Media & Entertainment

Overview

• The industry encompasses creation, licensing, and/or distribution of video, audio, and print media.
• Major disruption in the industry is driven by digital content.
• Disruptors include online news and online streaming services (e.g., Netflix, Hulu).

Revenue Drivers

• Advertising (largest revenue category, especially for media offering free access to customers).
• Subscriptions (e.g., streaming services).
• Licensing fees (for content).
• One-time purchases (e.g., movie downloads, album sales).
• Merchandise sales.

Cost Drivers

• Media production (e.g., studios, equipment, printing presses).
• Talent acquisition (e.g., actors, editors, writers).
• Other labor costs (e.g., sales staff).
• Marketing expenses.
• Technology-related costs, especially for digital media.

Key Metrics

• Viewership / Readership (audience engagement).

Important Considerations / Trends

• The industry is highly consolidated due to the history of conglomerates.
• High importance of network effects to grow viewership and readership.
• Most media has shifted to an omnichannel presence (content available across multiple platforms).
• Digital media often has low barriers to entry, which can put downward pressure on ad prices and increase piracy risks.
• Consumer and advertising spending are highly influenced by macroeconomic conditions.
• Growth in augmented reality (AR) and virtual reality (VR) technology.

Key Industry Trends

• The rise of OTT streaming services like Hulu, Netflix, and YouTube has led many to ‘cord-cut’ traditional cable.
• ‘Content is King’ as media giants invest heavily in curating high-quality content to attract and retain subscribers.
• There’s a shift from cable to digital online advertising, influenced by ad-blockers, AI, and big data for personalized ads.
• Augmented Reality (AR) and Virtual Reality (VR) are gaining traction for enhanced storytelling and sports coverage.
• Music streaming services like Spotify and Apple Music have largely replaced the physical disc market, making online platforms crucial for artists.
• Gaming and e-sports are fast-growing segments, with mobile gaming and streaming platforms (Twitch) driving a ‘games as a service’ monetization model.

Important Terminology

• Digital vs. Linear: Linear refers to traditional broadcast or cable TV, while Digital refers to online streaming.
• Ratings: A measure of viewers for a particular program or time slot in television; Nielsen is a major provider, though its digital ratings have lagged.
• Box-Office: The total revenue generated by movies shown in theaters.

Important Calculations

• Profitability: (Revenues - Costs) OR (Price x Quantity) - (Variable Cost) - (Fixed Costs)

Important Considerations (Revenue Factors)

• Advertising Revenue
• Ticket Sales (Price x Quantity)
• Merchandising
• Tours / Licensing / Endorsements

Important Considerations (Cost Factors)

• Artist Fees
• Commission
• Promotion Advertising
• Venues
• Content Creation Costs

Overview

• This industry encompasses the creation, licensing, and distribution of video, audio, and print media.
• Digital content has caused major disruption, with online news and streaming services (e.g., Netflix, Hulu) being key disruptors.

Revenue Drivers

• Advertising, which is the largest revenue category, especially for media offered free to consumers.
• Subscriptions, which can be tiered or single membership fees.
• Licensing fees for content.
• One-time purchases of content or products.
• Merchandise sales.

Key Metrics

• Viewership / Readership.

Cost Drivers

• Media production costs (e.g., studios, equipment, printing presses).
• Talent expenses (e.g., actors, editors, writers).
• Other labor costs (e.g., sales staff).
• Marketing expenses.
• Technology costs, especially for digital media infrastructure.
• Content acquisition costs (e.g., rights for sporting events, exclusive show rights).

Important Considerations / Trends

• The industry is highly consolidated due to a history of mergers and acquisitions.
• Network effects are crucial for growing viewership and readership.
• Most media companies have transitioned to an omnichannel presence.
• Digital media has low barriers to entry, leading to downward pressure on ad prices and increased piracy risks.
• Consumer and advertising spending are significantly influenced by macroeconomic conditions.
• Emergence of augmented reality (AR) and virtual reality (VR) technology.

Introduction

• The industry traditionally consists of film, television, radio, and print.
• It has expanded to include online content, gaming, live entertainment, and various other interactive ways for consumers to engage with content.

Revenue Drivers

• Advertisements (for both paid and free content).
• Subscriptions.
• Purchases (per-view, physical media).
• Content/Intellectual Property (IP) Licensing.
• Merchandising.

Cost Drivers

• Talent recruitment and management.
• Production and editing expenses.
• Marketing expenses.
• Distribution costs.
• Commissions and royalties.

Key Industry Trends

• Industry consolidation and the creation of dominant content platforms (e.g., Disney+, Discovery+) are putting pressure on traditional distributors and Over-the-Top (OTT) services globally.
• The industry remains fragmented at a regional level, with regional language content playing a significant role, especially in Asia.
• Technology-led disruptions include XR (Extended Reality)-led Metaverse applications and GameFi-tokenization, which involve crypto-led in-platform earn-and-burn models.

Suppliers

• Content creators and developers
• Production and publication houses
• Venue owners

Customers

• Broadcasters and content distributors
• Direct to individual consumers
• Advertisers

Other Industry Metrics

• Engagement (e.g., viewership, readership, impressions): Measures audience interaction with content.
• Ratings: Quantitative assessment of content popularity.
• Target Rating Point (TRP): A measure of audience reach for a specific demographic.
• Reach: The total number of unique individuals who have seen an advertisement or content.

Major Regional Players in Asia

• Sony
• Tencent
• ByteDance
• Nintendo
• Garena (Sea Ltd.)