Waves of Change in the Media Industry are Enabled by SAP Cloud ERP Solutions

The media industry is at a crossroads, with streaming services, evolving licensing models, and increasing M&A activity transforming the way content is created, distributed, and consumed. Revenue recognition challenges are rising as companies adopt more complex business models, while the rise of cloud ERP solutions is enabling companies to streamline their operations, ensure compliance, and adapt to new revenue streams. The convergence of these trends is driving the industry toward greater integration, flexibility, and data-driven decision-making, thereby reshaping the landscape for media companies and content consumers alike.

Key Trends in the Media Sector:

Streaming Services and the Evolution of Content Consumption: The streaming industry has experienced explosive growth over the past decade, reshaping how audiences consume media content. This shift has created new business models and challenges for traditional media companies, especially as consumer preferences evolve.

• Subscription-Based Models: Media companies are increasingly shifting from traditional cable and broadcast models to subscription-based streaming video on-demand (SVOD) services. Netflix, Disney+, and Amazon Prime Video have set the standard for direct-to-consumer offerings, while platforms like YouTube, Twitch, and TikTok cater to specific types of content (user-generated, live streaming, etc.).
• Freemium and Ad-Supported Models: In response to market saturation and competition, some services (like Hulu and Peacock) offer a mix of subscription tiers, with options for both ad-supported free models and premium ad-free experiences.
• Bundling and Partnerships: To stay competitive, media companies are bundling streaming services with other offerings. For example, Disney offers a bundle of Disney+, Hulu, and ESPN+. The bundling strategy provides better value and is increasingly appealing to consumers looking for all-in-one entertainment packages.
• Local and Regional Content: International expansion of streaming services has led to an increase in region-specific content. This trend is exemplified by services like Netflix investing heavily in non-English language content, creating regionally popular shows like Money Heist (Spain) and Squid Game (South Korea).

Streaming has driven the need for more dynamic content licensing, as platforms must quickly acquire a wide range of content to keep customers engaged. Companies are adjusting to a world where traditional broadcast licensing is less relevant, and content must be distributed across multiple digital platforms.

Licensing and Rights Sharing:  The growth of streaming services has led to a surge in content licensing deals, especially as companies vie for exclusive content to differentiate themselves from the competition.

• Exclusive Licensing Deals: Major streaming platforms are increasingly engaging in exclusive licensing agreements with content creators or studios, ensuring that their platforms are the sole home for popular films and series (e.g., Disney’s decision to pull its content from Netflix and place it on Disney+).
• Content Fragmentation: Consumers are finding that in order to access all of their favorite shows, they need subscriptions to multiple platforms. This has sparked the rise of rights-sharing deals where content is licensed to more than one platform, or studios may share rights with competitors (e.g., movies being available on both theaters and streaming services simultaneously).
• Global Content Distribution: Rights management has become more complicated as media companies look to distribute content globally. With digital distribution and the global nature of streaming services, managing rights across countries and jurisdictions is more complex than ever.

Mergers & Acquisitions (M&A) Activity: M&A activity in the media sector has surged as companies seek to consolidate, diversify their content offerings, and gain access to new technologies or market segments.

• Vertical Integration: Companies are increasingly merging or acquiring other companies along the value chain to strengthen their position in the content ecosystem. For example, large media conglomerates are acquiring studios, production houses, and streaming platforms to control content creation and distribution (e.g., Amazon’s acquisition of MGM).
• Cross-Industry Mergers: Another trend is the convergence of media companies with technology and telecommunications firms. Telecom companies are acquiring media assets to expand their entertainment offerings, while media companies are partnering with tech firms for enhanced content delivery and analytics capabilities.
• Consolidation of Streaming Platforms: The fragmented nature of the streaming industry has led to a wave of consolidation as platforms seek to achieve scale. The merger of Warner Media and Discovery Inc. is an example of such consolidation, attempting to compete more effectively with Netflix, Disney+, and Amazon Prime Video.

Revenue Recognition: The shift to digital streaming has forced media companies to adapt their revenue recognition practices. Streaming services, licensing, and rights sharing require new approaches to how revenues are recorded and reported.

• ASC 606/IFRS 15 Compliance: Under the ASC 606 (U.S.) and IFRS 15 (International) revenue recognition standards, media companies must recognize revenue based on performance obligations, such as when content is made available or when specific services are rendered. This has impacted how media companies recognize revenue from subscriptions, pay-per-view content, and advertising.
• Subscription and Usage-Based Revenue: Streaming services generally recognize revenue on a subscription basis, but some may also include ad revenue or pay-per-view content. This hybrid revenue model requires careful tracking of user subscriptions, content usage, and advertising performance to ensure compliance with revenue recognition standards.
• Bundling Services: Media companies that offer bundles of content, products, or services face additional challenges in determining how to allocate revenue across the different components. This requires companies to carefully assess the value of each service and how it relates to their financial reporting.

Cloud ERP Usage in the Media Industry:  Cloud ERP solutions are becoming increasingly essential for media companies to manage their diverse operations, from content creation to distribution, customer service, and financial reporting.

• Real-Time Financial Management: Media companies are turning to cloud-based ERP systems to handle real-time financial management, which is critical given the fluctuating nature of streaming subscriptions, ad revenues, and licensing fees. ERP systems integrate data across departments, providing comprehensive financial insights for better decision-making.
• Content and Rights Management: As the media industry becomes more complex, cloud ERP systems are being used to manage content lifecycle and rights management more effectively. These platforms allow companies to track content creation, licensing agreements, and distribution rights in a unified system.
• Supply Chain and Logistics Optimization: For companies that manage physical media, such as streaming devices, DVDs or Blu-rays, cloud-based ERP systems optimize logistics and inventory management. However, the primary benefit for media companies lies in digital content distribution and managing the streaming infrastructure.
• Scalability and Flexibility: The scalability of cloud ERP is particularly advantageous for media companies experiencing growth due to streaming expansion or M&A activity. These systems can quickly scale to accommodate increased customer bases, new services, or additional content catalogs.

Cloud ERPs provide data-driven insights that help media companies make more informed decisions around content creation, distribution, and customer engagement. Real-time reporting and dashboards improve visibility into revenue streams, helping companies optimize their business models. Media companies often operate in a highly collaborative environment with multiple teams working on content development, marketing, and distribution. Cloud ERP solutions enable seamless collaboration between these teams, improving efficiency and reducing time-to-market for new content.

SAP Cloud ERP: Streamlining Operations and Enhancing Efficiency

SAP Cloud ERP capabilities, along with SAP’s specialized subscription software, revenue recognition solutions, and other SAP applications, provide powerful tools to help media companies navigate the rapidly changing landscape, especially as they adapt to new business models like streaming, licensing, and subscription-based content. SAP Cloud ERP provides a comprehensive, unified platform to manage the core business functions of media companies, including financials, supply chain, content distribution, rights management, and customer engagement. Below is a breakdown of how these SAP solutions specifically support media companies in their success amid these shifts: 

How SAP Cloud ERP Supports Media Companies:

• Integrated Financial Management: SAP Cloud ERP offers real-time financial tracking and analysis, which is critical for media companies that rely on fluctuating revenues from subscriptions, licensing, and advertising. It ensures that all financial data is centralized and aligned across departments, reducing inefficiencies and improving decision-making.
• Content Lifecycle Management: Media companies often deal with complex content creation, licensing, and distribution processes. SAP Cloud ERP allows these companies to manage the entire content lifecycle—from creation and acquisition to distribution and monetization—by integrating financial, operational, and legal systems into one platform.
• Operational Scalability: As media companies grow and expand into global markets, SAP Cloud ERP enables seamless scalability. Whether it’s managing a global content distribution network, increasing the number of streaming subscribers, or handling large-scale M&As, SAP Cloud ERP adapts to the growing demands of the business.
• Global Compliance and Reporting: SAP Cloud ERP supports compliance with local and international regulations, including tax laws, reporting standards (like IFRS 15 or ASC 606), and regional content distribution rights. This helps media companies maintain transparency and avoid compliance risks as they expand into new markets.

In our work with media companies the Bramasol SAP Cloud ERP implementation team has front-line experience with understanding the trends and helping apply SAP Cloud ERP solutions to enable success with complex media offerings.

Below are some of the specific ways that SAP Cloud ERP and integrated applications are helping media companies succeed amid the dynamically changing industry environment.

SAP Subscription Billing: Managing Complex Subscription Models:  With the rise of subscription-based revenue models in the media industry, SAP offers a robust Subscription Billing solution to handle the complexities of recurring billing, pricing flexibility, and customer lifecycle management.

• Recurring Revenue Management: SAP Subscription Billing supports a variety of subscription models, including basic subscriptions, tiered pricing, pay-per-view, and freemium services. Media companies can automate billing, track usage patterns, and ensure customers are billed accurately for their subscriptions.
• Flexible Pricing Models: Media companies often use flexible pricing strategies, such as bundling services (e.g., streaming and pay-per-view), offering discounts, or providing region-specific pricing. SAP’s solution allows for customization in pricing models, enabling media companies to quickly adapt to market demands.
• Subscription Lifecycle Management: From acquisition to renewal, SAP Subscription Billing supports the entire subscription lifecycle. It helps manage customer retention, upselling, cross-selling, and churn prevention, which are all crucial for streaming platforms trying to retain subscribers in a highly competitive market.
• Seamless Integration with Other Systems: SAP Subscription Billing integrates seamlessly with other SAP applications like SAP Cloud ERP, SAP Sales Cloud, and SAP Customer Experience solutions, ensuring a unified view of customer accounts, usage patterns, and payment histories.

SAP Revenue Recognition: Ensuring Compliance and Accuracy:  Revenue recognition in the media industry is becoming more complex due to the combination of subscription models, licensing agreements, ad revenue, and content distribution rights. SAP’s Revenue Recognition solution ensures compliance with revenue standards such as ASC 606 and IFRS 15.

• Automated Revenue Allocation: SAP Revenue Recognition automatically allocates revenue across multiple performance obligations, such as content access, subscription services, and ad-supported content. This is essential for ensuring accurate revenue recognition based on the delivery of service (e.g., streaming content) and not just the receipt of payment.
• Compliance with Standards: Media companies must comply with strict revenue recognition standards, especially with the complexity of multi-element arrangements (e.g., subscription packages combined with pay-per-view content or streaming devices). SAP ensures that media companies can adhere to the latest standards (ASC 606, IFRS 15) through automated, rules-based processes.
• Real-Time Financial Insights: The solution provides real-time insights into revenue and financial performance, helping media companies understand the timing of revenue recognition, which is essential for forecasting, reporting, and investor communications.
• Cross-Departmental Integration: As revenue recognition touches various departments (e.g., sales, finance, legal), SAP’s solution integrates seamlessly with SAP Cloud ERP and other SAP applications to ensure that all data is synchronized and financial reports are consistent.

SAP Customer Experience (CX) Solutions: Enhancing Customer Engagement:  SAP’s suite of Customer Experience (CX) solutions, including SAP Sales Cloud, SAP Service Cloud, SAP Marketing Cloud and SAP AI solutions, help media companies better manage their customer relationships and tailor their offerings to meet individual consumer needs in a highly competitive and dynamic market.

• Personalized Marketing and Campaigns: SAP Marketing Cloud uses data-driven insights to help media companies deliver personalized content recommendations, promotions, and targeted advertising to subscribers. This improves engagement, reduces churn, and drives customer loyalty by offering content based on user preferences.
• Customer Insights and Analytics: SAP’s CX solutions provide deep insights into customer behavior and usage patterns. This helps media companies understand how subscribers engage with content, allowing for the creation of more tailored and effective marketing campaigns. It also helps in predicting subscriber churn and proactively addressing retention challenges.
• Seamless Customer Service: With SAP Service Cloud, media companies can provide a seamless customer service experience, whether it’s troubleshooting technical issues with streaming services or addressing billing inquiries. Integrated with other SAP solutions, this platform ensures that customer data and interactions are synchronized for a better service experience.
• Subscription Management: SAP’s Customer Experience suite integrates with SAP Subscription Billing to manage the full subscriber lifecycle, from onboarding to renewals, making it easier to track subscriptions, offer upgrades, and handle cancellations.

SAP S/4HANA: Real-Time Analytics and Data-Driven Decisions: SAP S/4HANA, SAP’s next-generation ERP suite, offers real-time data processing and analytics capabilities that are essential for media companies looking to respond quickly to market shifts and consumer preferences.

• Data-Driven Decision Making: SAP S/4HANA allows media companies to analyze vast amounts of data from their content libraries, subscriptions, advertising models, and customer interactions in real time. This enables quicker decision-making, such as identifying which content is performing well or optimizing pricing strategies.
• Agile Business Operations: The platform allows media companies to adjust their strategies in real time based on market demands, making it easier to pivot between different subscription models or expand into new regions as needed.
• Predictive Analytics: Using machine learning and predictive analytics, SAP S/4HANA can forecast trends in viewership, content preferences, and revenue patterns, providing media companies with the foresight needed to stay competitive.

SAP Cloud for Media: Industry-Specific Solutions: SAP Cloud for Media is a specialized set of applications designed to meet the unique needs of the media industry, including content management, rights management, and broadcasting.

• Content and Rights Management: SAP Cloud for Media provides tools for managing the complex web of content creation, rights ownership, distribution, and monetization. It helps media companies track where their content is being used and ensure that licensing agreements are adhered to.
• Broadcasting and Distribution: SAP’s cloud applications support the end-to-end broadcasting process, from content ingestion to distribution across multiple channels (linear TV, digital streaming platforms, on-demand services). It ensures that content is distributed seamlessly and monetized effectively.
• Business Model Flexibility: SAP Cloud for Media supports a range of business models, from subscription-based streaming to ad-supported content, allowing media companies to quickly adapt to evolving market conditions and consumer demands.

Summary: Enabling Media Companies’ Success Amid Industry Shifts

SAP’s suite of solutions—including SAP Cloud ERP, SAP Subscription Billing, SAP Revenue Recognition, and SAP Customer Experience—provides a robust, integrated platform that supports media companies in managing the complexities of modern media business models. These solutions help companies handle the financial, operational, and customer engagement challenges posed by subscription-based models, rights management, licensing, and rapidly evolving digital platforms.

By offering comprehensive support across financial management, customer relationships, content distribution, and compliance, with the assistance of experienced partners like Bramasol, SAP Cloud ERP enables media companies to streamline their operations, drive revenue growth, and enhance customer satisfaction in an increasingly competitive environment.

For more information on Bramasol and SAP Solutions for the Streaming Media Sector, contact us below: