Five Trends M&E Leaders Will Need to Navigate in 2022

By John Harrison, EY Americas Media & Entertainment Leader

In 2022, media and entertainment companies will experience a familiar landscape influenced by consumer behavior dynamism, technological innovation, and competitive intensity. Mix in the continuing effects of the pandemic, an inflationary economy and a charged social and political landscape, and company leaders are steering through unpredictable terrain.

Here are five trends to watch in the year ahead as the industry works to reframe its future:

1.??????Content distribution will get more complex.

Investment in original content shows no sign of slowing. However, as content fuels consumer interest and engagement across platforms – streaming, broadcast, and cable networks – content distribution strategies are becoming more complex.

In the year ahead, operators – especially those without the scale or capital to go truly “all in” on streaming today – will face a tricky balancing act. Companies must allocate fresh programming to their streaming platforms to drive subscriber growth and retention, while also maintaining sizable but structurally declining linear businesses to generate profits and cash flow.

2.??????Simplified and customized experiences will take center stage.

In 2022, delivering effective customer experiences will become a major priority across the industry as consumers juggle a growing collection of services with a variety of pricing tiers, challenging content discovery processes and low switching costs.

We will see more companies participating in the streaming value chains and taking steps to simplify and integrate across platforms and devices to improve service delivery. To stay competitive in this environment, media companies will need to provide personalized experiences that keep subscribers connected, engaged, and coming back for more.

?3.??????The movie industry and theaters will push forward.

The effects of the pandemic on the movie business have been severe. While the emergence of the Omicron COVID-19 variant is adding near-term uncertainty, there are signals pointing to a constructive path forward for the box office in 2022.

In fact, results in the second half of 2021 indicated an enduring audience appetite for tentpole features as reopening across the country gained steam. The shortening of the exclusive “first run” window will allow studios and theatres to retain the bulk of the benefits of successful major theatrical releases while also aligning with the M&E industry’s streaming strategic imperative

?4.??????NFTs will expand engagement opportunities.

Excitement is building around NFTs as a vehicle for media companies to expand engagement with their content and IP, and may provide a future monetization model as the market matures.

NFTs will allow media industry players to create cross-platform consumer interactivity and to build new communities by extending the consumer relationship into emerging digital areas. While the economic return is currently unclear, in the future, media companies could generate royalty income related to secondary sales of NFTs in transactions tied to activities in the metaverse.

5.??????M&A will remain a popular growth (and survival) strategy.

The consolidation of studios and networks will continue in 2022 as companies seek to build the content, capabilities and scale needed to battle the digital-native behemoths.

As the industry transitions from the stable, high-margin linear world to a streaming ecosystem that currently drives growing but less profitable revenue, leveraging cost savings from integration to fund future investment and boost profits will be mission critical. Asset divestitures will also be a key trend, as deep-pocketed buyers enable companies to sell non-core businesses and corporate assets that no longer fit their evolving growth strategies.

The media and entertainment industry has always been a whirlwind of innovation and strategic activity as companies build, renovate, and tear down business portfolios in response to market developments – 2022 will be no different.

?For more on these trends and the future of M&E, check out ey.com.