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TRENDS IN COMMUNICATIONS

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TRENDS IN COMMUNICATIONS An Introductory Overview Sources various; include Croteau and Hoynes (2006) The Business of Media. Thousand Oaks, CA.: Pine Forge Press; and ... – PowerPoint PPT presentation

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Title: TRENDS IN COMMUNICATIONS


1
TRENDS IN COMMUNICATIONS
  • An Introductory Overview
  • Sources various include Croteau and Hoynes
    (2006) The Business of Media. Thousand Oaks, CA.
    Pine Forge Press and various contributions to
    Alexander, Owers, Carveth et al. (Eds) (2003)
    Media Economics. New York Routledge.

2
14 Trends What Storyline?
  • 1. Digitization 8. Convergence
  • 2. Deregulation 9. Branding
  • 3. Privatization 10. Synergy
  • 4. Globalization 11. Mergers Acq
  • 5. Commercialization 12. Concentration
  • 6. Specialization 13. Innovation and
    Competitivization
  • 7. Growth 14. Connectivity

3
(1) Growth in Media
  • Variety of consumption technologies
    Proliferation of technologies cd's, computers,
    vcrs, dvds, MP3s, mobiles, 3G/4G mobiles
  • Growing portable, on-demand consumption
    opportunities
  • Financial growth media advertising up 733m to
    3.63bn to 150bn (1919-1950-2007), constant
    prices
  • (As of GDP 2.5 - 1.9 - 2.0)

4
Media Growth (2)Time Spent
  • Time spent with media 7hrs 35mins a day in 2009
    for 3-18 years old (10hrs 45mins incl. multi-task
    time)
  • http//news.cnet.com/8301-1023_3-10297935-93.html
  • http//www.mediainfocenter.org/television/competit
    ive/time_reach.asp
  • http//www.kff.org/entmedia/upload/8010.pdf

5
Share of Time Spent Per Day with Major Media
6
Growth (ctd) Print (WAN, 2009)
  • 1.9 billion people choose to read a newspaper
    every day, or 34 percent of the world population,
    while 24 percent use the internet.
  • Biggest newspaper market is India, with 107
    million daily sales. India, China and Japan
    account for more than 60 percent of the worlds
    newspaper sales, with the USA taking 14 percent.
  • In sales per 1,000 adult population, Japan leads
    the world with 612, Norway with 576, Finland with
    482. 91 percent of Japanese continue to read a
    newspaper daily

7
Growth (ctd) TV
  • 9 of 43m US HH had TV, 1950, rising to 98.9 of
    114.5m HH in 2009.
  • Globally, 1964-2004 TV HH increase six-fold to
    1.2 billion (world pop 6 billion)
  • In 2006, 59 HH had cable 25 had satellite
  • Internet is accessed by two billion people
    worldwide

8
Growth (ctd) Internethttp//www.internetworlds
tats.com/stats.htm
  • Global 361m Internet users 2000, rising to 1.7b
    users in 2009, or 25.6 of 6.77bn total pop
  • (User anyone currently in capacity to use the
    Internet, on basis of access and knowledge)
  • NorthAm 108m users 2000, rising to 253m in 2009
    or 74 of 341 total pop
  • Asia 114m users in 2000, rising to 738m in 2009
    or 19 of total pop of 3.8bn

9
2. Mergers and Acquisitions (MA)
  • Bagdikian (2000) Depending on measures, major
    U.S. media are owned by between 6 and 23 media
    conglomerates
  • For biggest 6 traditional media companies, 2009
  • http//www.freepress.net/ownership/chart/main

10
How does MA take place?
  • Occurs in 3 major ways
  • vertically (company buys company that supplied
    it, or that it supplies e.g. TV network buys
    Hollywood studio)
  • horizontally (company acquires second
  • company in same business e.g. theater chain
    buys another theater chain)
  • by conglomeration (a company building a
    portfolio of different kinds of businesses) may
    be intra-media (media only) or extra-media (media
    plus non-media)

11
What Motivates MA?
  • Economic gain
  • Market control and predictability
  • Synergy
  • Cash flow
  • Economies of scale
  • Cross-subsidization, cross-promotion,
  • Global market activity
  • Convergence,
  • Create barriers to new competition
  • Tax benefits
  • Greed and vanity.

12
What factors are favorable/unfavorable to MA?
  • Favorable
  • Low interest rates
  • Inflation
  • Company valuation,
  • Future expectations of growth
  • Factors affecting rates of return, and
    availability of finance.
  • Unfavorable
  • Convergence slow to happen
  • Huge debt, as result of overpayment
  • Organizational conflicts
  • Falling security prices, falling valuations

13
(3) Regulation / Deregulation
  • Regulation mainly affects scarce resource media
    (broadcast frequencies public rights of way in
    case of cable) or natural monopoly markets
    (telephony, cable, some newspapers).
  • 1980s-1990s, incl. 1996 Telecommunications Act, a
    period of deregulation or of re-regulation
    away from criteria of public interest to criteria
    of competition.
  • Deregulation stimulated by technological advance
    incl. digitization (increase in broadband),
    desire for MA, neoliberal philosophies

14
(4) Convergence
  • Eradication of technological differences among
    distribution networks
  • Multiple applications over the same network to
    different platforms
  • Content flows through increased number of
    distribution networks
  • Textvoicevideostilldata packaged/distributed
    simultaneously

15
(5) Globalization
  • International markets prime source of revenue
    growth following saturation of domestic markets
  • Economies of scale, but pressure to produce
    separate/customized content for different markets
  • Enhanced by policies of deregulation and
    liberalization in many countries
  • Motivated by desire for more revenue, leveraging
    of content, cross-subsidization etc.

16
(6) Concentration of Media Markets
  • Local (e.g. largest four radio owners gained 93
    of revenues in top 283 markets one cable
    provider in most markets, one dominant fixed-wire
    local telephony provider in most markets)
  • National (e.g. four major TV networks two major
    satellite providers six largest MSOs provide
    service to 60 of cable subs 20 newspaper chains
    account for 70 of daily circulation 10 largest
    film distributors owned by 6 conglomerates
    account for 90 of revenues)
  • Special Interest (e.g. two major players,
    Univision and Telemundo)

17
Corps controlling over 80
18
How is concentration measured?
  • Evaluation of significance of concentration
    complicated by
  • What constitutes a market
  • Different assessments as to when market is
    dominated by one or few
  • New technologies may create entirely new markets
    even if concentrated, more customer opportunities
    have been created

19
(7) Digitization
  • All forms of communication progressively more
    available for translation into computer language,
    and delivery over digital systems. This enhances
    convergence, and conglomeration.
  • Digitization creates significant problems of
    transition and coordination between content,
    distribution and receiver technologies
  • Long-term consequence implosion of traditional
    business models creation of entirely new ones

20
Press Business Model Implodes
21
Music Bus Model Implodes
22
Decline of Network TV
23
Google Ad Revolution
  • 3 billion searches a day
  • 70 of online searches worldwide
  • 90m unique YouTube visitors, March 2009 (66 of
    all web video traffic)
  • Over 20bn ad revs 2009 (40 of all advertising
    online). Matched combined ad revenues of 5
    largest TV networks
  • Google News aggregates 25,000 news sites

24
(8) Privatization
  • Process of removing media from government
    ownership / control and placing (selling) them
    into private hands OR of requiring government
    owned media to become semi-commercial.
  • In U.S. privatization has affected broadcasting
    structure, attitudes to PBS funding, satellite
    systems, Internet development.
  • Privatization enhances globalization

25
(9) Commercialization Infotainment
  • The process whereby increasingly, over time, more
    and more aspects of media activity, including
    news and information, are determined by
    bottom-line mentality on behalf of owners and
    shareholders. Examples include dumbing down of
    television news product placement in Hollywood
    movies intensification of sex and violence
    reduction in political coverage on television
    news increase in number of advertisements per
    hour of entertainment.

26
(10) Branding
  • Strategies to increase extent to which corporate
    identities acquire household or consumer
    recognition.
  • Branding aids marketing, stimulates MA activity
    to extend brand name over wider range of products
    or services.

27
(11) Synergy
  • Combining resources, talents, archives etc., in
    ways that create a whole that is richer than the
    sum of individual parts.
  • Quest for synergy drives much MA activity and
    accounts for many strategic alliances
  • Examples iPhone use of ATT as carrier

28
(12) Specialization
  • Narrowcasting, customization, localization.
  • Targeting small, specialized audiences.
  • Often based on advertising economics.
  • Specialist media typically owned by larger
    conglomerates.
  • Opportunities facilitated by new technologies
    (cable channels, websites)

29
Ad Advantages of Specailization
  • If advertiser can reach 100 people for 100 and
    every one of those 100 people buys his 10
    product, that is better than spending 100 to
    reach 10,000 people of whom only 50 end up buying
    the product. In the first case he earns 900 in
    the second case he earns 400.
  • Examples a cigar manufacturer who advertises in
    cigar magazine rather than LA Times.

30
(13) Competitivazation
  • Process typically triggered by (a) new
    regulations that reduce restrictions on ownership
    or (b) new technologies that create entirely new
    markets (e.g. cell phones).
  • These attract new entrants into given markets,
    creating (the appearance of) great competition.
  • But, almost immediately, competition is followed
    by MA activity until one or a small number of
    companies dominate the market

31
(14) Connectivity/Compatibility
  • Growing pressure on media producers to determine
    proprietary or universality strategies, relating
    to connectivity between
  • (1) distribution and reception technologies
  • (2) different reception technologies
  • (3) software formats, content, and reception
    technologies
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