How do Media and Entertainment CEO’s build dynamic, thriving and growing businesses ?

In the past it was straightforward. Invest in great talent, IP & commercial partnerships and success would follow.  

Now it’s more challenging. In a fast changing market, operators need to adapt and find new ways to serve and commercialise audiences.   

The playbook for success in this new, more digital, world is not yet clear… but Media and Entertainment businesses do have a potential ace up their sleeve.  Their potential to capitalise on a uniquely valuable asset. Their ability to build fandom.  

No other industry has quite the same ability to build brands with such loyal, passionate and engaged fanbases.

By building on, and systematising this capability Media & Entertainment companies have the potential to reinvent themselves and to create the winning businesses of the future.

So what does it mean to be a fan and why is fandom such a valuable currency

Fandom matters more than ever in an increasingly fractured world. Fans forge a uniquely deep & emotional bond to their favourite properties. Their fandom nourishes them, enables them to express their identity, gives them a sense of belonging, and is a source of pride, friendship, connection, purpose and meaning in their lives. (Just ask any fan of Manchester United, Dua Lipa, Fortnite or Harry Potter how much their fandom matters to them).  In fact fandom  fills a void in a world where traditional religion is declining, and polarised politics & culture wars makes it harder to sustain traditional communities.

Fan communities are source of enormous (and in many cased untapped) value to Media and Entertainment businesses. Active and engaged fans spend a huge amount of time and money with their favourite IPs (by way of illustration Deloitte Research  shows sports team fanatics spend 6X more than causal fans). In fact the more time and effort fans invest in learning about their favourite properties, the more emotional benefit and psychological value they realise from their fandom.  And the more money their invest in buying fan merchandise the better they are able to express their identify, sense of belonging and social capital within the fan community. Operators who understand how to capitalise on this virtuous circle of value by giving fans more of what they desire, will have an edge.

And the importance and value creation potential of fan franchises is growing.

The increasing pervasiveness of social, digital, immersive media and Web 3.0 technologies is making it easier to build bigger and more global fan communities, to create richer and more expansive fan experiences, and to deliver deeper and more valuable fan connections. 

This shift to digital fandom is fuelling commercial demand for fan IP. Digital platforms and consumer goods companies in particular are increasingly prepared to pay top dollar to commercialise IP that delivers a guaranteed engaged audience, to mitigate business risk as the economic growth slows ( Netflix's acquisition of The Roald Dahl Storytelling Company for a rumoured $1 billion and 20x EBITDA multiple, and Swedish video games company Embracer’s purchase of Middle Earth Enterprises are a case in point)  

In short, Fandom is arguably the most potent currency in the Media & Entertainment industry . Media businesses live or die on the quality of their IP portfolio, and fan IP is materially more valuable than other intellectual property. Operators who assemble, nurture and systematically develop IP with large, committed and passionate fan bases will not only have exceptional leverage with commercial partners, but will be more cash generative, profitable, and have higher valuation multiples than their industry peers.

The good news is there are more sources of this uniquely valuable fan IP than ever before. In the past fans gravitated towards music acts, sports teams, authored works and TV & film properties. Now we’re seeing unprecedented fan affinity for mobile games (like Clash of Clans), social media brands (Kylie Cosmetics) and a whole host of other digital properties. 

The growing number of fan properties is a boon for any business looking for IP to develop.

So how should Media and Entertainment businesses capitalise on their unique ability to develop IP with committed fanbases? The opportunity that lies ahead is to develop a new, more systematised and scientific processes for building fan franchises.

The process starts by identifying and nurturing IP with franchise potential. Focusing on properties that connect with audiences on a deep emotional, psychological and spiritual level, have instantly recognisable iconography, have a storytelling universe that can be enjoyed across a wide range of media formats, and already have an existing fan base who share their passion on social media by setting up communities and wikis on Facebook, Reddit and Fandom. By systematically auditing their IP portfolio, operators can see which properties have the greatest potential and are worth investing in.

The next step involves investing in digital content, to bring more fans into the franchise.

Expanding the IP’s social presence, with more platform native content not only creates more engagement amongst existing fans but also helps to attract a bigger, younger and more global audience.  

The journey continues by investing in data science, digital marketing and CRM to better understand audience needs, and (through test and learn experiments) what activations convert followers with a passing interest in the IP into active fans who are willing to share their customer details, and invest in a longer term relationship.

Finally by nurturing and deepening direct customer relationships, media IP owners can sell fans and superfans a much more expansive set of content, products and experiences that deepens their fandom and their enjoyment of the franchise, whilst unlocking new commercial revenues that can be invested back into the franchise.

By building fan engagement in this way, media owners create a flywheel that grows their audience, deepens engagement, improves the customer experience, diversifies their business and ultimately makes their IP materially more valuable.  

There is now a growing body of evidence to show how effectively this digital-centric, data driven approach to building fan franchises can be applied across the media industry to IPs in TV, Sports, Music, Apps, Games and the Social Media space.  

In Sport, the NBA more than doubled the size of its business by investing in an integrated digital experience connecting social content, tiered fan memberships, and OTT streaming services that grew fandom to over 150 million social followers, deepened engagement, and increased fan monetisation.

In Games, Minecraft has shown the value of nurturing and tapping into video gaming fan communities which dominate YouTube and other social platforms to offer a much more expansive set of products and experiences across social media, consumer products, live events, movies, fan conventions and brand collaborations, to build a truly transmedia franchise.

In TV, National Geographic. built a social following of 400 million (more than any other media IP) by opening up the brand to professional and amateur photographers who want to share stunning images about the natural world.  This fanbase has helped Nat Geo grow businesses in travel, live events and consumer products, and Disney+ (its parent company) to build its global subscriber base.  

In Music, www.pophouse.se has built Abba into a >$1 billion per year franchise by creating a powerful brand narrative and extending the fan experience into exhibitions (The Abba Museum), Film (The Mamma Mia movie series) and live immersive fan experiences ( Abba Voyage, and Mamma Mia The Party)

And in Social Media, influencer IPs like Kylie Jenner, Mr Beast,  The Sidemen , and Studio McGee are blazing a trail in building deep, authentic fan connections and consumer ventures generating hundreds of millions of dollars that capitalise on their global audience, customer insight, brand and IP.  Similarly, Moonbug and Cocomelon have shown how, with the right kind of financial backing and commercial infrastructure, you can take a YouTube property and build world beating kids franchises with longevity.

These case studies show that by investing in fan engagement and the digital machinery to support it, owners of media IP from across the industry have the potential to build bigger, faster growing and materially more valuable businesses.  

However most operators have yet to grasp this opportunity, and for the industry as a whole there is greenfield potential to build next generation media franchises that capitalise on the untapped value of fan communities.

At time of huge industry change and disruption, when legacy revenue streams are under attack, now is the time to double down on this opportunity.

So what practical steps can Media IP owners take to begin this journey of value creation?

Firstly, make a conscious choice to better understand the opportunity. Identifying the IPs with greatest untapped potential, and analysing how big these properties could become, will build confidence in the strategic case to invest.  

Secondly, develop a plan. Building a compelling vision and plan to translate loved IPs into next generation fan franchises will crystalise how expansive the fan offer could be, what success looks like, and critically, what machinery needs to be developed.   

Thirdly, get stakeholders on board to see through a long term (and at times difficult) journey that will involve doing things differently. Brave leadership, new partnerships, and new capabilities, along with new ways of working will be needed to create the next generation of world beating, fan-centric, media IP businesses.

Whilst the road ahead won’t be easy, the opportunity for Sports, Video Games, Music, TV and Film and Publishing businesses is compelling.  To take iconic IPs with cultural significance and scale social following (whether that be a music act like Bob Marley or a game like Runscape) and to turn them into billion dollar global franchises. To acquire, via M&A, media brands with untapped potential to build a stronger IP portfolio, and (over time) to package up, productise and sell fandom capabilities to other industries.

The jeopardy in sticking to old ways of developing and monetising IP is real, as in the future, media IP businesses will be valued differently with greater emphasis on ‘fan equity’ metrics (driven by the time and money  fans spend with their favourite properties) and next generation franchise development capability, as drivers of future cashflow growth. 

As Richard Branson, the entrepreneur behind one of the world’s most successful brand franchises, eloquently put it, “Every success story is a tale of constant adaptation, revision and change. A company that stands still will soon be forgotten”.