According to KPMG’s 2013 Media & Telecommunications Industry Outlook Survey, more than 70 percent of the U.S. senior executives polled say their company’s revenues have increased from last year, and 75 percent expect their company’s revenues to increase over the coming year, with 43 percent expecting revenues to increase by at least 6 percent.
More than 80 percent of those polled believe revenues derived from digital content distribution will continue to increase this year, which is down about10 percent from last year.
Half of the media and telecom executives said they have witnessed a “moderate” increase in revenue from transactions on mobile devices, with 19 percent citing a “significant” increase.
The survey provided an opportunity to compare the thoughts and opinions of media executives versus their telecom counterparts.
Media executives were more optimistic than the telecom executives regarding their company’s projected overall revenues, with 83 percent of the media executives expecting an increase, compared to 68 percent for telecom executives.
Nearly 70 percent of those polled said that maximizing digital revenue growth is either critical to their business or very important strategically, while nearly 80 percent pointed to the ability to evaluate information on customer purchases, sentiment and preferences.
When asked to identify the biggest driver for increasing revenues, 50 percent of the media executives pointed to emerging digital distribution methods, while 28 percent of the telco executives identified bundled service offerings – IP enabled Triple and Quad play-- as their top choice.
“Digital content and mobile communications are clearly becoming the driving force for growth in the industry,” said Paul Wissmann, lead partner for KPMG’s Media & Telecommunications practice in the US. “But while the media companies are focused on growth from new revenue streams, the telecom companies seem to be focusing their attention on their core offerings and cost containment.”
The most significant growth barriers facing the executives over the next year include pricing pressures and staying on top of emerging technologies.
- Pricing pressures, 43 percent, up from 35 percent last year
- Staying on top of emerging technologies, 42 percent, compared to 29 percent last year
Losing share to lower-cost producers poses the biggest “threat” to their business models, according to 39 percent of those polled, followed by disruptive technologies at 33 percent and political and regulatory uncertainty at 27 percent.
Companies are embracing newer technologies in their customer interactions and as an internal collaboration tool. A majority of companies are planning to use digital/ social/ mobile technologies more this year to get closer to their customers.
- 56 percent say they plan to use it for two-way customer engagement and insight;
- 47 percent for enterprise collaboration and knowledge sharing; and
- 46 percent for external brand promotion.
A majority of the executives (59 percent) said their companies plan to increase capital spending this year, compared to just 49 percent last year.
The three top areas media & telecom executives expect to increase spending over the next year include:
- New products or services- 47 percent, down from 56 percent last year
- Geographic expansion (U.S and global) - 40 percent, up from 22 percent last year
- Information technology -- 27 percent, down from 43 percent last year
The top two concerns addressed by the executives regarding their company’s future include:
- Their competitive position (36 percent, up from 24 percent last year); and
- Keeping pace with changing technology (30 percent, up from 22 percent last year.)
“With telcos hampered by intense competition and expensive network upgrades, they appear to be focusing on enhancing the pipe to the consumer, as opposed to making a significant shift into content or services,” said Wissmann. “While they will certainly have a part in the evolution of digital services, as primarily a supplier of bandwidth, telcos run the risk of becoming a business with a product that is increasingly commoditized.”
Some other findings include:
- Only one-third of the executives say their company is very prepared to manage the impact of public policy and regulatory changes.
- 42 percent of the executives say their company is at least somewhat likely to be involved in a merger or acquisition over the next year, as a potential buyer, and 38 percent as a potential seller. They cited cost containment, access to new technology and products, and product synergies as the main drivers of alliances and M&A activity.
- Moving some items to the cloud seems to be almost a given with the executives, with only 10 percent saying they have no plans to implement cloud technologies. Of the 64 percent of executives that have implemented some aspect of cloud technology, 47 percent said they had only minor or no challenges, while 17 percent said they faced major challenges.
About the Study:
KPMG’s 2013 Media and Telecommunications Business Outlook reflects the viewpoints of 102 senior executives in the United States. The web survey was conducted in February - March 2013.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.
Contact: Pete Settles
On Twitter: @pgsettles