The digital future for entertainment and media.

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1 What digital means for entertainment and media and why the network is key to success. The digital future for entertainment and media. Time to press play Few sectors have been so radically transformed by the rise of digital as entertainment and media. From print news to record labels, TV broadcasters to video game publishers, entire segments have been turned on their heads by a chain reaction of new customer expectations and new digital possibilities. Now we don t buy CDs; we stream tracks. We play MMO games online with teammates from around the world. We watch video-on-demand TV on our phones without a second thought. Live events and talent shows are occasions for #socialviewing on Twitter, and we get our morning news on Facebook. Although these changes have been underway for years, the real impact is yet to come, and entertainment and media companies are big ships to steer. Research we commissioned with Forrester Consulting found that only 3% have fully implemented digital strategies, compared to 25% across all sectors. 45% say they are currently executing 1. Furthermore, only 7% companies say the maturity of their digital strategy is excellent. 48% say it s fair, poor or very poor 1. There s clearly much work to do: digital is shaking up every part of the digital content lifecycle, from camera to screen, and production through digital distribution. And yet, not all entertainment and media companies are approaching digital with this big picture in mind. 42% say that each line of business is investing in its own digital initiatives without considering the wider digital business strategy. 55% say that each line of business has a different definition of what digital means 1. This document illustrates just some of the ways that digital solutions including cloud and analytics are helping entertainment and media companies compete with new entrants, innovate and accelerate processes, and enter a new age of unique customer experiences. There s no question that, whatever digital means to you, your organization and its infrastructure need to change. We ll show you what steps you can take today to get your business ready for the digital age. 1

2 Digital is the force behind key initiatives across the entertainment and media sector. Why digital matters to your business. Next-generation customer experience Today customers expect to be able to consume audio and video content on their mobiles, with great quality, and at a time and place to suit them. The industry has largely hit that expectation, but the entertainment and media leaders of today are already planning for a new generation of digital services and the tidal wave of data that comes with it. Success tomorrow will demand many things: flawless streaming of Ultra HD 4K video, support for jawdropping VR, interactivity and augmented reality in online games, apps and video, and an even richer anytime, any device experience for all kinds of content. Powerful content delivery networks will be at the heart of serving a global customer base with these types of content, across all platforms. But winning and keeping customers is about more than delivering content itself. In a multichannel world, entertainment and media companies must work harder to understand their customers and deliver a more tailored service. That means personalizing content recommendations and marketing communications, so analytics must be a top priority. Digital programmatic advertising platforms can help increase relevance and conversion. 40 % leaders say that customer experience is a critical priority for

3 Drive business growth throughout the content life-cycle The media landscape has grown exponentially more complex, with broader provider and partner ecosystems, more delivery channels and more formats. Yet the content lifecycle from creation to monetization has been compressed. Using media cloud platforms, companies are better able to manage these ecosystems, automating a host of workflow steps including video transcoding, IP rights management and asset management, as well as global transport and delivery. Using the cloud, it s easier to scale on demand to maintain performance during peaks in usage, while only paying for capacity and services consumed. 45 % leaders say they ve already implemented cloud, and a further 32% plan to implement it 1. Automating the content work flow is vital, but people and their creativity remain the foundation for the entertainment and media sector. Digital tools like unified communication and collaboration can help content creators, marketers, execs and other knowledge workers engage more effectively together even in globally distributed teams, using mobile, video, file sharing and whiteboarding. Protect content and manage risk After recent data breaches that have affected the industry, entertainment and media leaders have placed security high on the agenda, and bodies like the MPAA have been working hard to develop media-specific standards. Content, and the global systems that create, host, share and manage it, must be protected if customer trust is to be retained. 37 % leaders say that improving information security is a critical priority for As the content lifecycle and its workflows move into the cloud and beyond the four walls of the business, entertainment and media firms must adapt how they manage security. Functions for protecting against intrusions, malware, denial of service attacks and other threats must reside in the network instead of on-site. 80 % services leaders say that revenue growth is a high priority for % say that cost reduction is a high priority 1. 3

4 A secure, reliable network is vital to digital transformation. The network is the key to digital. Digital depends on the network Every one of the digital services we ve just discussed depends on the network. Take what goes into getting HD and 4K UHD content from a live broadcast to the viewer s tablet or phone on the other side of the globe. Uncompressed and compressed video must be ingested into the media cloud, and served through CDNs and over the 4G wireless network with minimal latency and near-zero errors. Or take the adoption of multi-touchpoint customer media analytics to support recommendation engines and programmatic advertising platforms. The data for media analytics must be gathered, aggregated and actioned in near real-time to provide a responsive experience. With so many customer-facing services relying on the network, downtime or poor performance will have a massive effect on business. Our research shows that entertainment and media leaders recognize the importance of the network in supporting business goals and managing global entertainment and media digital content workflows. Networks need to change Most entertainment and media companies recognize that, while networks are critical to digital content, their existing infrastructure isn t up to the challenge. Already 78% say their legacy network infrastructure is a bottleneck, and in response 58% say they re already expanding their network capacity to support digital content workflows 1. But simply adding more bandwidth isn t enough. In the digital age, global networks need to be agile: to support the business into the future, by reconfiguring and scaling as traffic volumes shift and as the cloud service ecosystems evolve. Networks need to react automatically to threats and failures to maintain service levels; to operate themselves intelligently and programmatically to lift the burden of manual reconfiguration from overstretched IT teams. Sound like a tall order? There are technologies emerging to deliver these next-generation capabilities, under the banners of software-defined networks (SDN) and network function virtualization (NFV), and CIOs are investigating them. 4

5 Close business and IT alignment is key. 71% say that the network forms part of their competitive advantage 1. 71% Cultural change is essential When technology is so central a part of business processes, IT departments themselves must be closely aligned with every line of business. Entertainment and media companies recognize this: 81% say that IT projects need clear business-focused KPIs. 76% say the CIO should blend business and technology expertise. 48% say that CIOs should chair a council on digital innovation, with representatives from IT and the business. 38% strongly agree that CIOs need to communicate the benefits of technology more strategically to the business compared to just 27% across all sectors 1. What s standing in the way of this happening? For once, it s not budgets, or even staffing. The greatest obstacle to the IT organization s ability to achieve IT and business goals and support the digital business needs is the rate of technology change, cited by 44% 1. say that poor network quality translates into poor user experience 1. 74% say that the network is critical to a big data strategy 1. 77% say that the network is integral to delivery of everything cloud promises 1. 5

6 Accelerate your digital journey. We know what you face Digital transformation is an ongoing, long-term journey, but the time to start readying your IT infrastructure is now. We know this first hand because, following our AOL acquisition, we re a media and entertainment company ourselves. We run our own advertising platforms and our own over-the-top (OTT) video services, such as Go90; and we use analytics to better serve our own subscriber base. The kinds of digital platforms we ve discussed in this document are available today. Through our Verizon Digital Media Services (VDMS), we are already providing CDN and media cloud services to companies old and new. Our live Linear and on-demand Nonlinear streaming video platform is used by major studios and broadcasters. But we know that the cutting edge of digital is always advancing. That s why we engage closely in dialog with the broader industry, sitting on the executive board of the Entertainment Technology Center at USC, with a mission to drive innovation, and the Cloud Security Alliance, to find better ways to keep your content safe. We partner with media technology giants, as well as dozens of specialists in areas like streaming, content management and monetization. References 1 A commissioned study conducted by Forrester Consulting on behalf of Verizon, February We help entertainment and media companies transform their networks and become digital businesses. Our full report explores the big picture of digital transformation and the future of the network. We have helped change the way the world experiences digital media. Global Media & Entertainment Cloud Ecosystem: Managing Emerging Global Digital Workflows explains how cloud services can improve your media and entertainment business. verizonenterprise.com 2015 Verizon. All Rights Reserved. The Verizon name and logo and all other names, logos, and slogans identifying Verizon s products and services are trademarks and service marks or registered trademarks and service marks of Verizon Trademark Services LLC or its affiliates in the United States and/or other countries. All other trademarks and service marks are the property of their respective owners. WP /15

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