With amazing performance, entertainment, media and publishing have evolved into a strongly powerful sector, adjoined by the international electronic system in a fashion that few individuals could even have conceived of a few decades ago. From books and media printed on paper, music on CDs, motion pictures leased on DVD at the local Blockbuster and TV networks that pushed the viewer to be in front of the screen at a given hour in order to view a given program, the market has evolved substantially into an always on, easy to time-shift, always with you, tailor-made stream of news, entertainment, motion pictures, ebooks and music.
Entertainment and media, as an expansive industry, are rather unique in that earnings are created by multiple approaches. Mainly, these approaches are:
Advertising revenues continue to be of large importance to this industry, and the Internet has generated a plethora of new avenues for such advertising. Global advertising media earnings were determined to be $489.6 billion in 2013, according to Magna Global, a unit of advertising agency leader Interpublic Group. Much of this growth is developing in online media, and the quickest flourishing 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 expenditures hit $1.189 trillion in 2012. They determine this number to expand to $1.455 trillion in 2016. Generally measured, the U.S. entertainment and media industry reaches various sectors, from America’s 10,656 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 $37.3 billion during 2012 (up from $35.6 billion in 2011), a number that does not include Indian reservation gambling, lotteries and some other outlets.
Today, virtual media of all types must be involved when considering the reach of the entertainment and media industry. Broadband Internet connections in U.S. homes and businesses total about 96 million, plus over 180 million wireless clients with easy access to smartphones and tablets. This means there is a huge market for online entertainment and media, and this portion exemplifies one of the most essential advertising revenue markets. Comcast (the cable TV provider) alone had more than 20 million high speed Internet customers as of the beginning of 2014. Advertising on the Internet (including ads on wireless devices) grew to $42.3 billion in the U.S. in 2013, according to eMarketer. The firm anticipates this number will grow to $61.4 billion in 2017. Plunkett Research estimates that online advertising totaled $98 billion globally in 2013.
Most recently, the “Third Screen” (cellphone-based content including video and music) is emerging as a huge factor in entertainment and media. As 2014 began, there were 326 million wireless registrations (for cellphones, tablets and other devices) in the U.S. and 7 billion worldwide.
The traditional, storefront video rental business has dwindled due to substitutes including Netflix, TiVo and video-on-demand services supplied by Comcast and other providers. This led to the bankruptcy of the Blockbuster retail establishment.
Newspapers have been considerably damaged by online substitutes. With an approximately 40 million paid daily circulation in the U.S. as of 2014 (down from nearly 60 million in 2000), newspapers are finding it progressively tough to compete against Internet news and advertising competitors. Many of America’s leading newspapers have gone bankrupt, while others have scaled down or become digital only. At the same time, free daily or weekly publications and shopping guides have taken pleasure in considerable growth.
Both newspapers and magazines are rapidly utilizing new formats and new technologies with the goal of making themselves highly important and readable for Internet users on PCs, and for mobile users on smartphones, tablets, ebook readers and other digital devices. Some customer magazine industry executives in the U.S. expect at least 25 % of their readership to be on digital devices by 2015. Recorded music sales on CD continue to drop while sales of digital music files obtain market share. Traditional radio broadcasting is hurting, finding it progressively tough to gather listeners for advertising-based radio programming due to such alternatives as satellite radio (SiriusXM had over 25 million paid subscribers by the beginning 2014), Internet-based radio and electronic music players.
In the movie industry, gross U.S. and Canadian box office receipts for 2012 were $10.8 billion. Meanwhile, motion picture production companies are enduring from diminishing earnings from DVD sales, as more viewers lease inexpensively from Netflix or Redbox instead of buying films. Both emerging and developed economies outside the U.S. are of key significance to film revenues. For 2013, China’s box office receipts rose to $3.6 billion, up from $2.8 billion in 2012. Foreign movies accounted for 41 % of ticket sales, while motion pictures made in China made up the remaining 59 %, according to the State Administration of Radio Film and Television. 638 films were produced in China in 2013, compared to 745 in 2012. 5,077 new screens were added, bringing China’s total to almost 18,200.
There are now thousands of 3-D capable screens in theatres around the world. Some spectators are willing to pay premium ticket prices for 3-D motion pictures. However, receipts for 3-D have not met expectations. IMAX theaters have also seen large growth in number in the past few years.
New television sets are Internet-enabled, meaning viewers are able to be connected right 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 memberships are costly. Broadcast TV is free, as is a lot of Internet-based programming, although online content is likely to become supported by membership to a growing extent. At the same time, online delivery of rented movies is now mainstream, led by technology at Netflix and Amazon. Customers have been dropping their paid TV subscriptions in large numbers, preferring to watch free or low-cost programming on sites such as Hulu.com while dramatically affecting incomes at cable and satellite TV service providers.
The burning concern impacting all sectors of the entertainment and media industry is preserving control of content and audiences while taking advantage of myriad new electronic delivery platforms. Rivalry in the entertainment field is ferocious. Gone are the days when television and radio programmers delighted in captive crowds who happily sat through ad after ad, or planned their routines around a favorite show. Consumers now call for more and more control over what they watch, read and listen to.
Source: Plunkett Research, Ltd
The competition among entertainment transmission platforms has heightened; all fields face daunting challenges from alternative delivery options. For example, online radio firm Pandora is interrupting 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 providers for market share.
Today, electronic offerings such as advanced smartphones, digital video recorders (DVRs), video-on-demand (VOD) and digital music players have immensely adjusted the way consumers enjoy entertainment. People watch and listen according to their own desires and impulses. Miss the finale to a favorite television show? Watch it online later, or plan in advance to record it to view later. Interested in only one track from a music artist’s new album? Purchase 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 inferences of these changes are staggering. The business models upon which most entertainment companies have commonly run are becoming outdated. Profits from traditional advertising and marketing is in risk while profits from subscription-based business models is soaring. Online advertising is growing at supersonic speed. Television programming timetables are losing significance while electronic program guidelines are becoming more and more vital. Printed books are slipping in market share while ebooks are soaring. The giant, U.S. book store chain Borders closed its doors in 2011. Traditional media are losing share while newer electronic media are becoming the standard. Entertainment and publishing providers are being forced to evolve in order to deal with new technologies and new demands from consumers.
Accelerated changes in viewing behaviors are taking place. Network TV news, radio news and newspapers all find that they have to compete fiercely against Internet-based options. A large segment 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 shows are found on cable only.
Meanwhile, platforms and delivery approaches are advancing 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 movement of entertainment and media connectivity. A significant transformation of access and delivery methods will continue at a rapid-fire pace, and media companies will be forced to be more nimble than ever. Mobile TV is taking a large step forward thanks to new technologies and platforms that provide programming to cellphones, laptops and other mobile devices. Hundreds of local broadcasters in the U.S. have joined in such an effort, called the Open Mobile Video Coalition.
Advanced technology is raising entertainment to new peaks. Electronic game machines feature exceptionally advanced chips, algorithms and motion detectors. Another exceptional example of the technology change at work in entertainment is today’s level of special effects in movies. The dramatically growing variety of mobile entertainment, games and media “apps” available for smartphones and tablets is further transforming the industry in a very dramatic way.
Suggestion software that learns the habits and tastes of consumers have developed to do a better task of pushing suitable entertainment choices towards viewers. 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 suggestion software to attract and better offer consumers throughout multiple types of entertainment media.
Count on continued, lightning-fast changes. As the change in new media carries on with, networks will develop promptly, 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 flourishing spread of cellphones and Internet connectivity.