America’s media giants have seen this movie before: Big Tech enters an industry with piles of cash and new ways of doing business, devastating the competition.
That’s why Big Media are scrambling for partnerships and tie-ups to bolster their content arsenal in the face of a well-funded onslaught from the tech sector.
This shifting landscape helps explain talks between Walt Disney Co and 21st Century Fox to sell key television and film assets from the Rupert Murdoch family-controlled group, and a proposed AT&T purchase of media-entertainment powerhouse Time Warner.
More deals are likely as the industry adapts to a consumer shift to online, on-demand services like Netflix, and efforts by tech giants such as Facebook and Apple to jump into original content.
“It’s an incredibly complicated game of musical chairs happening simultaneously,” said Robert Thompson, who heads Syracuse University’s Bleier Centre for Television and Popular Culture.
“Everyone is trying to make sure that when the music stops they have enough content and people to keep making it for them.”
The old model of hefty pay TV packages supporting the content creators is fading, and the struggle for power in the industry is now referred to by some analysts as a “Game of Thrones,” a reference to the popular HBO series.
Streaming services like Netflix and Amazon have already disrupted the sector.
According to a report by the investment firm Raymond James, 31 per cent of Americans said their primary source of video was streaming services.
About 32 per cent of consumers have cancelled or “traded down” to a less expensive package, and many young viewers rely entirely on Internet platforms for video, the report said.
Google-owned YouTube is also ramping up its original content offerings and Apple has reportedly created a $1 billion war chest for its television service programmes.
“It’s more than taking away money and subscriptions.
It’s about viewership, eyeballs,” said Bruce Leichtman of Leichtman Research Group, who follows media and entertainment.
Richard Greenfield, an analyst at BTIG Research, says the established “legacy” companies are being forced to sell, diversify or “scale up” to compete against tech players.
But Greenfield said Disney’s plan to acquire Fox’s stake in Sky TV and studio assets while gearing up for its own streaming offerings may not be enough. — AFP
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