Our lives have been transformed unimaginably by the COVID-19 pandemic. As we struggle to cope with the “new normal”, and what it means for us, our changing habits, needs, and demands have impacted businesses. New complexities seem to disrupt global markets every month, and companies are in a constant race to address the ever-changing technological and regulatory requirements.
Every industry has grappled with the effects of this volatile year and a half. But the media, entertainment, and broadcast services sector has been particularly impacted, with the $2.1 trillion global industry contracting by 5.6% in 2020. Lockdowns forced outdoor entertainment venues such as cinemas and LIVE public events to shut down. At the same time, the content supply has spluttered due to health and safety concerns along the production line. An alarming dip compounded the crisis in advertising revenue as the biggest spenders scrambled to cover their cash flow challenges.
On the other hand, people confined to their homes grew heavily reliant on digital experiences. The ways we communicate, teach, shop, play, learn, and entertain ourselves have all taken an increasingly digital turn. The telecom, media, and entertainment (TME) sector has adapted swiftly, aided by a host of independent software vendors (ISVs) who has pushed the boundaries of innovation at an unprecedented pace. Music concerts and blockbuster film releases moved online, e-gaming saw a significant upturn, and telecom giants offered subscriptions and curated access to several entertainment channels at no extra cost.
By turning the demands of a captive, content-hungry audience to their advantage, independent software vendors and original equipment manufacturers (OEMs) focused their tools and services on ensuring a positive and reliable customer experience, even under increasing network pressure. With the immediate challenges negotiated, it is time for these media and entertainment (M&E) organizations to chart a more defined path into the future.
Embracing Change: From Mitigation to Recovery
In 2020, M&E organizations primarily concentrated on immediate, short-term fixes to keep their businesses running. Now, they need to reassess what went wrong during the pandemic, along with the capabilities that helped them ride out the storm. The offerings and skillsets provided by ISVs and OEMs have always been instrumental to M&E firms in creating compelling content, understanding customer behavior, and building loyalty. Today, amid COVID-19, ISVs and OEMs face a two-pronged challenge— continuing to drive innovation to address customer demands while aligning the lessons learned with their future market positioning.
The first significant impact in the OEM and ISV space was felt right at the onset of the pandemic when companies faced severe disruptions in supply chains spread across China and Southeast Asia. While this initially affected hardware supplies, the software and services businesses also slowed down as COVID-19 spread beyond the boundaries of Asia. Since then, smaller IT vendors have successfully leveraged their agile and nimble development processes and cutting-edge innovation to facilitate large-scale adoption of collaboration platforms, VFX and audio-visual enablers, gaming engines, big data, and AI. With a significant gain in market share, some of them are on the path to turning “big” by the time the dust settles. Independent software vendors also have the opportunity to step up as consulting partners to handhold clients as they embark on their digital transformation journeys. They need a combination of scale, industry expertise, and top-line revenue to fuel a sustainable and resilient growth plan.
Roadmap for the Future
In 2020, emerging players in the ISV sector controlled 55-60% of market revenue, indicating a largely fragmented market. For most of these smaller players, it is now a question of where to put their money and cut costs. They need to carefully assess the right mix of intelligent technologies to help their telecom, media, and entertainment clients gain a competitive edge. 2021 presents both opportunities and challenges. While ISVs can sell more tools and software to address dynamic customer demands, they also need strategic partners to address fledgling issues around managing product hierarchies, satisfying expansion needs, and maintaining top-line revenue.
Private equity (PE) firms, in particular, are shaping up to be such partners for TME companies, with a report confirming that the sector saw 440 deals that involved PE companies. However, considering the disruptions caused by the pandemic, PE firms need to readjust their investments regarding developments while ensuring that they continue supporting the sector to gain a considerable edge.
In brief, a collaborative go-to-market approach goes a long way in attaining the following key business advantages:
Concentrate on the right product: ISVs need to pick the right product to market aggressively while relegating less critical software to the background. They sell or lease the de-prioritized products to a partner who can enhance their functionality and effectively market it to more diverse vertical and horizontal client segments.
Optimize cash flow to improve margin: Larger companies willing to take over the management and marketing of select products can provide the requisite cash infusion to grow the top line and contribute to increasing margins. This provides the impetus for ISVs to invest further in their core offerings.
Discover new markets: Most small to mid-sized technology firms cater to localized or domestic market needs. In a post-pandemic world where in-person product launches and technology summits are scarce, a global partner can help expand a product's geographical footprint.
Connect to a larger client base: A more significant technology player has greater reach across industry verticals and business horizontals. They are better positioned to repurpose products to serve the needs of a more extensive and diverse client base.
Enhance brand value to attract investment: A trusted technology partner ecosystem has become essential for private equity investors in the ISV market. Such a partnership adds to the brand's reliability and boosts the possibility of further capital infusion.
HCLTech: A Partner for Agility and Resilience
HCLTech is built on the genesis of our inherent DNA in product and platform engineering and the acquisition of several cutting-edge products. Our thorough understanding of today's enterprises' product lifecycle management needs, our holistic digital solutions suite, and our years of cross-domain experience position us as the perfect partner in your transformation and innovation journey. A comprehensive partnership with HCLTech promises top-line growth, innovation-empowered core competencies, and improved margins.
When clients from the TME industry partner with HCLTech, they enjoy a host of benefits from associating with an industry leader. We are committed to the Telecom, Media, and Entertainment industry client’s topline growth by increasing their footprint and revenue share through our broad spectrum of services. They can also enjoy enhanced visibility that comes with including their products/services in our product catalog. We have flexible partnership constructs that focus on core products, and our expertise allow our clients to scale and launch new products or services quickly and efficiently. Furthermore, we can run captive operations for our clients with a buy-back option, thus helping them improve margins. HCLTech has a global reach and can provide access to clients in prospective regions with a presence in 50 countries around the globe.
HCLTech has been at the forefront of transformation in the Media & Entertainment (M&E) sector as the industry shifts from linear content progression to a complex web of interactions. We have deep domain expertise and deploy a micro-vertical strategy in crafting M&E domain-specific solutions for broadcasting, new media, music, studios, and gaming segments.
We currently manage more than 10 IPs and frameworks in the M&E space to help our clients optimize their value chains. As their businesses increase in scale, ISVs and PE firms will need to innovate faster, leaving less time to focus on the quotidian tasks of IT management. Taking their business to the cloud offers further flexibility and allows them to concentrate on core business objectives. HCLTech cloud services are specifically designed to enable technology-led transformation for telecom, media, and entertainment companies and can help them bolster customer relationships and build future-ready infrastructure.
And therein lies HCLTech promise. As ISVs and PE firms look for strategically aligned, inorganic growth opportunities, HCLTech stands ready to build an integrated, collaborative relationship that drives innovation, elevates customer experience, and enhances resilience across the partner value chain. As a partner of choice for global enterprises, we at HCLTech work with our technology partners to create an adaptive product portfolio and an innovative go-to-market strategy driven by business insights and a robust technology ecosystem
