Essay Preview: Media Consumption
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Media consumption has changed over the years. Internet is a growing medium that provides users with the ability to view content anytime anywhere on portable computing devices. The shift in the traditional broadcast media to provide its content on their own internet sites by offering advertising supported streaming videos has created a new industry that competes with the traditional entertainment industry. The competitive landscape of network television, cable, and satellite industries has changed with the emergence of the Internet as a media outlet. Performing an industry competitive analysis and determining changes to the competitive forces present can demonstrate the competitive strategy needed to drive profitability.
With the addition of Internet, the media and entertainment industries barrier to entry increases. This is caused by the fact that access to Internet distribution channels is harder than that of traditional media and entertainment channels. In addition, Internet outlets require licensing agreements to stream content.
From the perspective of the power of the supplier, the competitive force also increase. This is due to that fact that the suppliers in the media and entertainment industry are highly concentrated with limited substitution. The five primary broadcast networks in the United States each reach 90% of households through stations they own themselves or by third party. Another contributing factor is the strong brand identity for the products offered. People associate content with specific broadcast networks.
The Internet also causes the threat of substitution to go up in the media and entertainment industries. This is caused by the fact that the Internet is a different product from television; the Internet offers a true substitution. Internet outlets can bring the content to the audience, rather than forcing the audience to come to one site to watch. In addition, there is no cost associated with making the switch, at present 40 million households have high-speed Internet service, which is desirable for high quality video streams.
The buyers in this industry are the viewers and the advertisers. With the Internet coming into the landscape the power of the buyer goes up. This is due to the fact that the threat from backwards integration is very low; advertisers and viewers are not going to create media content. In addition, the buyers are no longer concentrated and the Internet provides them with the ability to be dispersed.
Based on competitive analysis, the cable companies and operators, the satellite companies and the TV networks are worried because of changing trends in the market. As the Internet has entered this market, ad revenues have shifted from traditional to online media. For example content manufactures are concerned that the entrants of Internet can undermine television ratings and impact syndication and DVD sales. Given the fact that the barrier to entrance is high, indicates that the industry is very profitable and is very