Now that a judge has approved AT&T’s takeover of TimeWarner, we are on a path from an unstructured crazy media world to a well-structured media oligopoly. In the next few weeks, we will see a deal between Comcast and Fox, which already has an agreement to sell its entertainment assets to Walt Disney. And then many more deals as everyone will find a new dance partner.
The merger of content with the provider
In the 1950s, the move to network television saw a merger of content producer and the service provider with the major networks (NBC, CBS and ABC) producing content in NYC and Hollywood, and then pushing it through their networks of local stations, who then provided access into the homes of consumers.
As the 1980s shifted to cable and then direct TV, there was a separation of content production and the media service providers.
In the last 5-10 years, we are in an era where the content producers and the service providers are together, with streaming companies such as Netflix and Amazon. The move by AT&T to buy Time Warner is to put themselves on what they hope is an even playing field. I’m not sure how modern or great the Time Warner content will be in the future. They own HBO, which has some great content, but not sure about the content of CNN, TBS or TNT. They also own Warner Brothers, which has the Batman and Harry Potter franchises, plus a ton of old movies.
“Disneyflix” will be launching their own streaming service in 2019. They will be able to bring the Star Wars and Marvel franchises, plus every Disney cartoon since the 1930s. They also can bring content from ESPN and ABC.
Media companies trying to thread the needle between the death of cable and transfer to streaming
As viewers move to streaming services, media companies will spend the next 3-7 years trying to figure out how to make money in an online, streaming world, that will combine the use of TV, computers and digital screens.
Every six months, I google “When will Netflix have TV ads?” and while there continues to be a lot of chatter, there is yet to be any sort of move or sign they will. Right now, they are a unique alternative to the drudge of network television, with 8-12 minutes of ads per hour. If they are spending that much money on content production, and if they hit a ceiling with subscriptions, they will have to look for new ways to monetize it other than through subscription.
I subscribe to both Netflix and Amazon and have 100 channels of cable, which I only use to watch live sports. That means I’m threading the needle until I can get line up six streaming versions that likely includes Netflix, Amazon, Disney, and maybe 3 others–that could include a combination of any of the top 20 brands listed above.
Could Apple buy Netflix for $150 billion? Or maybe Google will buy Sony entertainment? What if Samsung enters into the media marketplace? You could take all 20 names on the list of biggest media companies and pair them up with dance partners. This new ruling will likely see a few take a shot.
The return to the media oligopoly
By 2025, the media landscape will look completely different. While I have focused on the top 20 media companies, most of this decade has been consumed by the wild wild west of social media and digital media.
The average Brand Manager has spent most of the decade confused. They now have 6-12 agencies, each lined up to their specialty. There is no one big agency partner telling them honest advice of what they should be doing, with each micro agency saying “you should be doing more of what we are selling.”
While many brand people have enjoyed it, the reality is this is quite possibly our dumbest decade as an industry. Everyone is so busy doing, no one has time to think. And, you can be as excited as you want to be about how you can find the exact target with the exact message, let me give you one good dose of reality. The overall cost of advertising (creative and media) has gone up dramatically this decade, while the revenue of brands has not kept pace at all. Higher cost and lower profits is a recipe for disaster.
The question for brand managers to think about: Would you rather have an easier media or a cheaper media?
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