Digital media giants are taking viewers away from traditional media companies, while winning the battle to produce and acquire top-tier content. Charlie Kim, a partner with Bain's Media practice, says traditional companies need to respond with a cost transformation at an unprecedented pace and scale, and he outlines four principles to guide it.
Read the Bain Brief: In Rewrite: Funding Media’s Transformation
Read the transcript below.
CHARLIE KIM: Digital media disruptors led by Netflix, Amazon and others are dominating the headlines and the war for eyeballs. And they're winning both at the quantity and quality of the content and experiences that they're offering.
Now with major spending, particularly in original programming, these disruptors are making it incredibly expensive for others to both produce or acquire comparably great content. This is putting tremendous pressure on traditional media companies, who are challenged to fight these new giants without massive investments in new content and new capabilities. And we believe that the only way to secure the needed capital is through a significant cost transformation. Frankly, at a pace and scale that hasn't happened yet in this industry.
Now with this existential crisis looming, this is forcing media executives to figure out new ways to bend the cost curve. First, don't go small. Media companies simply cannot match insurgents without game-changing approaches in things like zero-based redesign or radical simplification. The scale of investments needed simply requires a very ambitious mindset.
Second, finance and creative teams have to work together on this. The creative teams cannot see this as something done to them. Rather, this has to be led and owned by the line.
Third, aggressively drive results, and reinvest visibly. This cannot be seen as just a cost-reduction exercise. Rather, demonstrate that you are reinvesting the savings from these cost initiatives into programs that are going to generate top-line growth.
Fourth and relatedly, work with the creative culture. There's no surer way to win the hearts and minds of the organization than by reinvesting in content and the capabilities that will help you fulfill the creative mission.
The next few years will be full of turbulence and opportunity. There's a short window for media companies to both take action and reshape themselves to meet that future.