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Shapeshifting of entertainment ecosystems:

Content is king! And in TV, the trend clearly shows us moving away from watching traditional channels paid via cable TV and moving towards subscription-based streaming services. Streaming benefitted from COVID with record growth:

Time spent viewing streaming content increased dramatically during COVID: +44% globally and doubling in Europe and tripling in Latin America and Africa. (Image credit: Conviva State of Streaming Q4 2020 Report, 2021)

However, as the competitive battle heats up among the providers, winning new subscribers and preventing existing ones from leaving is becoming harder. As a consequence, providers started looking for more ammunition: attractive content to keep their viewers within their own walled garden longer and to attract new subscribers. A reshuffling of the assets in this industry has begun, and we have a front-row seat to a textbook case of a formerly new industry entering a more mature phase.

WarnerMedia TV and Discovery merged to create a new premium mouthful, “pure-play direct-to-consumer entertainment company.” WarnerMedia was previously owned by AT&T, the U.S. telecom provider who, with this move, turned their entertainment assets into an independent business. This spinoff was a glycemic index-busting sweet deal for AT&T, as it received up to $43 billion dollars, which it can now pour into the 5G battles over in telecom land. The new entertainment company has over 100 well-known brands, world-class production teams, and around $50 billion dollars in revenue: Size matters when you go into a war that will consolidate an industry!

A new home entertainment pure-play giant arises: WarnerMedia and Discovery merge. (Image credit: AT&T press release, May 17, 2021)

Interestingly, only a few days before the announcement by AT&T, its telecom competitor Verizon sold off Yahoo and AOL at a loss, to raise $5 billion dollars,  which it will invest in 5G networks and services.

The lion does not sleep tonight – Amazon buys MGM and with it one of the biggest movie libraries. (Image credit: Gyfcat)

Amazon has also been upping its movie game by buying MGM, the glorious and longtime Hollywood studio Metro-Goldwyn-Mayer. The famous MGM lion roars for a different owner now.

The announcement stated that Amazon was interested in MGM’s filmmaking tradition and movie assets. Translation: Expect remakes and revivals of traditional movies you and your ancestors liked – served exclusively on Amazon PRIME TV! This is a classic “new products for existing channels” to keep up with competitor Netflix.

Oh and Netflix, the champion of streaming TV services?

Streaming has eclipsed regular TV broadcasting but Cable TV still reigns supreme. Netflix is the leader among streaming TV providers (Image credit: The Gauge, Nielsen National TV Panel data plus streaming video ratings, June 18, 2021)

Viewers spent more than twice as much time on Netflix than on their competitors’ programs. It also leads in the number of subscribers with 207 million.

How does Netflix react to the shuffle in the ranks behind it? It seems content to stay the course, turning out great movies, expanding geographically, and adding auxiliary revenue (its latest example: a merchandise store). Netflix must think that its productions have reached such an iconic status that it can monetize them. What’s the next money generator for Netflix? A Bridgerton theme park? Stranger Things gummy Demogorgons?

It remains to be seen how the competition among the streaming providers will shake out. And I’m very curious who or what will try to spoil this merry-go-around.  Which technology will reshuffle the cards again by disrupting the industry? Perhaps one of the telecom companies with mobile devices? Or one of the VR companies with wireless goggles? After all, who needs cabled internet into computers and TVs once wireless 5G is available everywhere? Or who needs a device when content can be beamed straight into your eyes, and even in 3D?

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  1. Pingback: DIGIGRAM Newsletter of June 2021 – Gert

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