How important is innovation to today’s entertainment and media companies? Traditionally innovation has been adopted within the context of content or technology, but PwC research indicates that a broader approach has to be taken.
The PwC Australian Entertainment & Media Outlook highlights seven forms of innovation that the industry must strive to implement in order to remain successful in this new world of disruption.
In this edition of the podcast, PwC Australia’s David Wiadrowski and Marcel Fenez, Global Leader for Entertainment and Media, talk about how organisations can innovate and what can be done to nurture the right ecosystem to promote this.
Listen to the podcast using the player below or for regular updates, subscribe to the Digital Pulse Podcast on iTunes. A full transcript of the audio is included below.
David Wiadrowski: The key theme in our Australian Entertainment and Media Outlook in 2015 is really around innovation and the importance of innovation being a core part of strategy now in the entertainment and media industry.
When we look at innovation, a lot of people think that innovation is all purely about technology. Our view is that that’s a very simplistic analysis of what innovation is all about.
So, we’ve actually identified seven parts to innovation – and that includes technology. There’s also service innovation, there’s business model innovation, there’s distribution innovation, content innovation, funding innovation and relationship innovation.
To be successful, in our view, you need to work through a number, if not all, of those elements of innovation, to create a successful business model in this fast, rapid, disrupted world that we now live in. We’ve got some very good examples in the report this year of industry leaders that we’ve spoken to that have really embraced innovation in a significant way. One of the people we interviewed was Bruce Jeffreys, who’s the co-founder of GoGet. He’s now establishing another business disruption play around the optometry industry and what that’s going to do, on the basis that he sees that as very much a lineal business model, and he’s looking at different ways to disrupt that model and make it more holistic and more of an experience for the user.
So, it’s been an interesting journey in doing this deep dive in to innovation in Australia. Marcel, I’m keen to understand in the global territories that you follow, how important is innovation to the future success of entertainment and media companies?
Marcel Fenez: Many people would argue that innovation is at the core of entertainment and media but traditionally that focus has actually been on content innovation.
Increasingly, I think people, as you quite rightly point out, then think of technology innovation. The point that I would make – and we see this globally – you cannot just rely on one type of innovation; you have to do all of those seven things, because if you only focus on one then arguably you’re being marginalised and you’re not taking advantage of the larger opportunity. There is a huge opportunity here for companies that can embrace all of those types of innovation in terms of really growing their share of this pie. And just as we’ve seen many new entrants into the ecosystem, that also brings with it opportunity of growth for the industry as a whole.
So, I would say, making sure that you have all of the ingredients, not just one or two. And you know, the most successful organisations are the ones that can embrace innovation at different levels and that can foster that right environment for all of that innovation, because at the end of the day there’s a lot about how we innovate.
You’ve described the areas of innovation but I think critical is, what is the environment that you need to innovate and what are skills you need to innovate? Because for many organisations, actually it’s the skill part that is the biggest challenge. How do we attract the right people with different types of skills into the organisation? How do we retain them? And particularly how do we reward them? And if we can’t do that, we need to look at collaborations and partnerships with those outside of our organisation that can help us innovate in those areas. So, it’s not that everything has to be internal; I think you can look at external sources of innovation, but you have to have all the ingredients if you’re going to be successful.
David: The tagline for the Outlook in Australia this year is to “Have a go.” And in some ways, being a very proud Australian, it’s quite disappointing when we’ve done the research this year to really get a sense of the amount of innovation and investment in innovation that’s happening in Australia. It’s actually fairly light and it’s disappointing to see some very smart people and some smart technologies that in the end have been developed here have had to go offshore to get funding and support and talent to obviously maximise those ideas to develop it into something quite successful.
We’ve got some very good examples. Many people don’t know, for example, Google Maps was actually initially developed by some Australians and obviously that’s become a very successful tool within the Google portfolio. There are other examples of where Australians as a country and as individuals we don’t get behind some of the highly talented people we’ve got here in Australia.
So, Marcel, I’m just wondering, from your journeys around the world, what’s the success in those countries that have really brought innovation to life? I mean everyone obviously points to Silicon Valley where there is a mindset to get behind start-ups, and is it purely just the size of market and the size of money, or what is it?
Marcel: People use Silicon Valley obviously as sort of a gold standard when it comes to innovation but there are other centres of innovation out there – it’s not just the domain of Silicon Valley, nor should it be. If we look around the world we see, for example, Israel has a very flourishing start-up community.
What I would say is that it’s important to ask, who are the contributors to this? Is it entirely private-sector driven? What’s the role of the public sector? And I think increasingly what we’re seeing is that it needs to be this marriage between public sector involvement, either through creating the right regulatory environment, the right tax environment, and then the combination with the private sector.
I don’t think it’s a matter of saying it’s just do with individual capital, it’s to do with the whole ecosystem of how you create and how you innovate. And that’s why I came back to those – those seven elements are great but you need to create the environment. And in my opinion that needs to be a successful marriage between different players in the overall economic structure of a particular country or a particular territory. Let’s not forget that those countries that are most burdened by legacy of regulation often find this most difficult and it’s where you don’t have that burden you’re actually seeing greater growth. So, I think that there’s a role here to be played for public sector, both in terms of policy, regulation, funding, tax systems, etc, as well as the involvement of what I call the private sector and the sources of capital.
David: That probably leads into some other research that PwC has done around STEM, where we’ve got a strong view to encourage more focus in the educational sector around science, technology, engineering and mathematics, because again we think they’re the key drivers around technology and ultimate innovation. So, there is a strong view from PwC around where the country needs to go on this.
Similarly we’ve also expressed a view that the government has an important role to play here to provide tax incentives to provide an environment, and as you say, an ecosystem, that really encourages innovation. That innovation stays within Australia, that we are being supportive and ultimately that a lot of the good ideas that are developed here, stay here and ultimately are monetised and are very successful here in Australia – but taken to a global stage.
The PwC Australian Entertainment & Media Outlook is an annual report on consumer and business trends within 11 industry segments including film, TV, radio, interactive games and the internet. Access industry insights and forecasts by purchasing the 2015 Outlook here.