Consumers are increasingly involved in the content and distribution channels for media and entertainment. The concept of emerging channels and interactive involvement is known as digital convergence. Recently, Teradata Magazine asked two vice presidents from Capgemini North America's Media and Entertainment practice, Mark Landry and Jason Forbes, for their thoughts on digital convergence and how media and entertainment companies can leverage this emerging model to gain more value and leverage decision-making. The insights they shared are provided in collaborative format.

Q Let's start by defining "digital convergence." What is it, in a nutshell?

Mark Landry

A The definition is probably more of a bowl of nuts, since over time it has come to mean different things to different people. It can be thought of enabling "any content, any time, anywhere through any device." This may already sound like a cliché, but this concept has necessitated a fundamental re-drawing of how players—from content providers to distributors to retailers to technology companies—execute on the capabilities and alliances they need to compete and win.

Because of horizontal convergence, content providers develop direct relationships with consumers at the far end of the value chain. Meanwhile, vertical convergence encourages players like Apple to span across new device types and channels, further blurring traditional boundaries.

All along, we've had traditional members of that chain, but now we also have newer members. Players like Facebook, Google and MySpace that simply didn't exist 10 years ago are not only driving convergence, but further pushing boundaries by enabling and offering consumers new types of media and forms of distribution. User-generated content from blogs through RSS feeds are an example of the massive expansion of interactive media, which has underpinned the transformation of the value chain into a two-way exchange between consumers and content creators.

"Old media" will be around for many years to come, without changing much. However, the expansion of flavors and models of media interaction will further evolve. That means we're experiencing both digital convergence and emergence.

Digital convergence also means the transition of traditional media distribution channels into emerging and new channels. For example, on some online sites, consumers can request a title. Instead of following the model of delivering a pre-manufactured item via the traditional value chain, the content creator can manufacture it in real time—perhaps customize it to the consumer's request—and have it delivered in a day or two.

Q How can companies tap into digital convergence to grow their online market share?

A This kind of convergence has actually been going on for quite a while. New revenue streams are evolving as this convergence grows and develops, whether those streams are from advertising or more customized ways of packaging content, as in the previous example.

Companies need to figure out how to leverage branding—whether that's the brand of the title or of the provider—and how to connect with the consumers interested in that brand. Building communities around the brand can include online communities where consumers discuss the brand or share thoughts and ideas with each other. The entertainment and media industries are moving to a direct-to-consumer model in terms of how they provide content and how consumers experience the content. Then consumers discuss—thus further market the content—by word of mouth.

Increasingly, online market share will become blurred into maximizing market share across all the channels and platforms of consumption. Start with the "three-screen experience" of TV, PC and mobile for media consumption and then see how every stakeholder group in the value chain—whether they be content providers, advertisers or distributors—has a huge amount to gain and lose by offering consumers different models and means of consumption. Apple's ecosystem across the iPod, iTV and now the iPhone is a great example of a company trying to enable this three-screen experience and reap the benefits of aggregated market share that this provides.

Finally, digital convergence enables this kind of direct-to-consumer marketing by eliminating the restraints of physical market space. If there isn't room on the shelf of a retailer for content, that doesn't mean it can't be marketed. By being available online, even limited-appeal content can still be available for consumers, create its own revenue stream, and at the same time help build loyalty from those consumers who will then turn to the online retailer for other content.

Q What challenges will digital convergence create for capturing data—and using that data to add to a 360-degree view of the customer?

A An effective information flow requires integration among everyone in the value chain. For example, point-of-sale data must be accessible among the content creators, distributors and retailers so everyone knows what is selling where, to whom and why. This kind of data analysis and view of the consumer is important not just for current sales but also for forecasting future sales.

But sharing that data in near-real time is a challenge, since consumers expect faster responses to their needs, and also expect to be able to purchase content specific to their own tastes as well as format needs. There are contractual issues, of course—such as what's proprietary, how the data should be shared and protected—but there are also technology issues with this kind of sharing. Do all the players who need to share this data have the right technology in place to do so?

One of the big opportunities in the space is harnessing the wealth of data that Web 2.0 has enabled. Currently, social networking, blogging and other 2.0 features are creating reams of data that have little to no integration with broader data repositories or customer relationship management capability in organizations. If you effectively match these together, you would enjoy a level of customer insight that simply never existed before. Obviously, consumer privacy concerns need to be taken very seriously, but if treated in the right way this data consolidation and mining will likely underpin dramatic improvements in product development, marketing and targeted advertising.

Jason Forbes is the author of the Capgemini report Digitize or Die: Why Convergence is Growing Teeth.

Q Do you think companies are missing an important component of that view if they opt out of capturing that digital data?

A Yes, but there needs to be enough volume in these new channels of distribution to really make the business case to spend money in order to get the information. And that business case has to show that it's important to grab that information, mine it, and really translate it into good business intelligence, so that all the value can be pulled, not just from one channel, but from other related channels as well.

Q Do you foresee this becoming more and more necessary in the near future? If so, how?

A Capturing data to get the most out of this emerging digital convergence in the media and entertainment industries will become more and more necessary. It's a huge investment to capture that data and then turn it into actionable business intelligence, but already many companies in this industry—wireless, cable, content creators—are making that investment. In the long run, it's the only way to meet the end-consumer requirement for customized, on-demand content. That requirement isn't going to go away; it's just going to grow as media channels and formats proliferate. So it's a necessary, but absolutely worthwhile investment to put the technology in place for capturing digital data in order to leverage growth and revenue from the evolutions of digital convergence.

Q What technology, such as an enterprise data warehouse, should entertainment and media companies have in place to capture that digital data in order to leverage the opportunities of digital convergence?

A Companies absolutely need to be able to aggregate this information in a data warehouse or central repository. In many cases, historical data and certainly 2.0 data lie in separate repositories that were created quickly to meet the immediate imperative of new feature functionality. But companies need the ability to have sales information by all the various channels with as much demographic data as possible in one place to help them understand what's working and what's not: What are the most profitable channels of distribution? What are the most successful titles? And having this data in one place in order to get that 360-degree view—not just about end consumers, but of all the aspects of the business—is crucial to finding opportunities that might otherwise be missed. These may include ways to cross-sell channels or titles, or ways to build communities that develop brand loyalty. An enterprise data warehouse is absolutely valuable and fundamental for capturing that data and maximizing those digital convergence opportunities. T

Mark Landry specializes in technology services in the media and entertainment industry. He has experience in technology and consulting services, and expertise in technology-enabled enterprise transformation, technology strategy and program management.

Jason Forbes has helped to shape strategic sessions in digital to better understand how to marry physical and digital operations and monetize content across the rapidly evolving economic models of a "three-screen experience."

Sharon Short is a freelance writer who specializes in high-tech topics.

Teradata Magazine-December 2007