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 $503 billion in 2015, 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
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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 $503 billion in 2015, 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.
Today, digital media of all types
must be included when considering the scope of the entertainment and media
industry. As of the end of 2015,
according to Plunkett Research estimates, broadband Internet connections in
U.S. homes and businesses totaled about 103 million, plus over 265.9 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 22 million high speed Internet
customers as of mid-2015. Digital
advertising (including the Internet and ads on wireless devices) grew to $58.61
billion in the U.S. in 2015, according to eMarketer, a 15.6% increase. The firm forecasts this number will grow to $91.22
billion in 2019, including soaring growth in advertising on mobile devices. eMarketer estimates that digital advertising
totaled $170.5 billion worldwide in 2015.
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. By the end of 2015, there were 913 million smartphones in China alone, and more than 200 million in the U.S. eMarketer expects global smartphone users to top 2 billion in 2016.
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.
Recorded music sales are facing
powerful competition from Pandora, Spotify and similar Internet-based music
subscription services. 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 29 million paid subscribers by the 3rd
quarter of 2015).
In the film industry, gross U.S. and
Canadian box office receipts for 2015 were $10.8 billion, about a 3.4% increase
from the previous year. Meanwhile, film
production companies are suffering from dwindling revenues from DVD sales, as
more viewers 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 2015, China’s box office receipts rose to $6.3 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 called Sling TV. It 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.
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