IBM has warned of a looming crisis with old and new media on a collision course over how and where content such as TV, news and user-created will be carried, and says billions of dollars in revenue are at risk.
The report, to be released later today in New York, warns that the conflict between traditional and new media is seeing the emergence of a media divide that could erase hundreds of billions of dollars in revenue from the bottom line of the world's leading media companies.
"The current clash between traditional and new media has reached a fevered pitch," says the report, Navigating the Media Divide.
"Industry incumbents are responding - but perhaps not quickly or completely enough. While they are fighting an escalating competitive battle on this front, traditional media cannot ignore the impending division in its own ranks."
Steven Abraham, global industry leader, IBM media and entertainment, said the music industry had already demonstrated the dangers of mismanaging the transition.
"We estimate that the music industry lost between $US88 billion ($114 billion) and $US190 billion in its transition to digital," Mr Abraham said. "Television and film companies will be next if companies don't systematically navigate the media divide. Now is the time to determine changes in business models, innovate and re-evaluate partnerships. Media companies must take action before it is too late."
IBM conducted the study, interviewing senior media and internet industry leaders and analysing factors shaping the industry. It found new forms of media will grow from 11 per cent to 18 per cent of total market revenues over the next four years, with new media growing at five times the rate of traditional media.
"This media divide is pitting partner against partner in a struggle for growth," the report states. "In fact, IBM sees a clear delineation between the old and new worlds of media. In the traditional world, content produced by professionals and distributed through proprietary platforms still dominates. But in the new world, content is often user-created and accessed through open platforms. These polarised tendencies mark the clear and present conflict between incumbents and the new entrants."
Steven Canepa, vice-president of IBM's global media and entertainment industry, told Media that while "content" had been the buzzword used by people talking about the future, the media needed to again change its language. "In web 2.0 terms we are moving from connecting computers together to connecting people together," Mr Canepa said. "So it's not just providing compelling content but providing compelling experience and part of the experience may be something that extends beyond traditional content."
Mr Canepa said the media was dividing into four distinct models.
Beyond traditional media, he said, there was the rise of "walled communities, where niche, community and user generated content is distributed through a platform such as YouTube (and) content hypersyndication where professional content is made freely available".
However he said the most disruptive would be new platform aggregation, where content owners had no legacy advantages.
"One of the points we are making is to put consumers at the centre of your business," he said. "What all this means is pressure bearing down on media companies to increase their number of permutations of content for all sorts of different devices, formats and marketplaces et cetera.
"But to do that they really need to open up on the inside so they can open up on the outside. To open up on the inside you have to connect up what are historically silos so that the content can flow across the enterprise."
Other actions IBM says media companies need to take now include giving up control to get share, leveraging virtual worlds (IBM has been one of the most prominent movers in Second Life), innovating business models with aggressive experimentation, shifting investment from traditional business to new models and investing in interactive and measurable services. It also says companies need to redefine their partnerships while mitigating fallout. "Prepare for divergent strategies between formerly symbiotic partners," it states.
