The Ever-Expanding Media Giants
As content and tech firms crash together, they're buying every startup in their orbits.
Media makes more money today than at any time in human history — $2.4 trillion worldwide, if you count platform companies such as AT&T as well as content companies like the Walt Disney Co. And that figure is rising fast due to an unprecedented appetite for media products: The U.S. Census Bureau estimates that the average American spent 3,532 hours consuming media in 2009, an astounding 9.7 hours per day. (The number implies that media consumption overlaps with more than 60 percent of waking hours). Media choices, which used to be defined by the number of channels on the television or the radio stations on a dial, have seemingly become limitless.
This abundance obscures the fact that the media industry — really a series of increasingly interconnected industries — is objectively more concentrated today than it was in the analog past. Digital luminaries expected the internet to usher in the democratization of media. Instead, the reverse is happening — the big are getting bigger.
In the U.S., according to Eli Noam’s magisterial 1,400-page tome “Who Owns the World’s Media?,” five companies now control more than 44 percent of the media market by revenue: AT&T, Verizon, Comcast, Charter, and Google’s parent, Alphabet. And that level of consolidation is low compared to most of the rest of the world.
The media is in what scholar Victor Pickard calls a “constitutive moment” — a confluence of policy, technology, and business economics that could lock in the media landscape for a generation. If you stare long enough into the media galaxy, you can see the forces responsible for this consolidation. And get a sense of how the media empires of the future will be built.
Global giants are reshaping the media in some important ways…
High-cost, high-gloss, high-production-value content is now able to reach a truly global audience, making the potential returns on blockbuster content greater than ever before. Disney’s $4 billion acquisition in 2009 of Marvel Entertainment, for example, has already paid for itself. Even in the digital age, flicks with iconic characters draw crowds — no matter who wears the cape.Disney has created five of the 10 top-grossing films of all time worldwide
The Force Awakens
Age of Ultron
In 1984, the content sector’s concentration levels in the U.S. were only 13.3 percent those of platform companies, according to a widely used market share formula. By 2012, according to Noam, the level in the U.S. had jumped to 70 percent. While the platform sector remains far more concentrated on an absolute basis, content has been consolidating at a much faster rate: 3.3 percent a year, versus flat to slightly negative in recent years for platforms.
Big content companies have traditionally controlled their own infrastructure — newspapers had printing presses and fleets of trucks. If they didn’t own the pipes outright, they leased them by inking contracts with distributors, like a TV station might with a cable company. The rise of user-generated content upended this order. Now, platforms like Facebook and YouTube don’t need to buy content the way cable channels, and even Netlix, do. (YouTube might want more professional shows, but its users won’t see static if it can’t get the deals it wants.) That has given content distributors more leverage than ever.