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A regulator should think about tomorrow and not the past

PwC’s Marcel Fenez talks about the role of the digital media and regulatory challenges in an interview during a trip to New Delhi this month
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First Published: Tue, Sep 25 2012. 04 21 PM IST
Fenez says ownership restrictions don’t matter because ultimately the consumer is taking control. Photo: Ramesh Pathania/Mint
Fenez says ownership restrictions don’t matter because ultimately the consumer is taking control. Photo: Ramesh Pathania/Mint
Updated: Tue, Sep 25 2012. 04 58 PM IST
New Delhi: The power of the Internet has “challenged a lot of regulation”, says Marcel Fenez , who heads the entertainment and media practice at PricewaterhouseCoopers Llp (PwC). “The pace of regulatory change is probably slower than the pace of technology change and certainly slower than consumer change.” A globetrotter who visits major media centres to interact with industry leaders, Fenez spoke about the role of the digital media and regulatory challenges in an interview during a trip to New Delhi this month. Edited excerpts:
Your June report on the global media and entertainment industry says digital is the new normal. Could you elaborate?
The clear message in this year’s report is that we’re at the end of the beginning and we now need to accept a new normal. Generally speaking, organizations react to something new differently. They tend to incubate it like a new business unit. But when it is normal, you need to embed it in everything you do. One of the things we had lot of advertisers do in the last few years is digital marketing. But surely we now need to start thinking about marketing in a digital world. You’re now into a normal and that has profound implications on how you adapt to that challenge.
What is the challenge?
It is the implementation of solutions. If I use television content as a reference, you start off the process with the producer, go to the scriptwriter who writes the script and casts people...then you shoot and produce it, followed by distribution and marketing.
It is a linear process. But if you are going to market it using social media, for example, you need to build into it and not do it in the end. If you’re distributing a 30-minute episode, you need to have the flexibility to do 10-minute episodes for online or mobisodes (for the mobile). You need to be thinking about this at the very beginning...to be able to shoot extra material or shoot differently. So it is no longer a linear process and you need to understand the endgame.
How soon do you think digital will kill traditional media?
No one is out to kill anyone. We keep using terms like new media, old media, traditional media, social media. Number one, it is all media. It will always be core content that will be really important. But content alone is probably not enough because consumer’s requirements have changed. Content is being redefined to include and enhance experience, enhance convenience. What this then enables is different types of revenue models to come in. If you would draw me into a debate between traditional and digital, I’m not going to get into it because I don’t believe that is the way the media industry is developing.
But newspaper circulations are declining in developed countries.
Because that is the way the industry has defined itself. Media shift in content is probably growing the markets. People read more. I interviewed someone recently. The 18-year-old said: “I get very irritated when I’m told I don’t read newspapers, I just don’t get my hands dirty.”
We have written media and video. We tend to call that print and television, but actually it is written content and video/audio content. Again we’re talking about a redefinition.
But written media is not being able to monetize content online.
Video is certainly growing at a phenomenal rate. It is growing at a quicker rate than print is. Whether it is more words or more video is not important. What is more important is that it is the consumer who is driving the change. I may get my headline from a blog or a tweet, but I’ll get the headline. The important thing is whom does the consumer trust.
Within digital, how crucial is mobile marketing?
We’ve talked about mobile for seven-eight years or maybe more. But mobile has not meant anything in terms of true revenues or content except music. But the smart device has been a game-changer. Finally, we have devices about which consumers are beginning to say: “I will read a book on this device...or watch videos.” Our global outlook is 36% compounded annual growth rate in mobile advertising revenues, but we’d also say that it’s still a very small proportion of the total. In overall digital advertising, search is still the King Kong and it’s still growing at a phenomenal rate. Mobile is growing, but hasn’t yet reached that scale. It will happen as the penetration of smart devices increases.
What is the smartphone penetration in markets such as the UK and the US?
It’s between 60% and 80%. But I would still say there are limitations...not of content, but bandwidth and infrastructure.
Which are the hot media markets?
When I talk to global media companies, India remains a country of focus where people believe there is long-term opportunity. China may be restricted from the foreign investment viewpoint in traditional media, but increasingly it is developing as a digital market. By 2016, 40% of ad spends in China would be digital. In the short run, Indonesia and Vietnam are hot markets. Others that are of significant interest are Turkey, Brazil and southern Africa.
Can you regulate media in the age of Twitter and Facebook? Does it make sense to have ownership restrictions?
I think traditional cross-media ownership is probably missing the point these days. Today, it is not about who is controlling what because ultimately the consumer is taking control. Cross-media ownership rules will go under the knife.
Logically speaking, the power of the Internet has kind of challenged a lot of regulation. The pace of regulatory change is probably slower than the pace of technology change and certainly slower than consumer change. So they are in a catch-up mode. But every regulator is very much aware of these issues.
What would your advice to regulators be?
The advice to any regulator is that it is about thinking about tomorrow and not regulating yesterday.
What are the prospects for the advertising industry?
In the last two to three years, we’ve had a slowdown. For the next five years, we are predicting 6.4% compounded growth across the globe. In some parts of the world, we will see advertising grow at about 11-14%. This year, 2012, is an Olympic year and a year of elections. I think it will be a very robust year from an advertising standpoint at a time when some economies are not doing very well. The challenge will be 2013, when we don’t have many large events.
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First Published: Tue, Sep 25 2012. 04 21 PM IST
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