Andy Shenkler, CEO & Co-Founder, TMT Insights
The broadcast industry – and media and entertainment (M&E) overall – look very different than they did five years ago, and it’s near impossible to accurately predict what they will be in five or 10 years. After all, if you had asked M&E executives or any executives for that matter in February 2020 to predict the near-term future, it’s highly unlikely that any would have said that a period of unprecedented growth in consumer consumption and a world focused on remote accessibility would be undertaken just weeks later. Who knew?
“Who knew” is the main reason for a heightened focus on business resilience: an organization’s ability to adapt and pivot in the face of industry disruptions while maintaining continuous business operations and protecting its people, its customers, intellectual property, assets, and brand reputation.
Media and Entertainment is one of the fastest-moving industries, with an accelerated rate of technology development constantly driving new innovations across the content landscape. The past few years have seen media organizations reimagine every aspect of their operations to continually find new ways of attracting, engaging, and retaining audiences that have more viewing and content options than ever. Fueling this unprecedented choice is the proliferation of diverse streaming services, whether it’s new VOD platforms, FAST channels or new services launched by traditional broadcasters.
Now, after such a prolonged period of rapid expansion and development, M&E companies are faced with increasing budget pressures, emerging technologies and workflows, audiences with higher entertainment expectations and increasingly discerning tastes. The global demand for diverse media across multiple platforms in multiple formats is increasing and showing no signs of slowing. While it’s true that more content can create more business, it can also strain M&E operations almost to a breaking point.
These shifting industry dynamics are coupled with the significant macroeconomic trends occurring globally over the past few years: economic uncertainty amid concerns over a coming recession, supply chain breakdowns, rising utility costs, geopolitical conflicts, and the changing nature of work as organizations struggle to strike the right balance of onsite/WFH for their needs while meeting the changing expectations of their increasingly distributed workforces.
If for the past few years companies got to enjoy the honeymoon of the content boom, then they are now starting to move into a sustainable and long marriage with their customers and it’s time to take a hard look at their business models focused on long term benefits for everyone. We’re seeing this happen more and more across the customers we support, and we’re not alone.
A recent study by Deloitte notes that continued change in the media and entertainment business is a certainty, as “studios and video streamers face the reality of their own market disruption, trying to find profits in a less profitable business,” not only competing with each other for attention, time, and revenues, but also with social media, user-generated content, and gaming.
Which brings us back to the focus on business resilience. An Ernst & Young survey reported that “37% of executives said that without reinvention their companies would cease to exist in five years” – and that was before the pandemic; those numbers have only risen in subsequent post-COVID surveys. A recent poll by SAS found that organizations value business resilience if they are to survive, and even thrive. However, while 97% of business executives believe having a strategy in place is important, only 47% believe their organization is properly prepared.
The state of the industry
In our current world, business resilience is linked to the trend of organizations paring down in the face of massive layoffs as they deal with the impact of the last five years, which saw a massive acceleration of technology buildouts. We’re starting to see a transition now from a time when companies were in an arms race to develop content infrastructures, essentially throwing money and bodies at everything and everywhere to move as quickly as possible. Now there’s an increasing urgency to regain fiscal control, even as they serve a consumer base that’s continually expecting more.
Organizations of all sizes are wrestling with how to proactively optimize their financial forecasting and some even looking to return to more traditional CAPEX economic models that offer some level of predictability without requiring massive recurring costs while still maintaining a cloud presence. Business leaders in nearly every vertical and market sector are refocusing their priorities to remain as agile and forward-looking as possible, often fundamentally changing how they operate to deliver maximum efficiency.
The potential benefits certainly include significant cost savings and greater operational efficiency, but they also extend to greater resource management, enhanced customer insights, increased productivity, profitability, and agility.
Business resilience is key to organizations gaining a competitive edge by adapting quickly and acting strategically. The fundamental challenge is building a team that can continue to support that level of ongoing growth with an infrastructure capable of avoiding costly downtime, identifying and preventing vulnerabilities, and maintaining business operations in the face of unexpected intrusions.
True business resilience requires a holistic mindset, taking into consideration every aspect of an operation: security, business, and data protection, even shifting behaviors when it comes to technology funding sources.
Previously, low interest rates made funding easily accessible to media organizations and tech start-ups. Raising debt was relatively painless because, with interest rates so low, companies were basically borrowing free money.
That’s not the case anymore. Now there is more scrutiny over profits, resulting in less funding for tech companies and a change in how companies invest their money, carefully examining where they put every penny. There’s clearly more pressure on teams to make do with less.
As companies are doing everything possible, within financial reason, to ensure the business resiliency of their organization, they can’t lose sight of the resiliency of their customer base and how they can defend themselves from sharp changes in consumer behavior. At the end of the day, everything else is unimportant if you don’t have your customer base secured.
Criticality and risk tolerance
How many businesses really understand their risk tolerance? Do you know yours? Achieving resilience requires an understanding of the criticality of processes, assets, data, and user information, and the level of disruption a brand is willing to tolerate. Then, businesses can properly evaluate the corresponding business impact on the organization and their external audiences: customers, employers, partners and shareholders.
This often means asking some tough questions, starting with: “What does the recovery process look like for us after a catastrophic event?”, “What is the timeframe for that recovery?” and “How long can I live with the effects of that catastrophic event?”
As companies increasingly rely on third parties like Amazon or Google as their infrastructure, they are conducting more careful risk assessments of their entire operations. Many are also adopting an approach of “risk-based resilience,” recognizing that not all business processes, capabilities and services are as critical as others and don’t warrant the same level of response.
Now more questions need to be asked: “Are we okay with being down for six hours if that’s the amount of time it takes us to get back up, or are we okay with being down for an hour but maybe we lost the last three hours of data?” “How long does it take me to bring everything back up again without having to spend a fortune while still providing my core services to my key customers?”
Those are the types of trade-offs people are confronting.
Over the past few years, we’ve all experienced major culture shifts, and learned new definitions of the word “resilience” as we’ve adapted how we conduct our personal lives, social interactions, work habits, and even our expectations of what long-term success and growth look like.
Business resiliency is no different, requiring a flexible mindset and a willingness to change, and having the right plans and the right partners, to weather any storm.