Bob Dylan in his famous album “The essential Bob Dylan” sung this
beautiful song “The slow one now will later be fast. As the present now will
later be past. The order is Rapidly fadin' and the first one now will later be
last for the times they are a-changin'.
The advertising revenue in broadcasting industry grew at YoY growth of
1% compared to 17% YoY growth in Internet advertising. The future looks gloom
for the core broadcasting Industry as Moody’s Feb-2014 rating has put the
broadcasting media growth in US at 1%-3%. The internet advertising industry on
the other hand has been growing steadily at 18% CAGR over the last nine-years
starting 2004 and stands strong. The growth in internet advertising revenue was
not a major concern for broadcasters as internet advertising was majorly driven
with banner ads, classifieds and search. The trend has now changed with the
advertising pie from mobile and digital videos having grown exponentially in
the last few years with mobile advertising alone reporting a CAGR of 123% in
the last three years starting 2010.
The broadcasters in US had already witnessed the downfall of newspapers
in the last decade. The mistakes committed by newspapers are being avoided. The
top-six broadcasters account for over 70% of the US market having years of
experience and understanding of consumer psyche on content consumption are
gearing into action.
The broadcasters are working aggressively on the following three front’s
i.e consolidation, guarding forte, and venturing into uncharted territories.
Consolidation
The calendar year 2013 witnessed 87 deals in the US broadcasting sector
worth $25.6 billion. Major among them were, the Comcast Corp-NBCUniversal LLC
worth $16.7 Billion which gave Comcast access to television networks,
cable channels, and a group of local stations in the United States. Further, the
$2.73 billion acquisition by Tribune Co. of local television channels made
tribune, the largest television station owners. The broadcasters aggressively pursued
consolidations to increase scale in order to improve negotiations with pay-TV
distributors for retransmission revenues as advertising revenue for broadcaster
is expected to grow at a CAGR 4% from 2013-2017 as per PwC Media Outlook.
Guarding Forte
The broadcasting corporations themselves have started Video on Demand
(VoD) service leveraging their already existing content and formats. Major
broadcasters like Warner Bros, Viacom, and Walt Disney have launched their VoD
service which can be accessed across platforms and devices. Warner Bros caters
to a user base of over 75 Million across its digital touch points in a short
span, compared to the 2014 nielsen estimate of 115 Million television sets in
the US. The mobile apps like HBOGo and Viacom apps are growing exponentially
keeping pace with the second screen phenomenon.
Venturing into uncharted territories
Media corporations have been aggressive on acquisition spree while
facing the digital wave. Walt Disney in March-2014 acquired Maker studios for
$500 million, the YouTube channel network has over 55,000 channels and 5.8
billion video views/month. Turner Inc following the suit is in discussion with
Fulscreen Inc for a possible buyout worth $500 million which receives over 3
billion video views/month. The acquisition has been into short movies segment
which is majorly consumed on mobile devices as per Nielsen surveys. The lower
cost of production and digital assets of short movies make it a great deal for
traditional broadcasters.
.
The US broadcasting market is experiencing a digital convergence like
never before with broadcasters, telecommunication, entertainment and internet
companies coming together. The traditional broadcasting corporations are
gearing up for the digital wave with all guns blazing. Additionally, the pure
play digital media players, Netflix and Hulu are registering double digit
growths reaching to wider audiences across devices and platforms.
Time will tell, whether it will be the digital media players or
traditional broadcasters who will redefine the content consumption landscape.
The Digital Media players will have challenges in terms of providing
appropriate content across various touch points. Likewise, the traditional
broadcasters will have to reinvent their business model to compete effectively
against the pure-play digital media players.
Kudos to this effort of compilation of facts, and crisp encapsulation.
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