Historically offline media companies moving to digital
Entertainment dies last. Even in tough economic times, and maybe because of them, people turn to media to pass the time and distract themselves from struggles. Watching videos, listening to audio, and gaming are popular pastimes. It comes as no surprise that companies specializing in these media are reaping the financial benefits – but only because they are betting on digital segments.Comcast, the owner of such entertainment brands as NBCUniversal, Sky, DreamWorks, and Universal Studios, generates the largest share of its revenue from its cable communications segment, at more than 53 percent. However, the growth of the video streaming market and the subsequent increase in cord-cutting in the United States, is directly impacting the pay TV subscription of most companies and Comcast is no stranger to this trend. Since 2018, the company has seen losses in video subscribers intensify year-on-year. Comcast’s ad-supported streaming service, Xumo, competes with Roku, Pluto, and Plex for the number of channels offered to stay in the game and attract consumers.
When it comes to audio entertainment, the companies operating in the United States are mostly headquartered outside of the country. The one native to the U.S. is Warner Music Group, which in 2022 reported revenues of over five billion U.S. dollars. The majority of Warner Music’s revenue is attributed to recorded music. The same is true for Universal Music Group, the Dutch-American music label known for their work with artists such as Taylor Swift, Sting, Alicia Keys, The Weeknd, and Billie Eilish, to name just a few. UMG’s recorded music revenue surpassed eight billion U.S. dollars in 2022. However, the status quo of traditional music listening is disrupted by streaming. Despite hailing from Europe, Spotify’s popularity in the U.S. is undeniable. The music and podcast streaming service made close to 13 billion U.S. dollars in revenue in 2022.
In gaming, the biggest players, despite having built their strength on PC and console platforms, are now exploring the mobile world. What is more, the mobile segments are becoming increasingly lucrative, if not equally so. For example, the owner of the Grand Theft Auto franchise, Take-Two Interactive, is generating higher revenues with the mobile platform. The same is true for Activision Blizzard, who makes almost 47 percent of their revenue via mobile.
Tech companies prominent in the media world
Since media consumption is happening online, tech companies are drawing profits from both worlds. The parent of YouTube, Alphabet, earned more than 29 billion dollars from advertising on the video platform. Meta’s revenue is almost solely derived from their social media apps family, while Apple makes eight billion dollars from music products. Amazon, with Prime Video and Unlimited Music subscriptions, also opened up its doors to income from media services. All in all, media has always been and remains a profitable source of revenue as long as it answers the needs of consumers. Today, with the growing reach of internet, the ease of access is on top of consumer’s mind, therefore media and entertainment companies invest in streaming and social media.
