Total spending (including advertising) in the U.S. on media of all types was about $930 billion in 2007. U.S. advertising spending alone was about $284 billion.

Broadly measured, the entertainment and media industry spans multiple sectors, from America's 9,163 FM radio stations, to the 1.45 billion movie tickets sold each year in U.S. theaters. The gambling sector, with more than $60 billion in annual revenues, is often included when considering entertainment as a whole.

Today, new media of all types must be considered when considering the scope of the entertainment and media industry. The number of broadband Internet connections in the U.S. has reached true mass market in size, at about 80 million homes and businesses in 2007. Comcast (the cable TV provider) alone has more than 12 million high-speed Internet subscribers. Advertising on the Internet is now a $17 billion industry. Most recently, the "Third Screen" (cell phone-based entertainment including video and music) is becoming a major factor in entertainment and media.

Meanwhile, revenues are mixed at traditional entertainment and media segments. Book sales at retail were about $55 billion in the U.S. in 2007, according to the Book Industry Study Group, an increase of about 3.3%. The traditional, storefront video rental sector is suffering due to alternatives including Netflix, TiVo and video-on-demand services. Newspapers are finding it increasingly difficult to compete against Internet news and advertising rivals. Recorded music sales on CD-ROM continue to drop while sales of digital music files are soaring. Traditional radio broadcasting is hurting, finding it increasingly difficult to gather listeners for advertising-based radio programming due to such alternatives as satellite radio and digital MP3 players.

The burning issue affecting all sectors of the entertainment and media industry is maintaining control of content and audiences while taking advantage of myriad new electronic delivery venues. Competition in the entertainment sector is fierce. Gone are the days when television and radio programmers enjoyed captive audiences who happily sat through ad after ad, or planned their schedules around a favorite show. Consumers, especially consumers in younger demographics, now demand more and more control over what they watch, read and listen to.

Issues related to control include:

1) Pricing for content (including free-of-charge access; illegal downloads versus authorized downloads; and full ownership of a paid download versus pay-per-view).

2) Portability (including the ability for a consumer to download once, and then use a file on multiple platforms and devices including iPods and cell phones, or the ability to share a download with friends).

3) Delayed viewing or listening (such as viewing TV programming at the consumer's convenience via TiVo and similar personal video recorders).

The competition among entertainment delivery platforms has intensified; all sectors face daunting challenges from alternative delivery methods. For example, satellite radio delivery of subscription-based music and talk programming has hit its stride with multimillion subscriber counts for Sirius and its competitor XM. Another example: telecommunications companies such as AT&T and Verizon are now delivering television programming to the home via ultra high-speed Internet connections, battling cable and satellite TV firms for market share.

Today, electronic offerings such as DVDs, digital video recorders (DVRs), video-on-demand (VOD) and MP3 players have vastly altered the way consumers enjoy entertainment. People watch and listen according to their own desires and whims. Miss the finale to a favorite television show? Rent or buy it on DVD or record it to watch later. Interested in only one track from a recording artist's new CD? Buy and download just the one song via the Internet. Love a prime-time drama on a major network but hate commercials? Record the show while skipping over the commercials with a DVR.

The implications of these changes are staggering. The business models upon which most entertainment companies have traditionally run are becoming obsolete. Revenue from traditional advertising is in jeopardy while revenue from subscription-based business models is soaring. Online advertising is growing at supersonic speed. Television programming schedules are losing relevance while electronic program guides are becoming more and more vital. Traditional media are losing share while newer digital media are becoming the norm. Entertainment companies are forced to evolve in order to deal with new technologies and new demands from consumers.

Rapid changes in viewing habits are already occurring. Network TV news, radio news and newspapers all find that they have to compete fiercely against Internet-based news content. A large portion of sports programming has migrated away from "free" broadcasts on TV and onto paid cable channels and pay-per-view systems.

Meanwhile, platforms and delivery are evolving quickly. Multipurpose cell phones are now used for more and more entertainment purposes, including video and TV-like programming. Game machines are going multipurpose with the ability to connect to the Internet and play DVDs. Broadband to the home has matured into a true mass-market medium, while wireless broadband systems such as Wi-Fi are enhancing the mobility of entertainment and media access. A serious evolution of access and delivery methods will continue at a rapid-fire pace, and media companies will be forced to be more nimble than ever. The current battle for dominance of high definition (HD) video standards is part of this evolution.

Advanced technology is elevating entertainment to new heights. For example, Sony's new PlayStation 3 utilizes a supercomputer-like chip called "Cell" that has the potential to revolutionize the electronic games industry due to its ability to run highly realistic, advanced software at amazing speed. Meanwhile, Nintendo's Wii has added a virtual reality feature to game players that has been a stunning success. Another excellent example of the technology revolution at work in entertainment is today's level of special effects in movies.

Recommendation software that learns the habits and tastes of consumers will evolve and will do a better job of pushing appropriate entertainment choices toward audiences. Amazon.com has long been a leader in the use of such software. Netflix has created an admirable package of its own. Likewise, Apple's iTunes software is strong on recommending content to customers. Some interesting mergers might be driven by the potential to use extremely powerful recommendation software to attract and better serve consumers across multiple types of entertainment media.

he gambling sector remains strong, with massive new projects in Las Vegas, incredible growth in Macau and rebuilding, on a much bigger and better scale, of the Gulf Coast casinos that were wiped out by 2005's hurricanes. Native American-owned casinos across the U.S. are booming as well.

Advertising, long the main revenue source for much of the media industry, is rapidly moving to the Internet. This is well illustrated by the incredible financial success of Yahoo! and Google, among other search sites that offer advertising services.

You should count on continued, rapid changes: The revolution in new media continues, platforms will evolve quickly, consumers will obtain even greater control and competition will become even hotter.