Prospects and challenges of digitization for the Corporate Film Industry
Article and interview with Prof. Dr. Conrad Heberling
Digital technology has changed a lot about how the world works. The boundaries between the digital and the analog world are blurring at more and more different touch points. The digital market has infiltrated almost any type of industry you could name, including the moving image industry. Disruptive technologies such as Artificial Intelligence (AI), Blockchain, Virtual and Augmented Reality, 3D, 4K, 5G and the Metaverse are on everyone’s lips. The growing technological progress offers a whole range of new possibilities in terms of content production and distribution — digital technologies have splintered media into numerous niches, channels, and segments. As a result of these processes media creators are facing major challenges. Linear content is merging with on-demand offerings, cross-media and multimedia extensions, and digital applications such as games and apps — with lasting effects on content, storytelling, user behavior, brand experiences, and business models.
In the same way as media is fragmenting, so is the audience — we are responding to this plethora of offerings. We watch TV while reading the news on our smartphone; we browse the Internet while listening to a podcast; and we switch back and forth between Facebook, YouTube, and Instagram at night before bed. Especially, the reception of content on mobile devices has increased drastically in recent years. This is because these technical innovations allow us to consume a variety of different forms of content simultaneously, on the go and at any time. Everything the world offers us in terms of information and entertainment is bundled on these small devices.
Social media and the importance of moving images for corporate communication
Because consumers are increasingly able to use an ever-greater variety of offerings regardless of time and place, media providers, especially branded content and corporate film producers, are faced with the question of where the audience is headed, how to catch its attention and how individualized media behavior will look like in the future. Social Media, in particular, is a big buzzword here. The percentage of active social media users in most parts of Europe is reported to be between 70 and 80 percent by now (We are Social, Hootsuite).
The increasing numbers of users on social networks such as Facebook, YouTube, Instagram and TikTok have spawned a new trend of advertising videos, branded content productions, corporate image or recruiting campaigns and much more on these platforms. According to the German Entertainment and Media Outlook 2021-2025 (PWC), (mobile) online advertising has surpassed the revenue of traditional TV advertising for the first time in 2020. The Global Entertainment & Media Outlook 2020-2024 (PWC) says that in 2019 digital advertising revenues have first caught-up with non-digital advertising revenues globally. A crucial point in this development is the proximity to the consumer and the excellent possibility of targeted marketing online.
In this context, video is a significant medium that will be indispensable in the future. As reported by Cisco, 82 percent of all online content will be videos by this year. Whether short clips as on Instagram Reels or on TikTok, stories, webinars, or tutorials on YouTube: Moving images will dominate social media platforms in the future. No other instrument is better able to convey a story and transport information at the same time. According to explainer video company Wyzowl, 86 percent of businesses already use video as a marketing tool with an expanding pool of marketers expecting to integrate it in their marketing strategy in the future. 68 percent of marketing video content is already produced for social media and videos are the favorite type of content that consumers see from brands on these platforms (Wyzowl).
It shows that video marketing offers real value to both consumers and businesses: 87 percent of video marketers say it has given them a significant return on investment, 93 percent say video has at least helped them increase brand awareness (Wyzowl). While most people prefer to consume branded video content to learn about products or services more than other types of content, marketing videos or audiovisual corporate content is used in several ways. Not only for external marketing reasons but also in the realm of internal communications video has proven to be a medium much in demand, especially over the last two years.
Importance of video for internal communication
The possibilities of digitization have also changed the options for Corporate TV and film. Thus, the consumption of in-house contributions is possible at any time via the intranet and can - analogous to the design of YouTube and other video platforms — additionally be supported by feedback channels in the form of a comment or reply function. On-demand content is also becoming increasingly important in this context. Video archives, which make certain content available to every employee at any time, are ideal for knowledge transfer and thus for employee education and development. (Hajduk & Zowislo-Grünewald, 2021). On the other end of the spectrum of Corporate TV employee-generated content is on the rise: planned or unplanned communication by employees, who serve as testimonials for products, working conditions, corporate culture, and corporate identity in the same way as user-generated content (Hajduk & Zowislo-Grünewald, 2021). Moreover, the demand for livestreaming in the corporate sector is growing unabated, also due to the current pandemic situation. Whether team events, town hall meetings or training formats, events are increasingly taking place virtually via video (Movingimage).
Current and future trends
In light of the growing importance of moving image content, especially on social networks, the need for the (corporate) film industry to deal with disruptive technologies is rising as well. Technologies such as AI, blockchain, AR and VR are radically changing the moving image production. AR and VR in particular are becoming increasingly significant with a global market size of already USD 15.81 billion in 2020 and an estimated compound annual growth rate of 18 percent from 2021 to 2028 (for VR, Grand View Research). The AR market is even estimated to reach USD 60.55 by 2023 (TechRepublic). With a continuously rising user base these immersive technologies have the potential to revolutionize not only the gaming and film industry in general but may gain importance for corporate filming, as well, for example in the realm of marketing and advertising but also regarding employee training films or other educational content. As for internal communication purposes, the possibilities of augmented reality could significantly change the visual component of audiovisual presentations. Being able to present planning processes even more vividly through digital content interwoven with reality, and thus make them more comprehensible, also ties in with a possible use of augmented reality in the areas of information and knowledge transfer (Hajduk & Zowislo-Grünewald). With regard to external communication, it is primarily interactive videos using VR or AR elements that are increasingly in demand.
But even already established technologies and applications are constantly evolving, being reinterpreted, and used in new ways. Vlogging, for example, is becoming increasingly relevant for the corporate video world as well. The formal design of the content produced for social media is also subject to constant change: prevalent vertical videos, silent videos or sound optimized videos equipped with subtitles, captions, and/or on-screen instructions, and short videos are currently in particular demand, although the latter trend is about to change, as longer format videos are also on the rise (Designshack). However, this also depends on the particular platform that the content is published on.
What about the Corporate Film Industry?
How can the (corporate) film industry adapt to this constant change, quickly implement and apply new developments, and what opportunities are there for the European market in particular to finally take on a pioneering role in this respect? Major players can be found in the U.S. and Asia. However, our guest article by Philipp Hollerbach on the automotive industry shows that the corporate film industry in Europe is already adapting to these developments and in fact can even be a driver for digital and technological innovations. But what about the rest of the corporate film industry in Europe? And what about Europe in general?
Our expert and member of the jury, Prof. Dr. Conrad Heberling, Professor of Marketing and Market Research at the Film University Konrad Wolf in Babelsberg, Germany, Head of Studies for the Digital Media Law and Management MBA/LL.M. program at the Erich Pommer Institute in Potsdam and lecturer for digital communications at the SRH Berlin University of Applied Sciences Berlin School of Popular Arts for digital communications, firmly believes that Europe has the potential and innovative strength to play a significant role in reshaping digital developments worldwide. For the completion of our analysis we asked what opportunities he perceives for this continent to achieve digital leadership and what part of the (corporate) film industry could play in contributing to this.
An interview with Prof. Dr. Conrad Heberling
- 1 How advanced is Europe in terms of digitization? And what is lacking for us to become a more driving force in terms of digital progress?
The European telecommunications industry and 5G, the heart of digitization, clearly make Europe´s shortcomings apparent. Without efficient networks, absolutely no digital business model will work. Europe is lagging behind other markets because digitalization is only slowly progressing and secondly, because of the countless small-scale national telecommunications markets and the resulting fragmentation of the 5G markets: 100 mobile network operators in Europe serve a population of 450 million whereas only three telcos cover the US population of around 330 million.
Europe clearly does not act decisively enough in the field of digitization. Policy makers in Brussels as well as in many European countries still do not realize the magnitude of the digital change we are facing.
Fact is that Europe is literally lacking a clear digital strategy, and, moreover, a fundamental digital education. Every educational institution and every student needs to be equipped with state-of-the-art broadband infrastructure as well as digital technologies, tools and, above all, digital skills to develop a digital mindset. Only if the awareness of the importance of digital transformation is raised will we create the prerequisites for a promising transition into the digital age. Great efforts are necessary to ensure young generations do not miss out on digital opportunities.
At a European level, bold actions such as the implementation of the "Digital Services Act" and the "European Chips Act" presented by the President of the European Commission, Ursula von der Leyen, are necessary. In addition, the realization of the European cloud — Gaia X — and a solid and sustainable economic foundation for large scale digitalization projects must finally be tackled.
The era of a digital offensive with allies at a European level has long been overdue. We must not leave the world market neither to the Americans nor to the Asians. They all know all too well about Europe's weakness, namely that continent has created anti-competitive hurdles for itself with its barely comprehensible consumer protection regulations, complicated tax laws, strict data protection guidelines and differing technical standards which have all left Europe lagging behind in international comparison.
For a strong Europe we urgently need to harmonize the fragmented markets, otherwise we will irrevocably fall further behind. The current status quo in Europe leads to major competitive disadvantages especially for young start-ups.
In this sense Europe is lacking its own SVoD and AVoD platforms such as Netflix, Amazon Prime Video, Disney+, Apple TV+, Peacock, Roku TV and more, and social media platforms such as Facebook, Instagram, YouTube, Pinterest and the like. Europe virtually has none and in the foreseeable future Europe will unfortunately continue to be highly dependent upon all of the US platforms because no comparable European streaming or social media platforms are in sight.
- 2 What has the Corona pandemic contributed to digital development in Europe and in the film industry?
The pandemic has been a driver for digital developments in Europe. Corona has in fact been a booster for a more evident shift into the digital world. Today, two years later, the use of digital technologies is more prevalent than ever before: Whether at work, for leisure activities or in maintaining social contacts and, needless to say, throughout the whole media industry. Companies should take advantage of the new digital opportunities and also dare to make a fresh start. In doing so, it is important to reorganize business models in such a way that they meet the current expectations of the digital world.
During the pandemic and resulting lockdowns, videos and films have become the leading medium to convey content and messages and the trend is clearly towards shorter but content richer films and videos. The present-day questions pertaing to peaked audience attention time and socalled infinite mobile phone scrolling are: How will audiences spend their economies of time e.g. for lengthy cinematic productions? What will the cinema of the future be in the scope of audiences´(constrained) household budgets? Audiences might rather want or even need to spend their money on (numerous) streaming subscriber platforms than on costly cinema tickets — not mentioning the time budgets involved in going to the movies which may be “better utilized” on mobile screens for social media interactions and for short video consumption.
What will all this mean for story telling, for content marketing and for the advertising industries and media agencies in adapting to ubiquous 9:16 small screen formats and new (parallel) viewing habits? There are no clear cut answers but what we know for certainty is that there is no alternative and video and film markets are at the heart of our dynamic and rapidly changing digital world with technological and social disruptions virtually around the corner.
- 3 What opportunities do you see for Europe in the digital market in the future? And what potentials does the film industry have to become a driving force in terms of digital development?
In my opinion in the election program 2021 of the German FDP Party — part of the new government coalition — drew up a sustainable plan for a strong digital future with a clear commitment to the European digital single market.
I also firmly believe that digital business models need to become easier to scale across Europe. Regulatory barriers must be dismantled without putting freedom of contract into question at the same time. This will create a Europe that is digitally independent without falling into digital protectionism.
If basic European values such as personal freedom, democracy and civil rights are to be upheld even in an increasingly digitized and a data-driven world, a uniform regulation across Europe is needed.
The video and film industry has taken on an exemplary leadership role in terms of the digital developments ranging from the professional to the individual worlds. Today most everyone has access and at hand the digital equipment, nearly unlimited high performance tools and software and the knowledge necessary for expediently producing and enhancing effective videos and distributing these more or less instantly to audiences worldwide.
However, the very important ingredience for achieving maximum success in the fragmented video and film audience markets and above all attention and reach is creativity, one of the most crucial elements we carefully evaluate when we judge the entries to the Cannes Corporate Media & TV Awards Festival in order to select and honor the finest corporate films in the world.
- 4 How can companies and agencies better adapt to the digital transformation?
Companies and agencies must be open to and ready to face the new digital challenges. It is indispensable to posses an open-minded willingness to think and act outside usual boundaries and to develop, adapt and expand current business models. In doing so, the awareness must be that digital transformation goes hand in hand with agility and ensures lasting changes in the company.
The basis of digital transformation is always the direct and indirect impact of new technologies and techniques, with the objective of creating a technical, digital infrastructure as the basis for a new way of collaborating which at the same time supports new and accelerated business processes.
An example of a successful digital transformation is Netflix which initially started as an online video shop and shipped millions of DVDs and BlueRays every year to its customers by mail. Then Netflix' streaming offering replaced the old business model of traditional video stores. The company exemplified how user data can be used to develop an optimal customer relationship: Netflix developed intelligent recommendations — algorithms — for its extensive movie libraries by analyzing its user data. Today, these recommendations — the heart and USP of the company — are very much appreciated by its international audiences to guide them in their daily viewing needs and wishes. Artificial intelligence supports Netflix´ efforts in analyzing network capacities to predict bottlenecks and work around any to guarantee seamless viewing comfort. In the end, the company´s successful digital transformation has made Netflix the leading global steaming platform.
- 5 What role do developments in the European start-up market also play when it comes to digitalization? And where do you see a need to catch up and potential there?
The start-up market is the backbone for creating innovative businesses and jobs of tomorrow. In this sense the focus on digitalization is of even greater importance. What many still do not understood is that as technologies progress the world changes. The digital impact is that every company — without exception — will become a technological player in the market.
Video and film start-ups must clearly comprehend and embrace digital markets, most recent storytelling and production developments, media and adverstising trends and maintain a high degree of know-how of the digital know how and strategies to maximize audience and customer reach. Start-ups must understand that customer and audience orientation is not enough in our digital times but rather unconditional audience centricity is fundamental. And, by reducing and calibrating the competitive disadvantages mentioned above, young start-up companies in Europe will even better strive.
If forecasts are correct, the European tech industry is on an internationally unprecedentedly successful course. As the German “Manager Magazin” recently reported, the industry is about to "break a milestone". 100 billion dollars in venture capital is expected to have flowed into European companies in 2021. That is three times more than in the previous year. And that would put Europe on a par with the U.S. in terms of early-stage investments for the first time. As a source, the paper cites the "State of European Tech" report published annually by the European venture capital company Atomico.
In this sense the European start-up culture is on track.