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TOP CONTRIBUTORS

The media and entertainment industry captures a wide variety of companies that serve to provide products and services that keep the everyday consumer engaged. There are a number of segments within the industry, each of which provides a different form of entertainment to consumers around the world. These segments include traditional print media, television, radio broadcasting, film entertainment, video games, advertising and perhaps most importantly, the manufacturers of the technology that the above segments rely on. The significance of these manufacturers cannot be overlooked when considering the industry as a whole; after all none of these segments has been around longer than the technology used for its distribution. Due to its dependancy on technological developments new segments of the media and entertainment industry are constantly up and coming. To that end, the most significant technological development (in recent years, at least) for the evolution of the media industry has been the rise of the internet. This technology alone has changed how media is consumed and furthermore has created entirely new sectors and platforms for mainstream entertainment that are still in the early stages of their development.

In 2007 the U.S. spent roughly $930 billion on the media industry as a whole, with advertising spending accounting for over $284 billion.[1]

Advertising

In 2007 U.S. advertising spending was about $284 billion, nearly 31% of total spending on the entire media industry. Advertising has long been the major revenue generator for media companies.[1] The advertising industry utilizes nearly every communication channel available to make their clients' products and services known. Major mediums for advertising include television, radio, print media, and to an increasingly large degree, the internet. Other platforms for advertising include public advertisements like billboards (both traditional and digital) and city busses.

The development of internet advertising has had a very significant impact on the advertising industry and has created some trouble for many media companies that rely on traditional advertising platforms. With over 80 million broadband internet connections in the U.S. during 2007, advertising companies have found a new and very significant audience Major companies in the advertising industry include

You probably wont get any of this cause you dumb

Print Media

Companies that produce and distribute newspapers, magazines, and books are considered to be in the print media segment. Many of these companies use the subscription revenue model, which is very attractive as customers pay for product before receiving it, allowing the firm to invest the proceeds, earning a return even before delivering the product. Also, the cost structure of the publishing business is mostly fixed. The printing machinery and distribution network of a typical publisher can deliver 750,000 copies for only slightly more than the cost of delivering 500,000 copies, meaning higher volume falls directly to profits (also known as leveraging costs). This allows excellent return on capital for the larger publishers. Lastly, these firms have valuable intangible assets in the form of brands that protect their products from competition. Value Line, despite a complete lack of product innovation and no embrace of the internet, can still afford to charge a premium for their product because of it's long standing reputation with investors.

However, beware the internet. More than any other business sector, the internet has affected the business model of media companies drastically. Once upon a time, newspapers were an outstanding business. Many had a monopoly within their city, as few cities were large enough to support more than one. However, the internet allows anyone to read news from around the world, advertising has moved online (leading to falling print ad rates), and classified ads took a hit from eBay (EBAY) and Craigslist. Keep in mind how the internet can hurt (or help) your publisher of choice.

Since the rise of the internet, print media companies have had a difficult time keeping up with the pace of the industry. Internet advertising has seen strong fast paced growth in recent years and as a result newspapers and magazines have had trouble attracting ad revenues. In 2006 there were 2,344 total daily and Sunday newspapers distributed throughout the U.S. and newspaper companies earned $49.3 in advertising revenue. U.S. Magazine advertising revenues for 2006 were $24.0 billion.[2] Evidence of the print media industry's struggle against internet advertising can be seen in decreasing ad revenue figures. The Newspaper Association of America reported that 2007 newspaper ad revenues were down 9.4% to $42 billion, the most significant percentage loss in the 50 years that the NAA has been reporting these figures.[3] Companies that produce and distribute print media such as newspapers, magazines and books include

Television

The television segment of the media and entertainment industry includes a large number of companies that compete directly and indirectly by offering various services to consumers. It has long been a traditional entertainment segment and has evolved in many directions since its beginning. Today there are various offerings for television users including network television channels, cable networks and satellite television services. The latter two options are generally subscription based services which offer programming not available to non-subscribers. In 2007 there were roughly 112 million U.S. households with televisions, or about one third of the entire population.[2]

As the technology supporting the media and entertainment industry evolves, television service providers are required to evolve their services in order to keep up. Television providers have had some success in keeping up with the fast paced and fiercely competitive industry though. Since the TiVo hit shelves in 1997 service providers like Comcast and DirecTV have produced similar hardware and services for their subscribers. The popularity of the internet however, has not been such a quick fix for companies in this segment. As with print publishing, television broadcasting companies are now competing with the enormous advertising platform that is the internet. Furthermore, programming that was once exclusively available through television service subscriptions can be found (both legally and illegally) with the click of a mouse. Companies involved in television broadcasting include

Filmed Entertainment

1.45 billion movie tickets were sold in 2007 making filmed entertainment a $10.2 billion dollar segment of the industry. [2] Companies whose operations include the production or distribution of filmed entertainment include

Video Games

In 2007 the video game industry brought in $7.4 billion in U.S. revenues.[2] Companies that produce and distribute video games, consoles and technologies include

Radio

9,163 stations[1]. The Radio is generally called the granddaddy of all broadcast media. It's also a business model that has taken serious hits over the past ten years, as satellite radio, digital music, and recorded audio programs ("podcasts") have increasingly become the preferred forms of audio entertainment. For example, Westwood One (WON), which has a stock price of $1.71 as of this writing. Compare this to a price near $40 in late 2003 and it's clear this is not an industry we want to be investing in. Companies that operate radio stations and services include

Internet based Media

Internet based media has seen significant growth in recent years. There were 80 million broadband internet connections in the U.S. during 2007[2] up from roughly 58 million in 2006.[4] Broadband internet growth around the world can be seen in the chart below. This growth is allowing media and entertainment companies to market their content to a much larger group of consumers each year.


Companies that provide media and entertainment sources over the internet include

Media Technology Manufacturers

Companies that produce products and technologies involved in the distribution and use of media include

References

  1. 1.0 1.1 1.2 | Plunkett Research, Ltd., Entertainment and Media Industry Overview, Retrieved March 26, 2008.
  2. 2.0 2.1 2.2 2.3 2.4 | Plunkett Research, Ltd., Entertainment & Media Overview, Retrieved March 26, 2008.
  3. NAA Reveals Biggest Ad Revenue Plunge in More Than 50 Years, www.editorandpublisher.com, retrieved March 29, 2008.
  4. OECD Broadband Statistics to December 2006, www.oecd.org, Retrieved June 17, 2008.
  5. Broadband penetration, historic, G7 countries, www.oecd.org, retrieved June 17, 2008.
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