M+E Daily

Deloitte: Guiding M&E Companies Through the Digital Sea Change

by Larry Jaffee

If content is king, then who is that trusted advisor to the throne?

Based on the size and commitment to the media & entertainment industry, the individuals who are whispering in the ears of media and entertainment power-brokers work for Deloitte Consulting LLP, which provides expert advice to M&E companies on the ever-evolving digital technologies that have disrupted the industry’s traditional business models.

Jim McDonnell, Deloitte’s National Media Industry Leader, explains that his company about four or five years ago made a significant investment in creating dedicated consulting and research teams to stay ahead of the digital curve, and pass on that knowledge to its corporate clients in the M&E space.

In the U.S., the company employs 1,000 practitioners exclusively focused on media and entertainment, as well as another 100 in the UK and 750 in the rest of the world. Besides consulting, the global parent company’s subsidiaries work in three other key business areas: audit, financial advisory, and tax.

New York-based McDonnell notes that within the Deloitte organization, its three groups — focused on technology, media, and telecommunications — are working closely together these days, as content and hardware continue to converge at a rapid pace.

“Media and entertainment companies have to find the right opportunities,” McDonnell says, noting that partnerships are a key to finding new business models and revenue streams in today’s economic environment. He cites the trend of mobile phone companies making their own content deals with record labels to offer bundled music directly to its cell service customers.

The economic downturn notwithstanding, McDonnell believes digital would have still figured prominently in media and entertainment companies’ distribution plans — not only because of its inherent efficiencies, but also because of the new ways audiences have demonstrated they want to consume media, whether watching video on mobile devices or reading an electronic version of a magazine.

“It’s not traditional media platforms versus digital media platforms,” McDonnell observes of the current ecosystem. “The same media and entertainment companies are offering both traditional and digital platforms.”

As such, Deloitte is taking “a long view and a short view” for its formidable M&E client list, including:

• All the major movie studios,

• Four of the top five cable operators and satellite operators,

• Seven of the top 10 TV station groups,

• Four of the top five music publishers,

• Seven of the world’s top 10 advertising agencies,

• All of the top five advertising agencies in the U.S.,

• Four of the top five book publishers,

• Three of the top five game publishers,

• Three of the top five information services companies,

• Four of the top five newspaper publishing companies,

• Three of the top five search engines, and

• Three of the top four record labels.

On the west coast, Robin Tarufelli, a Los Angeles-based senior manager for Deloitte’s M&E practice and an active attendee of MESA events, has been advising the Hollywood studios, who are grappling with ways to make up for diminishing DVD revenues. Five major trends redefining media consumption have emerged: digitization; wireless enablement; cloud computing; social media; and device proliferation.

“I don’t think there’s a magic bullet,” she opines. The record industry’s “fast and furious shift” to digital distribution thus far has spared the movie industry, Tarufelli notes. But Blu-ray has not turned into the growth engine that the studios had hoped for with the next-generation DVD, she adds.

While in the past year “the noise level of 3D” might have suggested that the industry found its savior, Tarufelli says in recent months, from her “point of view, the marketplace has quieted a down a bit, it’s not as intense.” Still, particular animation titles might make a lot of sense for 3D treatment, she adds.

It is this kind of business environment in which a consultancy such as Deloitte thrives. Despite the recession and high unemployment rates, talented professionals with technical skills are in demand, Tarufelli observes. Her clients are doing their best to “retain the best and the brightest.”

Tarufelli reports that Deloitte lately has been busy assisting its clients with assessing their “human capital needs” – the silver lining behind the M&E companies’ family jewels.