ‚ho chose “very” or “etremely” important ‚hen asŒed to rate the importance o­ this statement to their organiœation on a ˆ–„ scaleŠ ƒther‚ise€ given the sŒills issue previously discussed€ M&E companies could find themselves building secondrate solutions• or€ as business Figure 22: „hat is your company’s preferred approach for gaining access to the reuirements evolve rapidly€ companies folloing digital technologies…¦ ¤ƒll respondents¥ may be stucŒ ‚ith proprietary legacy (Select one approach or each technology) systems that cannot meet today’s needsŠ Although actual needs ‚ill vary significantly by segment and place in 31% Build/grow within the 31% 34% Build/grow within the 34% 40% the value chain€ in general€ reducing organization 40% resistance to technology alliances may organization 41% 41% ‚ell be a necessary step many M&E 27% companies must taŒe in order to become Buy/acquire 27% 33% Buy/acquire 21% 33% agile organiœations ˜see Figure ‡‡šŠ 21% 24% 24% 26% Lease/pay for use 18% 26% Lease/pay for use 18% 23% 13% 23% 13% 16% 16% Partnerships/alliances 14% 14% Partnerships/alliances 16% 16% 23% 23% Social networking Mobile technology Cloud computing Big data Social networking Mobile technology Cloud computing Big data ¡£ercentages sho‚n are ­or all respondents• total ­or each technology may not sum to ˆ…… due to roundingŠ ¢

­pportunities for technology companies ­pportunities for M&E companies Žhen it comes to technology in­rastructure€ M&E The maturity and scale o­ M&E companies help shape companies still largely pre­er a “command and control” their technology strategyŠ Žhen to invest and ‚ho to philosophyŠ ›ut our data suggests most M&E companies partner ‚ith are critical uestionsŠ don’t have the sŒills necessary to manage all o­ the technology reuired to enable their agilityŠ ¡uestions to consider€ • Is o‚nership the right option® Žhat ­actors are ¡uestions to consider€ influencing your decision to o‚n versus outsource€ and • In ‚hat ‚ays can your company help M&E companies ho‚ do you thinŒ about this at di­­erent stages in your integrate customer­acing applications ‚ith bacŒend company’s evolution and ­or di­­erent parts o­ your systems to increase organiœational agility® company’s technology in­rastructure® • ‘o‚ can you help M&E companies develop and eecute • Is there an e­­ective balance among the investments a comprehensive big data analytics strategy® being made in technology ­or the ­ront o­fice€ bacŒ • Is your company able to communicate the business o­fice and the bacŒ end€ and ho‚ do you thinŒ about benefits o­ sourcing M&E companies’ data and bacŒ these di­­erently® o­fice technologies® • To ‚hat etent do you ‚orŒ ‚ith your technology • ‘o‚ can you help M&E clients understand the benefits partners to better understand opportunities and risŒs® o­ partnering — and build the necessary trust® ¦o you ­eel su­ficiently in­ormed about the technology • Žhat are the best ‚ays your technology can help M&E choices available in the marŒet and their impact on your companies improve internal collaboration® business® • To ‚hat etent do you consider ‚here technologybased di­­erentiation can have the highest impact on your business® Žill suggesting standardiœed solutions su­fice€ ‚here little di­­erentiation is possible® ¨

ƒutlooŒ “nsights from our ƒgility “nde‡ ­ur †gility nde ranks the relatie organiƒational I­ ‚e taŒe the long vie‚€ media has al‚ays evolved in partnership agility of different M&E ‚ith the leading edge o­ technologyŠ And their partnership has al‚ays segments as well as enabling changed societyŠ ThinŒ ˆ¥¥… and the printing press• thinŒ about technology and digital leaders. the advent o­ television in the middle o­ the last century and the The aerage score of all subseuent rise o­ popular cultureŠ respondents is indeed to ‘’’. “or eample€ a score Žhat’s ne‚ and pro­ound today is an and systems€ people and processesŠ of ‘‘’ denotes performance etraordinarily ­ast pace o­ change enabled The ­uture belongs to the nimbleŠ Žinning ‘’” aboe aerage• –’ is by t‚o characteristics o­ modern broadband M&E companies ‚ill be those that best ‘’” below aerage. net‚orŒs’ they connect us all at the speed leverage audience analytics across channels€ o­ light ˜no matter ‚here ‚e goš and anticipate emerging trends€ identi­y they are interactiveŠ The ­ormer leads to synergies across lines o­ business and uicŒly the “anytime€ any‚here” reuirement ­or deploy the most e­­ective responsesŠ content ubiuity and content curation€ to ensure the right content meets the right To better understand ‚hich companies audiences€ ‚hen and ‚here they ‚ish itŠ and sectors meet that agility test€ ‚e The latter empo‚ers the audiences that reanalyœed our survey data to develop comprise popular culture to talŒ bacŒ to an Agility IndeŠ It’s based on a subset o­ their media providers€ both eplicitly in€ survey uestions that bear on a company’s ­or eample€ social media and implicitly agility€ and is ‚eighted in ­avor o­ ans‚ers through the big data “ehaust” generated that demonstrate agile behaviorsŠ For by all their digital interactionsŠ eample€ ans‚ers such as “creating a culture o­ innovation€” “analyœing customer From these simple initial conditions€ interactions” or “building alliances” ‚ith mobilesocialcloud and big data analytics M&E and technology partners ‚ere heavily technologies are spinning out ne‚ digital ‚eightedŠ “Getting to marŒet ­aster ‚ith M&E possibilities that are changing media ne‚ or evolved products and services ‚as consumers’ habits€ pre­erences and€ ‚eighted” as a Œey gro‚th driverŠ In all€ ‚e ultimately€ demands at a diœœying paceŠ ­actored together ans‚ers to ˆ™ uestionsŠ This report maŒes the case that in order to For clarity€ ‚e indeed the average score o­ anticipate ne‚ directions in this accelerating all respondents to ˆ……Š There­ore€ a score o­ M&E evolution€ and get out in ­ront o­ ˆˆ…€ ­or eample€ denotes per­ormance ˆ…” changing customer behavior€ M&E companies above average• “… is ˆ…” belo‚ average• must become etremely agile organiœations€ and so onŠ enabled by the right technologies€ structure §

€here doe Applying our methodology to the eight As a reminder€ ‚e defined digital leaders industry segments surveyed€ ‚e ­ound that’ by three characteristics’ your coŠpany • Interactive gaming ˜ˆˆ¨š and social • They’re already generating more than core on the net‚orŒing ˜ˆ…“š segments indeed hal­ their revenue ­rom digital products as most agileŠ and servicesŠ giity ™nde”˜ • Advertising and measurement ˜ž‰š and • They’ve integrated customer data across publishing and in­ormation services ˜“¥š at least t‚o channelsŠ ˜see Figure ‡‰š ‚ere least agileŠ • They’ve deployed secondgeneration or later solutions o­ at least t‚o o­ ­our Œey This finding is consistent ‚ith the ma«or technologies ˜smart mobility€ cloud dislocations a­­ecting media industriesŠ computing€ social media or big data re you prepared to Gaming companies€ ­or instance€ have been analyticsš ­or product development ­orced to move rapidly to embrace the or revenue generationŠ ’e a digita eader˜ rising popularity o­ first social€ then mobile games€ ‚hich represent ma«or distribution Given their ˆ‡“ score on the Agility Inde€ • and business models shi­tsŠ it appears that the leaders’ greater Žhat is your agility vision® technology eperience has o­­ered them a • In addition€ ‚e ­ound’ clear vision o­ the digital ­uture this report ‘o‚ do you plan to describes€ in ‚hich a continuous stream o­ implement and continuously • Asia£acific ˜ˆ…“š companies indeed innovative ne‚ products and services re­resh that vision higher than those in orth America ˜“¨š is necessary to meet ­astchanging throughout your organiœation® or EMEA ˜“¥šŠ customer behaviorŠ • Midsiœe companies ˜©„……m–©“““mš • ‘o‚ prepared are you to indeed higher€ at ˆ…“€ than small ˜“‰š They also appear to have seen€ and acted identi­y and compete ­or the or big ˜““š companiesŠ on€ the reuirement ­or organiœational people and sŒill sets you • And digital leaders indeed highest o­ all’ agility to overcome the challenges o­ that need to ecel in a digital this ™“company subset scored ˆ‡“€ ­astmoving ­utureŠ compared ‚ith “™ ­or the more than ¥ž… environment® other respondentsŠ And they are more advanced in terms o­ using technologies such as social media • ‘ave you invested in and the cloud to create an internal culture enabling technology tools around collaboration€ and in using enabling that allo‚ you to anticipate technology tools to create fleibility in their and respond to customer and bacŒend and bacŒo­fice in­rastructureŠ marŒet changes uicŒly Figure 23: ƒgility “nde‡ by M&E segments‰ enabling technology and digital leaders and confidently® Digital leaders 129 Interactive gaming 117 The ™“ digital leaders ranŒed Social networking/social media 109 Music 101 ¢ž Enabling technology 101 more agile than the Filmed entertainment 100 study averageŠ Broadcast and cable networks 96 Publishing and information services 94 Advertising and measurement 83 ource’ EY analysis€ ‡…ˆ‰Š 

AcŒno‚ledgments First and ­oremost ‚e ‚ant to thanŒ the media and entertainment and technology eecutives ­rom around the ‚orld ‚ho participated in our survey — thereby providing us ‚ith such a rich data setŠ LiŒe‚ise€ ‚e are grate­ul to the eecutives intervie‚ed€ ­or providing us ‚ith added insights and eamples to bring the story to li­eŠ And finally€ ‚e ‚ant to acŒno‚ledge those ‚ho ‚orŒed diligently to analyœe the survey results and produce this report€ ‚hich ‚as developed ‚ith the support€ Œno‚ledge and insights ­rom sta­­ members ­rom around our firm and ƒ­ord EconomicsŠ Source notes ˆ “etfli subscriber Losses Evidence o­ Lo‚ ƒTT ¥ “etfli hares urge Above ©‡…… on trong Threat€” ›usiness Žire€ ‡™ ƒctober ‡…ˆˆ€ via Factiva€ ubscriber Gro‚th” The Œall …treet Žournal ­nline€ © ‡…ˆˆ ›usiness ŽireŠ ‡‰ April ‡…ˆ‰€ via Factiva€ © ‡…ˆ‰ ¦o‚ °ones ‡ “etfli hares urge Above ©‡…… on trong & Company€ IncŠ ubscriber Gro‚th€” The Œall …treet Žournal ­nline€ „ “ caling Agile at poti­y’ An intervie‚ ‚ith ‘enriŒ ‡‰ April ‡…ˆ‰€ via Factiva€ © ‡…ˆ‰ ¦o‚ °ones & ²niberg€” In­ogŠcomŠ “ April ‡…ˆ‰Š Company€ IncŠ ™ “¬irtual £roducts€ ‹eal £rofits• £layers pend on ‰ “‘astings€ ‹eed• etfli Culture’ Freedom & ´ynga’s Games€ but ³uality Turns ome ƒ­­€” The ‹esponsibility€” posted ˆ August ‡……“€ © ‡…ˆ‰ Œall …treet Žournal ­nline€ “ eptember ‡…ˆˆ€ lide hare IncŠ via Factiva€ © ‡…ˆˆ ¦o‚ °ones & Company€ IncŠ ote’ uotes throughout our report are ­rom eecutive intervie‚s conducted by ƒ­ord EconomicsŠ

Global Technology Center Œey contacts †eephone „Šai Global Technology Center contacts ©at £ye‚‰ Global Technology Industry Leader ˜ an °ose€ § š š1 4“8 94Œ ‚6“8 pat.hyekœey.coŠ Guy „anger‰ ¦eputy & Americas Technology Industry Leader ˜‹ed‚ood hores€ § š š1 6‚“ 8“2 468Œ guy.ˆangerœey.coŠ ”oe Tsang‰ Asia£acific Technology Industry Leader ˜›ei«ing€ Chinaš š86 1“ ‚81‚ 29“2 žoe.tangœcn.ey.coŠ Yuichiro Muna‚ata‰ °apan Technology Industry Leader ˜ToŒyo€ °apanš š81 3 3‚“3 11““ Šunakata•ychrœhinnihon.or.žp Global technology serice line leaders Channing ’lynn‰ Ta ˜ an °ose€ § š š1 4“8 94Œ ‚434 channing.flynnœey.coŠ —ein ©rice‰ Advisory ˜ an Francisco€ § š š1 41‚ 894 8229 kein.priceœey.coŠ ”oe Steger‰ Transaction Advisory ervices ˜ an °ose€ § š š1 4“8 94Œ ‚488 žoeph.tegerœey.coŠ Guy „anger‰ Assurance ˜‹ed‚ood hores€ § š š1 6‚“ 8“2 468Œ guy.ˆangerœey.coŠ Global and regional leaders ƒle‡ ‘ender‰ Žest ‹egion Technology Industry Leader ˜ an Francisco€ § š š1 41‚ 894 8Œ“9 ae”.’enderœey.coŠ Marios Damianides‰ ortheast Technology Advisory Leader ˜e‚ YorŒ€ § š š1 212 ŒŒ3 ‚ŒŒ6 Šario.daŠianideœey.coŠ ”eff Liu‰ § Technology M&A Advisory ˜ an °ose€ § š š1 4“8 94Œ ‚‚88 že‹‹rey.iuœey.coŠ Daid •ichols‰ Americas IT Trans­ormation £ractice Leader ˜Chicago€ § š š1 312 8Œ9 2Œ1Œ daid.nichoœey.coŠ EY —noledge — Technology Michael ©if‚o‰ Technology Lead Analyst ˜Chicago€ § š š1 312 8Œ9 2““4 Šichae.pi‹koœey.coŠ Žobert DeMaine‰ Technology Analyst ˜e‚ YorŒ€ § š š1 212 ŒŒ3 91Œ8 ro’ert.deŠaineœey.coŠ †

Global Media & Entertainment Center Œey contacts †eephone „Šai Global M&E Center contacts ”ohn •endic‚‰ Global M&E Leader and Americas M&E Leader ˜Los Angeles€ § š š1 213 9ŒŒ 3188 žohn.nendickœey.coŠ ’aro‚h ‘alsara‰ EMEIA M&E Leader ˜Mumbai€ Indiaš š91 22 6192 “28“ ‹arokh.’aaraœin.ey.coŠ Daid McGregor‰ Asia£acific M&E Leader ˜Melbourne€ Australiaš š61 3 9288 8491 daid.Šcgregorœau.ey.coŠ Yuichiro Muna‚ata‰ °apan M&E Leader ˜ToŒyo€ °apanš š81 3 3‚“3 11““ Šunakata•ychrœhinnihon.or.žp Global M&E serice line leaders Mar‚ ”ˆ ‘orao€ Global M&E Advisory ervices Leader ˜Los Angeles€ § š š1 213 9ŒŒ 3633 Šark.’oraoœey.coŠ Thomas ”ˆ Connolly‰ Global M&E Transaction Advisory ervices Leader š1 212 ŒŒ3 Œ146 toŠ.connoyœey.coŠ and E A M&E Leader ˜e‚ YorŒ€ § š “an Eddleston‰ Global and Americas M&E Assurance Leader š1 213 9ŒŒ 33“4 ian.eddetonœey.coŠ and Žest ubArea M&E Leader ˜Los Angeles€ § š ƒlan Luchs‰ Global M&E Ta Leader ˜e‚ YorŒ€ § š š1 212 ŒŒ3 438“ aan.uchœey.coŠ Global and regional leaders £oard ‘ass‰ E A M&E Advisory ervices Leader ˜e‚ YorŒ€ § š š1 212 ŒŒ3 4841 hoˆard.’aœey.coŠ Mar‚ ‘esca‰ e‚ YorŒ City ƒ­fice Managing £artner ˜e‚ YorŒ€ § š š1 212 ŒŒ3 3423 Šark.’ecaœey.coŠ Glenn ‘urr‰ ˜Los Angeles€ § š š1 213 9ŒŒ 33Œ8 genn.’urrœey.coŠ ©eter Y’ Chan‰ Greater China M&E Leader ˜‘ong ²ong€ Chinaš š8‚2 2846 9936 Peter•y‹.chanœhk.ey.coŠ •eal Clarance‰ ˜¬ancouver€ Canadaš š1 6“4 648 36“1 nea.g.caranceœca.ey.coŠ ”onathan Dharmapalan‰ Global Telecommunications Leader ˜ an Francisco€ § š š1 41‚ 894 8Œ8Œ žonathan.dharŠapaanœey.coŠ ©eter Lennart‰ G A M&E Leader ˜Munich€ Germanyš š49 3“ 2‚4Œ1 2“631 peter.ennartŸœde.ey.coŠ ‘runo ©errin‰ EMEIA M&E Assurance Leader ˜£aris€ Franceš š33 1 46 93 6‚43 ’runo.perrinœ‹r.ey.coŠ Chris ©imlott‰ Americas M&E Ta Leader ˜Los Angeles€ § š š1 213 9ŒŒ ŒŒ21 chri.piŠottœey.coŠ Michael Žudberg‰ ˜London€ Englandš š44 2“Œ 9‚1 23Œ“ Šrud’ergœuk.ey.coŠ —en „al‚er‰ ˜Los Angeles€ § š š1 8“‚ ŒŒ8 Œ“18 kenneth.ˆakerœey.coŠ EY —noledge — M&E Martyn „histler‰ M&E Lead Analyst ˜London€ Englandš š44 2“ Œ98“ “6‚4 Šˆhiterœuk.ey.coŠ Žagha Mani‰ M&E ²no‚ledge Leader€ ˜Los Angeles€ § š š1 213 9ŒŒ ‚8‚‚ ragha.Šaniœey.coŠ š

EY ¶ Assurance ¶ Ta ¶ Transactions ¶ Advisory ƒbout EY EY is a global leader in assurance€ ta€ transaction and advisory servicesŠ The insights and uality services ‚e deliver help build trust and confidence in the capital marŒets and in economies the ‚orld overŠ Že develop outstanding leaders ‚ho team to deliver on our promises to all o­ our staŒeholdersŠ In so doing€ ‚e play a critical role in building a better ‚orŒing ‚orld ­or our people€ ­or our clients and ­or our communitiesŠ EY re­ers to the global organiœation€ and may re­er to one or more€ o­ the member firms o­ Ernst & Young Global Limited€ each o­ ‚hich is a separate legal entityŠ Ernst & Young Global Limited€ a §² company limited by guarantee€ does not provide services to clientsŠ For more in­ormation about our organiœation€ please visit eyŠcomŠ ƒbout EY’s Global Technology Center EY’s Global Technology Center ˜GTCš is a net‚orŒ o­ ˆ„€……… technology practice pro­essionals ­rom across our global member firms€ all sharing deep technical and industry Œno‚ledgeŠ ƒur highper­orming teams are diverse€ inclusive and borderlessŠ ƒur eperience helps clients gro‚€ manage€ protect and€ ‚hen necessary€ trans­orm their businessesŠ Že provide assurance€ advisory€ transaction and ta guidance through a net‚orŒ o­ eperienced and innovative advisors to help clients manage business risŒ€ trans­orm per­ormance and improve operationallyŠ ¬isit us at eyŠcom¯technologyŠ ƒbout EY’s Global Media & Entertainment Center EY’s Global Media & Entertainment Center brings together a ‚orld‚ide team o­ pro­essionals to help you achieve your potential — a team ‚ith deep technical eperience in providing assurance€ ta€ transaction and advisory servicesŠ ƒur net‚orŒ o­ pro­essionals collaborate and share Œno‚ledge around the ‚orld€ to provide consistent€ highuality service and leverage our leading marŒet share position to provide you ‚ith actionable in­ormation€ uicŒly and reliablyŠ ¬isit us at eyŠcom¯GL¯en¯Industries¯MediaEntertainmentŠ © ‡…ˆ‰ EYGM LimitedŠ All ‹ights ‹eservedŠ EYG noŠ F£………¨ E¦ one In line ‚ith EY’s commitment to minimiœe its impact on the environment€ this document has been printed on paper ‚ith a high recycled contentŠ This material has been prepared ­or general in­ormational purposes only and is not intended to be relied upon as accounting€ ta€ or other pro­essional adviceŠ £lease re­er to your advisors ­or specific adviceŠ