When superstar Kobe Bryant announced his retirement from pro basketball, it went live first on social media and the digital publisher The Players Tribune. It didn’t air on the traditional media networks first. The same thing happened when CBS revealed its plan to bring back Star Trek. Instead of airing it on conventional TV, the new show will run on the CBS All Access on-demand streaming service.

These are just a few incidents in what accounting and consulting firm PwC calls the “videoquake,” or the disruption that is occurring in the $420 billion entertainment and media industry as digital surpasses traditional media. PwC highlighted the change in a white paper it revealed at the 2016 International CES.

“These developments highlight that the entertainment and media industry is quickly transitioning to a direct-to-consumer world, where most content will remain the same — at first, at least — but the packaging and distribution will change significantly,” PwC said in the report, dubbed PwC Videoquake 3.0: The Evolution of TV’s Revolution. “Specifically, the expansion of digital technology, manifested by more ubiquitous fixed and wireless network connectivity enabling growing numbers of connected devices and new routes to the user, is altering the industry’s structure, driving new ways to produce, distribute, and monetize content across its landscape.”

Sixteen percent of PwC poll respondents said they had unsubscribed from pay TV in the past year.

For creators, that means there are more opportunities outside of traditional studios and distribution channels. Consumers can snack or binge on a lot more content using a variety of delivery options and devices.

And for entertainment and media executives, the formula for success is changing radically.

“No longer is it enough to develop content for eyeballs,” the report said. “Now, you must create a fan-centric business. If you are an executive in E&M, your formula for success is already shifting radically. No longer is it enough solely to attract eyeballs, seeking the largest audiences possible for advertising and subscription revenues. Now, you must create fans: active users united by shared ideas, interests, and experiences, who will return every day to your brands and properties.”

The digital media with loyal users will have strategic advantages. Companies will have to directly target these users and monetize them. Current fans will recruit new fans. The pace of this change is only going to accelerate in 2016. More consumers will shift to over-the-top (OTT) third-party media services such as Netflix, rather than continue with subscriptions to cable TV. Video providers will have to learn from digital music providers such as Spotify that have learned to offer consumers the a la carte entertainment that they want. Live events are becoming critical to building fan bases, and fans help stoke the growth via social media.

PwC concludes that the winners and losers in this coming fan-centric, direct-to-consumer world have yet to be determined. But the requirements for victory include more customization, control, and perceived value. It also requires distinctive, habit-forming brands and experiences that turn commodity eyeballs into devoted fans. Adapting to that world won’t be easy for major media, entertainment, and brand companies.


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