CEOs Say Getting Consumers to Pay Fair Prices for Digital Goods is Challenging

Three-quarters of chief executive officers believe that the future of the media and entertainment industries lies in digital.

According to Ernst & Young, 74% of CEOs say tech-enabled offerings are the future of the media and entertainment industry. They also agree emerging markets hold the key to unlocking that potential revenue and growth.

“With 3% to 8% projected growth in income and high mobile subscription rates in emerging economies, there is a great opportunity for growth in these markets, particularly where new technology and digital are concerned,” says Martin Lundie, Ernst & Young’s Canadian Media and Entertainment Leader. “But improving infrastructure, such as broadband and mobile networks, to handle the demand will be critical to realizing the opportunity.”

In a new report titled “Opportunity and optimism: how CEOs are embracing digital growth,” it’s revealed that media and entertainment companies from around the globe unanimously agree that catering their offerings to digital ecosystems, where consumers can interact with content across multiple connected devices, is essential for growth.

“In the race to adapt products and services to meet consumer needs, some companies realize that their operational capabilities still lag behind their ability to get these new products and services into the market. In particular, in building infrastructure and delivery capabilities to support new models, CEOs must respond to challenges such as creating new product and service bundles for which the consumer is willing to pay,” says Lundie.

This is indeed a concern. 69% of CEOs surveyed say getting the consumer to pay a fair price is a challenge. Meanwhile, 53% report their companies struggle to determine where to house their intellectual property and how to manage it. And 47% report that optimizing the supply chain to realize better margins is a challenge for their company.

Lundie adds, “The infrastructure challenges are real—but not insurmountable. By finding innovative ways to overcome these challenges, media and entertainment companies will be better positioned to take advantage of digital revenue and growth opportunities.”

Note that Lundie tackles the infrastructure problem, but not the pricing problem. That one is significantly more tricky in an era of 99-cent apps, flat-rate streaming video services, and easily accessible torrent sites.