Forbes delivered some apparently bad news for the media & entertainment (M&E) business this week: Mounting evidence suggests millennials value experiences over owning things. While I don’t dispute the theory, there’s a future in selling media for keeps, especially for companies that understand that ownership should be an enjoyable experience in itself.
The business magazine draws on a number of sources to suggest that consumers are moving from wanting to accumulate a wide variety of goods to preferring to experience, rent, and share: “25 years from now, car sharing will be the norm, and car ownership an anomaly,” reads a quote from a Morgan Stanley report cited by the article.
It’s a theory some in M&E might be loath to entertain. Companies used to charging around $10–15 for a single CD, DVD, or digital download will have to accept that many people will only pay half that per month for access to vast swathes of their catalogs via services like Spotify and Netflix. Others might not spend on digital media at all, preferring to save their cash for live events.
For many in the music industry, it’s no longer a scenario. Revenues from subscription-based streaming services have already eclipsed those from digital downloads and CD sales in a number of markets. Download-to-own TV shows and movies will almost certainly suffer the same fate as music downloads, despite many in the industry’s continued confidence in these electronic sell-through (EST) services.
Why? Owning a digital download is a distinctly flat experience. It offers little that a digital rental doesn’t offer – beyond a nagging sense of having paid too much.
But that doesn’t mean that owning media can’t be desirable. Witness the resurgence in vinyl sales and the resilience of the market for physical books, thanks no doubt to the wonderful tactile experience these formats offer in contrast to their sterile digital equivalents, especially as manufacturers invest in high-quality packaging and limited releases.
Owning digital media can be enjoyable too. The games industry provides the best examples, fostering a burgeoning market for virtual spaceships, weapons, and other in-game items. Like beautiful books or rare records in the real world, these goods confer a sense of identity and status to the owner in the digital worlds they inhabit.
The most innovative work in owned media will combine the power of both physical and digital formats. Take Activision’s Skylanders game. The product, which was launched in 2013 and has been emulated by Disney, Nintendo, and Lego, is reliant on players buying collectible figurines to unlock characters and other items within the console segment of the game.
(Note to the industry: I’m thinking true convergence here, not clumsy concepts which combine existing physical and digital formats – such as Ultraviolet and Superticket bundles of movie tickets and digital downloads.)
The main challenge for many media companies is that they sold the experience of owning media short some years ago. Despite increases in fidelity, the move to CDs involved compromises on the quality of packaging and durability in the name of increasing the record industry’s profits. And I think you’ll find that few people are nostalgic for DVDs and their flimsy plastic cases.
We bought these formats because we had little other choice. Digital distribution will undoubtedly relegate owning media to a marginal activity, but that doesn’t mean that rightsholders shouldn’t seek to maximize its contribution to their overall revenues. They’ll just have to work much harder to create products that tomorrow’s consumers truly want to own.
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