With astonishing speed, entertainment, media
and publishing have digitized, evolving 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.
We've gone from static and flat (that is: 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) to always-on, user-controlled, portable and
always-with-you.
Now, the industry is
driven by the needs, habits and desires of individual consumers: delivering
content that is accessible as customized digital streams; serving up news,
entertainment, movies, ebooks and music on-demand.
If you don't know what you want to watch,
listen to or read, the best digital platforms push suggestions to you.
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.
Many media rely on a combination of
subscription fees plus advertising revenues.
For example, most magazines have a cover price, but
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With astonishing speed, entertainment, media
and publishing have digitized, evolving 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.
We’ve gone from static and flat (that is: 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) to always-on, user-controlled, portable and
always-with-you. Now, the industry is
driven by the needs, habits and desires of individual consumers: delivering
content that is accessible as customized digital streams; serving up news,
entertainment, movies, ebooks and music on-demand. If you don’t know what you want to watch,
listen to or read, the best digital platforms push suggestions to you.
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. Many media rely on a combination of
subscription fees plus advertising revenues.
For example, most magazines have a cover price, but they also contain
paid advertising. Elsewhere, subscribers
pay for cable TV service, but then are subjected to seemingly endless
commercials on cable channels.
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 $551 billion in 2018, 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 and India.
America
continues to be the world’s largest media market. Plunkett Research estimates that, broadly
measured, total U.S. communications and media spending was $1.6 trillion in
2018. The U.S. entertainment and media
industry spans multiple sectors, from America’s 10,909 FM radio stations, to
the 1.3 billion movie tickets sold yearly in American theaters. Also, the gambling sector is often included
when considering entertainment as a whole.
In America, legal gambling is estimated to be a $100 billion industry,
and recent legal decisions are likely to make online gambling grow rapidly.
Today, digital
media of all types must be included when considering the scope of the entertainment
and media industry. As of the end of
2018, according to Plunkett Research estimates, broadband internet connections
in U.S. homes and businesses totaled 111.3 million, plus 322.4 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 26.9 million high speed internet
customers as of the third quarter of 2018.
Digital advertising (including the internet and ads on wireless devices)
grew to $111.1 billion in the U.S. in 2018, according to eMarketer, a 20%
increase over the previous year. The
firm forecasts this number will grow to $125.8 billion in 2019, including
soaring growth in advertising on mobile devices. eMarketer estimates that digital advertising
totaled $273.3 billion worldwide in 2018.
What some people
refer to as “the third screen” (smartphone- and tablet-based viewing) has
become a vital factor in entertainment and media. By the end of 2018, there were 699 million
smartphone users in China alone.
Newspapers have
been dramatically hurt by online alternatives.
With an approximately 31 million paid daily circulation in the U.S. as
of 2018 (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 have adopted
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 challenging to
gather listeners for advertising-based radio programming due to such alternatives
as satellite radio. The satellite-based
radio service, SiriusXM, had 32.7 million paid subscribers by the second
quarter of 2018. During the fall of
2018, SiriusXM announced its intended acquisition of Pandora.
In the film
industry, gross U.S. box office receipts for 2018 were $10.2 billion. Meanwhile, film production companies are
suffering from dwindling 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
2017, China’s box office receipts rose to $9 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 online. 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 cable and satellite TV subscriptions in large numbers, opting to
watch free or lower-cost programming that is streamed online via services such
as Hulu.com.
While content providers such as Disney and ESPN
have long earned vast revenues by distributing through cable systems such as
Comcast and satellite systems such as DISH, they are now also offering their
own, inexpensive monthly subscriptions services that stream online. These low-cost, monthly internet-based plans are
viable alternatives to expensive cable or satellite subscriptions. They tend to be user-friendly, with no
additional equipment to install, no credit check, and no long-term subscription
contracts required. Another vital
advantage is that they can be watched on smartphones.
Also, 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 connectors, for example, can be
purchased for less than $50, and deliver hundreds of popular content apps to
the TV screen, enabling the user to easily click to watch HBOgo, Netflix, PBS,
YouTube and myriad other content providers (some of which require separate subscription
fees).
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 near-total 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 subscriptions; 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 or family.
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,
telecommunications companies such as AT&T and Verizon are now delivering
television programming to the home via high-speed internet connections,
battling cable and satellite TV firms for market share.
Meanwhile, platforms and delivery methods are
evolving quickly. Smartphones are widely
used for entertainment purposes, including games, videos, sports and TV-like
programming. Game machines have become
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. 5G ultrafast
cellular telephone systems will be the next leap forward.
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. Pandora and Spotify recommend music to users. Netflix has created an admirable technology
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
smartphones and internet access.