Entertainment, Media, Publishing & Broadcasting Industry Market Research How to Buy
With astonishing speed, entertainment, media and publishing have evolved into a highly dynamic industry, interconnected by global digital platforms in a manner that few people could even have conceived of a few decades ago. From books and media printed on paper, music on CDs, movies rented on DVD at the local Blockbuster and TV networks that forced the viewer to be in front of the screen at a given hour in order to watch a given show, the industry has changed dramatically into an always on, easy to time-shift, always with you, customizable stream of news, entertainment, movies, ebooks and music.
Entertainment and media, as a broad sector, are somewhat unique in that revenues are generated by multiple methods. Primarily, these methods are: 1) outright purchase, such as the download of an ebook or the purchase of a magazine or a movie theater ticket; 2) subscription, such as cable TV fees, Netflix fees or subscriptions to magazines or to music on Pandora; and 3) advertising fees.
Advertising revenues remain of vast importance to this industry, and the Internet has created a multitude of new outlets for such advertising. Global advertising media revenues were estimated to be $521.6 billion in 2014, according to Magna Global, a unit of advertising agency leader Interpublic Group. Much of this revenue is made in online media, and the fastest growing markets are in developing nations such as China, Indonesia, India and Brazil.
Analysts at Veronis Suhler Stevenson estimate that total U.S. communications and media spending will be $1.419 trillion in 2015. Broadly measured, the U.S. entertainment and media industry spans multiple sectors, from America’s 10,785 FM radio stations, to the 1.3 billion movie tickets sold yearly in U.S. theaters. Also, the gambling sector is often included when considering entertainment as a whole. In America, legal gambling is estimated to be a $90 billion industry. The American Gaming Association placed commercial casino gambling in the U.S. at $38 billion during 2013, a number that does not include Indian reservation gambling, lotteries and some other outlets.
Today, digital media of all types must be included when considering the scope of the entertainment and media industry. As of the end of 2014, according to Plunkett Research estimates, broadband Internet connections in U.S. homes and businesses total about 99.8 million, plus over 229 million wireless subscribers with access to smartphones and tablets. This means there is a vast market for online entertainment and media, and this segment represents one of the most important advertising revenue markets. Comcast (the cable TV provider) alone had more than 21.5 million high speed Internet customers as of the beginning of 2015. Digital advertising (including the Internet and ads on wireless devices) grew to $50.71 billion in the U.S. in 2014, according to eMarketer, a 17.7% increase. The firm forecasts this number will grow to $82.24 billion in 2018, including soaring growth in advertising on mobile devices. eMarketer estimates that digital advertising totaled $137.53 billion worldwide in 2014.
What some people refer to as “the third screen” (smartphone- and tablet-based content including video and music) has become a vital factor in entertainment and media. As 2015 began, there were more than 690 million smartphones in China alone, and 200 million in the U.S. eMarketer expects global smartphone users to top 2 billion in 2015.
Newspapers have been dramatically hurt by online alternatives. With an approximately 35 million paid daily circulation in the U.S. as of 2015 (down from nearly 60 million in 2000), newspapers are finding it increasingly difficult to compete against online news and advertising rivals. Many of America’s leading newspapers have gone bankrupt, while others have downsized or become electronic only. The most successful newspapers have evolved into powerful online and print combinations, offering subscribers and advertisers a choice of digital, print or both.
Both newspapers and magazines are rapidly adopting new formats and new technologies with the goal of making themselves highly relevant and readable for Internet users on PCs, and for mobile users on smartphones, tablets, ebook readers and other digital devices. A survey in the spring of 2013 found that the number of digital magazine readers in the U.S. had soared by 83% during the previous 12 months.
Recorded music sales on CD continue to drop while sales of digital music files gain market share. Traditional radio broadcasting is hurting, finding it increasingly difficult to gather listeners for advertising-based radio programming due to such alternatives as satellite radio (SiriusXM had over 27 million paid subscribers by the beginning 2015), Internet-based radio and digital music players.
In the film industry, gross U.S. and Canadian box office receipts for 2014 were $10.4 billion, about a 5% decrease from the previous year. Meanwhile, film production companies are suffering from dwindling revenues from DVD sales, as more viewers rent inexpensively from Redbox, or download them from Amazon.com or Netflix instead of buying films. Both emerging and mature economies outside the U.S. are of prime importance to film revenues. For 2014, China’s box office receipts rose to $4.8 billion, up from only $2.8 billion in 2012.
New television sets are Internet-enabled, meaning viewers are able to connect directly to entertainment options on the Internet. This brings up an important question: where will TV viewers of the future get their programming? Cable and satellite subscriptions are expensive, and do not appeal to many consumers under 35 years of age. Consumers have been dropping their paid TV subscriptions in large numbers, opting to watch free or low-cost programming on sites such as Hulu.com. TV content and distribution providers are fighting back by offering niche online subscriptions to movies, sports and other entertainment. DISH, a leading satellite subscription TV firm has announced a $20 per month, online subscription service that delivers a handful of its most popular content, including ESPN. Sling is user-friendly, with no additional equipment to install, mobile access, no credit check, and no long-term subscription contracts required. Consumers are eagerly buying relatively inexpensive devices that make it simple to connect their Internet-ready TVs to online content. Competitors in this field include Roku, Chromecast, Apple TV and Amazon Fire. Roku, for example, can be purchased for less than $100, and delivers as many as 1,700 apps to the TV screen, enabling the user to easily click to watch Hulu, PBS, YouTube and myriad other content providers, some of which require a separate subscription.
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 now demand more and more control over what they watch, read and listen to.
Issues Related to Control of Entertainment and News Content:
1) Pricing for content, including free-of-charge access versus paid; 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 tablets and smartphones, 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 digital video recorders.
Source: Plunkett Research, Ltd.
The competition among entertainment delivery platforms has intensified; all sectors face daunting challenges from alternative delivery methods. For example, online radio firm Pandora is disrupting the traditional radio industry. 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 advanced smartphones, digital video recorders (DVRs), video-on-demand (VOD) and digital music 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? Watch it online later, or plan in advance to record it to watch later. Interested in only one track from a music artist’s new album? Buy and download just the one song via Apple’s iTunes. Love a prime-time drama on a major network but hate commercials? Skip over the commercials with a DVR.
The business models upon which most entertainment companies have traditionally run are being forced to evolve. 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 and publishing companies are being forced to adapt in order to deal with new technologies and new demands from consumers.
Rapid changes in viewing habits are occurring also. Network TV news, radio news and newspapers all find that they have to compete fiercely against Internet-based options. A large portion of sports programming has migrated away from “free” broadcasts on TV and onto paid cable channels and pay-per-view systems, and many of the most popular TV-type shows are found on cable only.
Meanwhile, platforms and delivery methods are evolving quickly. Smartphones are now used more and more for entertainment purposes, including games, videos and TV-like programming. Game machines are going multipurpose with the ability to connect to the Internet. 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.
Technology is elevating entertainment to new heights. Electronic game machines feature incredibly advanced chips, algorithms and motion detectors. The rapidly growing variety of mobile entertainment, games and media “apps” available for smartphones and tablets is further revolutionizing the industry in a very dramatic way.
Recommendation software that learns the habits and tastes of consumers have evolved to do a better job of pushing appropriate entertainment content 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.
Count on continued, lightning-fast changes in the entertainment, media and publishing environment. As the revolution in new media continues, platforms will evolve quickly, consumers will obtain even greater control and competition will become even hotter. Meanwhile, the global audience is growing quickly, thanks to emerging middle classes in developing nations as well as the booming spread of cellphones and Internet access.