Google | Sector Overview

MEDIA / ENTERTAINMENT

sector Overview:

Today’s media landscape is partly characterised by big multinational companies with wide-ranging activities covering magazines, television, radio, film and books as a result of a tradition in diversification and acquisition. On the other hand there are organisations such as Google, Apple and Yahoo who have been seen to innovate across sectors and have an impact on media in a way not foreseen by the incumbents. With the introduction of Web 2.0 the focus has again shifted. This time it’s networks and communities that are catching everybody’s attention as demonstrated by NewsCorp’s acquisition of MySpace, Yahoo’s interest in Facebook and Google’s acquisition of YouTube.

Online video is gaining traction, Time Warner successfully broadcasted Live8, YouTube was streaming 100m videos each day and Disney sold half a million films through Apple’s iTunes within the first 2 months of their distribution deal. Apple announced plans to shake up the online movie rental business by offering movies from most major studios through iTunes. At the same time Hollywood was able to continue its recovery from a decline in movie attendance in 2005. Box office receipts were up by 7.2% compared to 2006 with hit movies such as Harry Potter and third instalments of Pirates, Spiderman and Shrek. But while DVDs generate over 50% of the revenues from most movies, sales growth remained flat and the expected pickup from high definition DVDs was slowed due to technical delays and a format war between consortia led by Sony and Toshiba that was finally resolved with Blu-Ray as the victor in January 2008.

While it is expected that consumers will spend more on media and entertainment over the years to come, they will also be more demanding in terms of price, convenience and speed.

ONES WE ARE WATCHING

News Corporation
As it continues to extend its reach in all of its TV, print and online markets, News Corp remains a strong contender for the future leadership with strong financial growth performance over the last few years. As well as buying Dow Jones & Co, in 2007 the company delivered growth across the board, including online where MySpace turned a profit for the first time. Given its leadership position in direct satellite broadcasting and its ability to syndicate film, text and TV content across its many newspapers, book and magazine publishing and online channels, News Corp is a major player in innovating the future of media.

Disney
With Pixar now firmly in the family, $35.5bn revenue Disney is growing well on all fronts. Across domestic, satellite, cable, mobile and internet, its media broadcast businesses are extending reach: the increasing range of parks, resorts and vacations around the world are must-do for many kids, studio entertainment across both animated and live-action areas continues to deliver hits like Ratatouille, Enchanted and Pirates of the Caribbean 3, while underpinning it all, Disney Stores in key markets are generating additional revenue streams. Knitting all this together has been a challenge but cross-channel innovation at Disney is again in full swing.

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