Media & Telecom Execs Expect Transformational Change In Their Businesses Over Next Three Years

LOS ANGELES, Oct. 7, 2014 /PRNewswire/ -- Continued convergence within and between the media and telecommunications industries, and the impact of emerging technologies are just two of the several factors that will lead to transformational changes in core business over the next few years, according to KPMG's 2014 Media & Telecommunications Industry Outlook Survey.

In surveying 100 senior executives in the media and telecom industries, KPMG found that an increasing amount of companies are expecting change at a more rapid pace than they have ever seen before – more than 55 percent of executives polled say that their company will experience a transformational change to their core business in the next three years. When combined with an additional 40 percent that feel their business will continue to change at the current high rate, it shows a dynamic change in executives' outlooks. This is fundamentally different than what the media and telecom industries have previously experienced, KPMG leaders say.

"Historically, change has often had a negative connotation to established businesses," said Paul Wissmann, national sector leader of KPMG's Media & Telecommunications practice in the U.S. "However, in the current environment, transformation – driven by technology, innovation, consumer demand, etc. – is creating new opportunities for media and telecommunications companies to evolve their business models to become more competitive and agile."

Impact of New Technologies and Digital Services

More than 70 percent of both media and telecom executives believe the continued emergence of new technology devices and services will positively impact their business in the next year. Additionally, 70 percent of industry executives believe that their company's revenue will increase as a result of mobile device transactions. In fact, the sale of applications and content over smartphones, tablets and other wireless devices is also expected to be a top revenue driver over the next three years (65 percent media and entertainment executives, 76 percent telecom executives).

The survey finds that media executives are even more bullish than their telecom counterparts about how new digital distribution methods will increase their revenue over time. In fact, 59 percent of media and entertainment executives feel that emerging digital distribution methods will be one of the top three drivers of their company's revenue growth in the next three years (as compared to just 36 percent of telecom executives). Nearly 30 percent of executives feel that machine-to-machine (M2M) service will also be a top revenue driver.

These changes will also affect how businesses run themselves. Many companies expect to see a change in the level of centralization or autonomy that they give to key subsidiaries. This is largely being driven by the need for cost containment and increased access to new technology and products.

The Effects of Convergence

More than 65 percent believe that the media and telecom industries will continue to converge over the next year and that it will positively impact their business. An overwhelming amount of that statistic is dominated by those in the telecom industry, suggesting that industry leaders anticipate more deals similar to the recently proposed media-telecom mergers that have been seen in the press.

Concerns

While many executives have not yet experienced a cyber-security related issue within their company, many are concerned about it. When asked to consider their company's current IT security structure, 74 percent feel that it is likely that their company will experience a major security issue within the next three years.

When asked what concerns them most about their company's future, KPMG found some clear differences between media and telecom executives. Forty-four percent of media executives are worried about the economy's impact on their company compared with only 22 percent of telecom executives. Meanwhile, 38 percent of telecom executives are worried about keeping pace with changing technology (an increase from 2013) compared with only 24 percent of media executives (a decrease from 2013).

About the Study

KPMG's 2014 Media & Telecommunications Industry Outlook reflects the viewpoints of 100 senior executives in the United States. The web survey was concluded in April 2014. For more information, visit www.kpmg.com/us/mediatelecomindustry.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 155,000 professionals, including more than 8,600 partners, in 155 countries.

SOURCE KPMG LLP