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TV producers miss digitization

TV producers miss digitization

How the TV industry can conquer new markets using knowledge and disruptive innovations.

Television is dead – long live television.

TV producers have so far given digitalization the cold shoulder. At the same time, start-ups, users, the advertising industry and companies are increasingly taking on the role of content creators in digital media. To ensure that the TV industry does not miss out on digitisation, it needs good incentives and offers.

Buzzwords such as digitization, innovation and disruption have been ghosting through the media for years and frightened all industries – except the media industry. Few media makers understand that this is a treasure and that it is time to act.

There are good reasons for this. One is that television, which has long been said to be dead, is still alive and will continue to live, but perhaps in a different fashion. Another reason is that the media industry itself creates innovations every day, for example in the form of new TV formats and high-quality content for well-known media channels with a high circulation. The third reason is that TV producers are usually small and medium-sized businesses and are closely dependent on their clients. Similar to app producers who depend on Google and Apple, who dictate the prices for their apps and then sell them at high margins in their stores. Those who have the most direct customer relationship are in command.

Competition among content providers is growing

Snapchat, Instagram and Co. produce over 300 million photos and videos every day and offer their own storytelling tools. Augmented and Virtual Reality are the next promising sales channels on the horizon. Bloggers, users and startups are conquering the content market with disruptive business models and innovative products. Even companies have become media makers. Digital media not only level the boundaries between the media industry, industry and the advertising industry, they also create new markets and new competition.

If you want to be successful tomorrow, you have to attract attention and adapt to constantly changing customer requirements and communication technologies. For TV producers, this means adapting. But how? If they still want to play in the digital media content market tomorrow, a further development in the direction of new competencies would not be bad. Because the new currency in digital business models is called: direct customer relationship. Those who have reach and direct customer access also have their data – the basis of digital business models.

While digitization and change processes in large media companies are already running at full speed on the highest tax levels and are already having initial successes, small and medium-sized TV producers are facing the problem that digitization is a book with seven seals for them and they therefore do not recognize the potentials of future markets. They are not alone in this. Only 19 percent of SMEs in Germany are considered digital pioneers (KfW study).

Digital business models work differently

Digital business models use different mechanisms than traditional industrial value chains. You do not have product management, but customer management. Often it is niche products that suddenly enter the mass market because they are unbeatably cheaper or solve a customer need. They use the network effect, which can expand their market share exponentially.

Knowledge is a key factor for successful innovation

A digital strategy helps companies adapt to digital market conditions and develop new value chains through digital business models. This alone is an innovation, because the changes have an impact on existing customer relationships and corporate culture. This transformation is only accompanied by a fundamental change of attitude in corporate management. Knowledge transfer, transparency and clearly structured digitisation stages are basic requirements for a digital transformation in a company.

First and foremost is further training. This is not only about how new innovative products can be developed, but rather about generating knowledge about digital business models and how innovation can be implemented in the company.

Creative destruction and the dilemma of established companies

Innovation stands for renewal. For a company this is a high risk, for you only know in the end how successful it has been. The prerequisites for successful implementation are sufficient financial resources, motivated employees, knowledge exchange and room for unusual ideas and unconventional action. This alone cannot be achieved in the daily standard business of TV producers. Especially not to develop something groundbreaking.

This start-up culture does not exist in the TV and media industry – except among young colleagues, who are supported by mentors, who are allowed to gather their experiences in the hope that something innovative and disruptive will emerge. In this way, innovation is created that builds on existing structures. The degree of innovation is therefore low because it depends on the general conditions and resources within the company. “Disruption,” on the other hand, is an interruption of the past. This means the destruction of traditional business models and value chains. Incidentally, a term that Joseph Schumpeter established almost a hundred years ago as a capitalist principle with the theory of “creative destruction”. This means that capitalism survives only through constant renewal and growth. The rise and fall of a product or company are therefore necessary renewal processes. Harvard economist Clayton Christensen has expanded Schumpeter’s theory. According to him, the “dilemma” of established companies is that they rest on their former innovations. They are thus trapped in their structures and “still” successful because they would risk losing customers, markets and structures.

TV producers could go through the same thing. They are prisoners of their success and thus in a dilemma. They operate in the classic offer market by offering their high-quality creative services to the same clients at all times. Your value chain consists of profits from production costs and the generation of licenses. However, they only retain license shares if they are prepared to cover a financial shortfall in the project and are therefore at risk.

The media industry also consists of people for whom creativity is intrinsically motivated. No one would publicly admit that their revenues are declining because orders are becoming less and budgets smaller. They all seem to be doing well, although they may only have a small series that will ensure their survival until next year, and then they will be renegotiated.

At the end of the value chain are decision-makers, usually editors, who do everything in their power to flush their broadcasters and themselves upwards in this media drive – market shares to the outside world, praise and “aristocracy” to the inside. At the same time, the complete production and innovation risk – if one can speak of this in the media industry – is left to the contractors, i.e. the TV producers. Sustainable management is almost impossible. The producers are stuck in this dilemma because videos, video series and explanatory films produced by corporates and advertising agencies endanger their core business.

Cooperation instead of competition

Both sides – broadcasters and TV producers – are in the same boat. Knowledge of the potential of digitisation in the media industry, a “look beyond the horizon” and cooperative cooperation with other partners would be a real opportunity for the TV industry to move towards digitisation together and safely. To do this, everyone involved needs knowledge and tools with which you can take your company and your employees into a digital media era. Where the journey can lead has not yet been determined. What is certain is that breakthrough innovations are also rare in times of digitization. But one thing is clear, no industry can do it alone.

Further training and workshops are an ideal platform for developing cross-industry and cross-company ideas, getting to know new partners and developing new business models together. For managers and employees, further training in teams is an engine of motivation, because common goals can be defined and new knowledge can be established in various parts of the company – a success factor for the implementation of digital innovations. And not to forger digital professional development is financially supported by the government.

Training for Digital Leaders

Pimento Formate – Agency for transmedial communication – offers cross-sector training formats. The workshops open up an experimental space in which media makers and companies come together to develop new ideas, innovations and business models. They learn from each other’s experiences. Participants receive the tools and the knowledge for this in each workshop module and can use them in their subsequent projects.