Traditional media companies—networks, studios and production companies—face an existential threat with the rise of deep-pocketed digital disrupters like Netflix and Amazon. To compete with these insurgents, incumbents will need to reinvent the way they do business and reduce costs drastically. Cost reduction not only frees up funds to develop more content, but also raises value for shareholders. Bain’s research finds that cutting costs by 13% to 15% in focused areas allows media companies to increase their earnings by up to 45% and boost shareholder value significantly.
Charlie Kim is a partner with Bain’s Global Media practice, and Jeff Katzin is a Bain partner working with the Global Media and Telecom practices. Both partners are based in New York.
The meteoric rise of Netflix and Amazon as media giants is forcing the industry to confront the need for dramatic cost transformation.