M+E Connections

By Todd Supplee, Partner, Entertainment & Media Practice, PwC

Technological advances represent a potent centrifugal force in entertainment and media (E&M) — breaking up existing relationships; pushing large generalists to yield to smaller specialists; and allowing smaller, nimble competitors to run circles around incumbents. Meanwhile, digitization, compounded by shifting consumer behavior, is accelerating the pace of change at unprecedented rates. While all Entertainment & Media sectors are affected, motion-picture and television studios face these challenges daily — in particular with home entertainment, as digital consumption proliferates and DVD/Blu-ray disc sales decline.

Studios generally leverage historical data to predict DVD and Blu-ray unit sales, which drive downstream marketing, promotions, and manufacturing decisions. However, in today’s mercurial global marketplace, historical data becomes outdated almost immediately, rendering forecasting models obsolete. Despite the immense proliferation of sources and data points, fewer annual new release titles exist to constitute a relevant sample set — compounded by frequent changes to release windows and business models.

And stakeholders across studios remain committed to older modes and styles of thinking.

In such an environment, how does a studio executive uncover truly meaningful intelligence, cultivate fresh perspective, and generate reliable forecasts that factor in and anticipate shifts in an ever-morphing industry?

Drawing on deep industry experience, E&M data science can review and recalibrate forecasting standards to overcome these issues. We advocate innovative models and approaches that treat outliers with detailed nuance, incorporate accelerated DVD market decline rates, and leverage datasets that were not previously available to improve prediction and fill gaps.

These improvements lead to more powerful modeling approaches that separate signal from noise and forecast global sales based on real trends, not just a finite set of blockbusters or underperformers. These approaches also yield analytics models with more stability and integrity, so forecasts are more reliable over time despite new market developments.

As it turns out, data science can vastly improve DVD and Blu-ray sales forecasting efforts. The implications for this is clear throughout all Entertainment & Media sectors: if film studios can better predict market turbulence and its impact to the business, so can other industry players. Despite the centrifugal effect of market forces — and even though a centrifuge can be dizzying on the inside — the velocity, acceleration, and trajectory of the flight path are measurable and predictable.