Where is Digital Economy Headed?
Humans have always been obsessed with information and entertainment. However, in the last 30 years with the rise of a digital world this obsession has heightened a lot. It is estimated that almost 5 billion people in this world are consuming content-words, sounds, images of some kind on a regular basis. I
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In our connected world on an average we are spending about 4 hours a day reading, talking, listening or watching something on the Internet. Any widespread such use of a technology means it’s a big business. Of the Fortune 500 companies not only are several of these digital companies but these are among the fastest growing businesses in the world. However, there is a catch in this unusual growth phenomenon. It’s the finite nature of time. Obviously, there is a limit to how much time one can spend (expend) doing this and keeping other human needs in mind. So, between working, this will include professional occupation, housework, studying etc., sleeping, bathing and dressing, eating, commuting, shopping, chores ad errands we are left with a finite time for leisure. This could wary from 2 hours to 8 hours a day. This is the time which is up for grabs for the new mainly digital companies of today and in this melee of monetization many will end in dust.
Social scientists have now extended the scope of leisure fulfilment to include not only media and entertainment and conventional hobbies but activities like sport, adventure, hanging out, travel and just chilling out. The largest and most dominant of our engagement form is of course is via a device-phone, computer, TV. Internet is the ubiquitous currency of our world and connectivity is our lifeline. In this ecosystem these two enablers are leading to monetization of our leisure and increasingly work. Since the start of the Internet economy in the nineties there has been a shift from the earlier emphasis on cost, convenience and community. All business models of media, entertainment since the new millennium are based on these assumptions that the more people will continue to spend increasingly more time on a screen. The arrival of mobile telephony and worldwide web changed human lives.
So almost 25 years ago the first pan global digital service was email. Web based search and information, games, music and video soon became ubiquitous. Rapid spread of wireless connectivity led to a mobile phone revolution and in a decade half the world was interconnected and access to internet became easy and convenient. This was another turning point and a new digital economy developed on the foundation of an always on world.
Data was the new Energy which fueled a million dreams and almost every touch point of humanity was now a possible revenue opportunity. Hundreds of billions of dollars were invested in creating an overarching digital structure. Wired and wireless networks driven by new age technology, newer powerful devices based faster microchips and software and operating systems using AI have today created a multi-trillion-dollar Digital Economy around the world. By the time we entered the present decade the world was already hooked to smartphones and the Internet. Massive amounts of data including text, audio and video pumped down giant wired or wireless pipes connected to myriad devices across geographies, social structures and services. Instant messaging, E Commerce, User Generated Content, social media and streaming audio, video services and a wide array of Web based services keep 5 billion people spend an average of 4 hours a day on these services. What started as free, ad supported services are gradually moving towards a subscription or pay per use model. Today’s it’s about personalization, privacy and performance. As institutive web (3.0) is replaced by thinking web (Web 4.0), m2m and IoT. It is estimated Digital Media & Entertainment (inclusive streaming audio, video, broadcast, gaming, Out of Home will account for about 40% of the entire leisure Industry in 2026 totaling to more than USD 1.5 trillion empowering nearly 6 billion people.
A similar scene will be repeated in India where out of a total size of 70 billion E&M Industry the digital part will be more than 40 %. This year the digital M& E in India is worth more than the film Industry and will exceed the Print Industry in 3 years and the TV industry later in the next decade.
The success of companies like Apple, Google, Amazon, Microsoft, Facebook, Alibaba, Netflix, Alibaba, Baidu, Uber, Airbnb, Spotify, Uber all of whom did not own telecom networks to ride the waves of traditional carriers. These new Corporate giants were the harbingers of shared, transactional economy, bunched together under the acronym OTT (Over the Top) where the consumer pays for using services (often brick-mortar -steel kind) on demand without owning anything except an Internet accessing phone. The range of services catered by these pseudo-platforms are far ranging from group or individual instant messaging, Music and Films, TV programmes, News, Gaming, Education, Health, Governance, Banking and financial services, Commerce, and virtually which could be of interest to the whole world or a small community of consumers. Unlike most other telecom services OTT services do not require any license and are presently unregulated in most markets including India.
Hence there are no entry barriers and no surprise there are millions of such services available. Of these at least a hundred have a size and scale which would have classified them into a major business in the old economy. In a corollary most large telecom providers and device manufacturers have also integrated backwards into content creation. Obviously, there is bound to be shake out. At best 20 global players will survive but perhaps hundreds of National and thousands of hyperlocal services will find a market big enough to make them viable. In terms of value probably E Commerce is and will remain the largest segment but the advent of Internet of Things (Iot) may be change that in future. Education, health, Advertising Marketing, travel and hospitality, home care, career guidance and placement will keep growing for at least a few years. The fact that over within the next decade online reading, listening and viewing will far exceed the traditional forms of media is a given. If look at an indicator recent PWC and KPMG reports all say that digital media & entertainment as well ad spend will overtake the total spend on all analogue formats.
This is the tricky part is no one actually has figured it out yet. Unfortunately, large bucks are being spent in creating filmed entertainment which is a mere reworking of the accepted formula of Hollywood, Bollywood and other major film industries Similarly most TV Channels and production houses are transferring mediocrity from one platform to another like newspapers are putting out online versions of existing publications. We have to understand each medium and its context in time has its own strengths and weaknesses. In case of on demand services two variables are distinctly different. You access a particular content at your convenience, often in the privacy of your home or in close proximity to you and may see it at one stretch or at different intervals. You may experience it by itself or simultaneously as you multi task. The second variable is the amount customization or personalized segmentation which the todays ecosystem allows. Even today you can have news or other information as well as entertainment is delivered to you based on your likes and preferences or even the location where you are. This allows immense possibilities to the creator to manipulate you in a way to maximize monetization. A TV show for example may lead you to a travel site for a trip at the picturesque location where it was filmed or film may prompt you to buy the dress which the lead actor is wearing. Multiple storylines are a
Somehow many media professionals, writers, directors sincerely believe that streaming audio video which has little regulation so far only means heightened violence, sex, gore, sensationalism and of course VFX. Yes, there are brilliant examples of some outstanding stuff on Netflix, Amazon, Hulu and others but that is more to do with individual genius and large budgets. Not restricted by the conventional time formats or rigors of appointment viewing on demand entertainment is often disruptive. Yet, I see increasingly see a tendency (derived from television) of forced extension of story lines and follow up seasons. Unlike audience of the past tomorrow’s audience has shorter attention spans and programmed fatigue is an ever-lurking danger. The tremendous success of YouTube, Facebook, Instagram, Tik Tok and other content sharing services and incredible rise of online gaming (it is twice the size of film industry globally) is reality check for tomorrow’s creative fraternity.
Not only one to understand the creating for a new multimedia, multi device and multi-sensory experience the craft has to evolve afresh. We can already see more news being accessed through social media sites and apps like twitter and What’s App. Fake news is a temporary blip as AI assisted filters will soon spot manipulated reports and doctored news.
In the next few years news breaks will be accompanied by short blurbs on known political and other biases of the source or reporter. Syndicating and reformatting news is no business model. Even newspapers and magazines will have to value add to their print versions to survive. A pay per use model has to provide premium service.
In the next 5 years voce activated search will intermediate our search for personalized and customized content. Even the Apps may become redundant. IoT, connected, edge computing and the cloud are all part of a universal network. Almost all devices, gadgets, appliances in homes, workplace, factories schools, hospitals, offices et al will seamlessly keep us informed, entertained, assisted and serviced anywhere anytime. In this new ecosystem the creators and marketeers will have to learn a new language of communication using new skills and tools. Until now most of the innovation has been of craft and the use of jargon. Yes, big data analytics is increasingly being used but its only following traditional forecasting and measurement techniques albeit in a new technological avatar. We do not realize the much talked about Millennials are not digital natives but migrants who still carry a, lot of legacy traits and habits. Gen Z (or whatever) and those born in this millennium have little connection with say baby boomers. This is a consumer which will in the years to come demand new experiences even new goods and services. For this generation even entertainment will have to reinvent itself.
Narratives change every generation and even eternal stories must be told in smarter more relevant formats. Context and syntax change and sadly most of existing players are still busy reinventing the wheel. Innovation not renovation is the key. The post millennial and the following generations require a mindset change. Automation and AI will not only render millions unemployed but even others will have perhaps more leisure. We must not forget that there is an overlap which will perhaps last another decade where legacy social, economic and political structures will coexist but with a certain dissonance. Pedagogical reinvention is as necessary as individual reimagination. From photorealism and Virtual reality to multisensory experiences ,3D manufacturing to shared services in the cloud our lives will change. From a 100 trillion-dollar global economy we will be a 500 trillion-dollar economy in the next 10 to 15 years. Life will only get better.
Those obsessed with OTTs and other such formats must understand it is merely jargon to hide a clumsy transition to tomorrows entertainment. There are not enough adequately trained professionals who can lead us into Digital Nirvana. Rhetoric and jargon must give way to a willingness to relearn and reskill. Adaption and adoption are band aid solutions to a change which is cataclysmic. Those who are prepared and clever enough to learn will survive. Others born with their umbilical cord cut from the analogue existence will be the leaders. It’s the time when a few will take the next leap for humanity and many will follow into an exciting tomorrow. Future never disappoints to those who are ready for it. Go for it. As futurist Thomas Frey says so succinctly,” “Humanity will change more in the next 20 years than in all of human history.”
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