NEW YORK - Thursday, April 5th 2012 [ME NewsWire]
Online content and services were the only sector of the communications, media, and technology (CMT) industry to gain market value in 2011, according to financial analysis by Oliver Wyman that illuminates the shifts reshaping the CMT landscape. The 2012 State of the Industry Report, “Painting the Bigger Picture,” also reveals how value has migrated in the communications sector, with the fixed and mobile subsector losing value in Western Europe last year but growing in North America and China.
The report, which includes the results of a survey of more than 500 CMT executives, quantifies how the digital cannibalization of traditional media has polarized the industry. Bouncing back from the global financial crisis of 2008, the online content and services sector had already regained its 2007 market value by 2010 and is now 14% above water. By contrast, all of the traditional media sectors declined in 2011, dragging the broader media sector to a 3% market cap decrease, the report shows. The dominance of United States-headquartered online companies contributed to a geographic value shift in the media sector, away from regions such as Western Europe (where market value declined 15%) and toward the U.S.
“This is a wake-up call for traditional media players and policy makers alike to rethink the role and stake their companies and economies claim in digital,” notes Denis Burger, Partner and head of media in Central Europe at Oliver Wyman and a co-author of the report. “Looking ahead, for the first time ever, media executives expect monetization from advertising and consumer spend actually to outpace growth in usage of online media,” Burger adds. “This will accelerate the digital cannibalization trend and regional economic shifts.”
Although the value of the tech sector declined slightly in 2011, it has recovered its losses from 2008, with the software and services subsector actually increasing in market value by 8% between 2007 and 2011. Consumer electronics companies, dependent on consumer spending, remain below their 2007 level and fell by 7% in 2011 – due in part to the earthquake and tsunami in Japan. Overall, technology executives are focused on the potential for growth in the next two years, with the vast majority expecting their companies to increase both revenues and margins. Opportunities for organic growth, followed by expansion into new markets, are their highest growth priorities, with executives still open to partnerships across a spectrum of businesses.
While the market value of Communications firms declined 30% from 2007 to 2011, most value was lost in 2008. In 2011, a 5% decline reversed the growth achieved in 2010. Since 2008, Asia has been an area of strength. Chinese communications firms scored 84% above the industry average on the Oliver Wyman Shareholder Performance Index (SPI), a risk-adjusted measure that identifies long-term value-migration trends.
Taking the CMT sectors together, North American companies are within 6% of their 2007 value, thanks to strength in hardware equipment and semiconductors,and in software and services. In 2011, North American CMT companies lost the least value (1%) of any region, bolstered by growth in thefixed and mobile communications and media industries, and especially online content and services.
“Although there are encouraging bright spots, the CMT industry remains unsettled,“ comments Raul Macias, a Partner at Oliver Wyman and co-author of the report. “As politicians, regulators, and consumers adapt and respond to the changing CMT landscape, the next few years will see increasing reliance on operations optimization, synergies, and innovation, all of which require strong managerial skills.”
For a full copy of the report, go to: http://www.oliverwyman.com/state-of-cmt-2012.htm
About Oliver Wyman
Oliver Wyman is a global leader in management consulting. With offices in 50+ cities across 25 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development. The firm's 3,000 professionals help clients optimize their business, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is a wholly owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].For more information, visit www.oliverwyman.com. Follow Oliver Wyman on Twitter at @OliverWyman.
About the Oliver Wyman State of the Industry Survey
Oliver Wyman conducted online surveys in the second half of 2011 among more than 500 communications, media, technology and IT executives from private and public companies in Asia, the Americas, Europe, and the Middle East. In appreciation of the time spent by the participants, Oliver Wyman donated $5,100 to non-profit organizations such as Kiva, Room to Read, and Teach for India.
Contacts
Julia Karas
julia.karas@oliverwyman.com
+49-89-939-49-468
Mark Kremers
Oliver Wyman
Dubai Media City
Dubai, United Arab Emirates
Tel (reception): +971 4 425 7000
mark.kremers@oliverwyman.com
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