Google enters the competitive landscape...again

With countless numbers of companies aiming to provide consumers with entertainment, media can be quite a competitive industry. In such a wild competitive landscape, it takes true entrepreneurship to set you apart form the competition. Google is a perfect example of a company that seeks to be involved in competition. Just when we thought Google couldn’t get more involved in the services they provide, they somehow find a way to surprise us. Google has put up several headlines over the past year. First it was the revealing of their social media website, Google +. Then it was revealed that Google would be entering competition with Apple and Amazon’s music services by starting Music Beta. Now, Google appears to be entering competition with Apple’s Apple TV services.

This past Friday, Google announced an update to the software for Google TV. Google stated that they simplified the product to allow users to access the Internet and search for online videos through their TVs. Google TV will also offer on-demand shows that are normally available of services such as Netflix and Hulu. Google has recently reached a deal with various chipmakers, device makers, and TV makers, such as Vizio and Sony, which will bring new Google-powered TVs into the market next year.

Google plans to separate itself from Apple TV in that Google TV will provide access to all content available on the Internet, instead establishing a narrow amount of offerings formatted for use on TVs. Some analysts are viewing Google TV as potential threat to cable/satellite companies. Google on the other hand stated that Google TV isn’t meant to replace TV and cable, but rather to complement it. Google seems to be on the right track. They seem to be doing a great job in entrepreneurship seeing as how they are involved in almost every aspect of media's competitive landscape.

To the Internet & Beyond!

At In Medias Res, we are racking our brains for opportunities for entrepreneurship in the media industry.

We had our Eureka moment when we stumbled upon this Wall Street Journal article.

Online advertising is opening up and is presenting itself as a very good opportunity for entrepreneurs.

"U.S. online advertising revenues rose: 3% in 2009 and 15% in 2010, and S&P Capital IQ estimates an increase of 10% in 2011," says Scott Kessler- quoted on NetAdvantage as a top analyst in internet software & services, a sub-industry of what we, here at In Medias Res, care about. The growing revenues from online advertising give investors a sense of security within the media industry.

And with thriving social media sites, like Facebook and Twitter, a lot of advertising space is being made available and is waiting to be snagged up. And because this is through the internet, many mediums are available for advertisers: from videos to pop-ups to promotional Facebook group pages with interactive games. Various ad-technologies are being developed and the growth of this industry shows many opportunities for newcomers. Online advertising is being redefined, with ad-technology changing hands and with the area re-consolidating itself, as the article suggests.

Entrepreneurship in the Media Industry

Currently in the Media industry, there is a lot of entrepreneurship happening. Entrepreneurship thrives when there are many unfilled niches. While traditional media such as newspapers, and television are saturated and make it very difficult for entrepreneurs, there are many opportunities elsewhere. There are a lot of success stories in entrepreneurs using the internet in creative ways.

This article tells about a recent entrepreneur that is doing very well. Groupon started in 2008 as a way for companies advertise by offering great deals through a middleman. This is great for small businesses to get their name out while Groupon gets their cut.

Another entrepreneurship that caught my eye is Foursquare. This article explains how Foursquare started and 2009 and outdid its large competitors in location services such as Facebook and Google. Foursquare is now the leader in location services.

Can Netflix Change the Media Industry, or Will It Stay In a Funk?

In Medias Res was asked this week: in what areas of the media industry are there opportunities for innovation?

Reed Hastings, CEO and entrepreneur of Netflix gives good advice about being an entrepreneur in the media industry. He also gives good tips and his visions for Netflix, which leaves way to improvement within the media industry. When asked his advice on becoming a successful entrepreneur he remarked, “creating freedom and responsibility” in the work place. One example of freedom and responsibility is having no vacation policy. If you work for Netflix, you don’t have a set amount of days you can take off for vacation according to Reed Hastings. Yet freedom and responsibility aren’t the only improvements being made within Netflix and the media industry. Reed Hastings has some visions that could change the online streaming of TV and movies forever.

Entrepreneurs have taken over the media industry. A rise in the use of social networking, Facebook, Twitter, and Google +, but social media isn’t the only sub-industry that has effective entrepreneurs. Netflix’s Reed Hastings has two visions for Netflix. Netflix is taking advantage of the fact that the internet has evolved our culture. He plans to “change the online experience” because of the fact that internet has gone from dial up to fiber. This one single changed has allowed Netflix to work faster and be able to stream more videos, thus making the online experience much more enjoyable, and Reed Hastings point of taking advantage of the internet as a success.

Reed Hastings has also said that he would like to take the mobile market and go global with Netflix as his second vision. According to Forbes.com, “there are 5 billion people on mobile.” With the 5 billion projected people on mobile as Netflix’s audience, Reed Hastings says, “His dream is to see Netflix rolled out across the globe, in the process of becoming the world’s best entertainment distribution platform.” With both of these projected goals, Mr. Hastings wants to basically take over the world with internet and mobile domination of entertainment.

Revenue of GE, Profit of Disney.

Although the Walt Disney Co. tops the charts in terms of profit, General Electric Co. dominates in terms of revenue with 128,051 million dollars in year 2000, $180,929 million in 2008 and $149,060 million in 2010. This at least triples the revenue of Disney in any year. However, we cannot make judgments yet, we still need to know how much of a percentage the profit is of the revenue.

GE had a 12.8% return on revenue of profit in year 2000 while Disney received 9.8%. However, the earliest statistics show that GE got an 8.5% return on revenue of profit while Disney had a 10.4%.

Then why is Walt Disney still on top? Because General Electric has a broader range of supplies -goes even beyond entertaining- so when you balance between the ratios, it will be apparent that the revenue Disney is receiving is massive relative to the number of products and services the company offers in comparison with GE which produces a lot more than Disney while Disney remains a clear competitor.

How the Recession Affected the Media Industry

According to this article, the recession heavily damaged part of the media industry. Of the 37 ratings made by the S&P in European media space in 2010, 90% were negative. Newspapers lost a lot of revenue from advertising as well as a decline in newspaper subscriptions. As you can see in the above chart from here, newspaper advertising revenue declined by 25 percent in the United States. With the recession, newspapers are moving away from print and onto cheaper online content. This diversification is likely to greatly help the industry in the long term.

Other parts of the media industry seem to be doing well. This article discusses how the movie industry is doing quite well. More people are going to the movies despite higher prices. With consumers seeking an escape from realities, the movie industry looks like it will continue to be doing well in the future.

Google Music vs. iTunes: Who Will Take Over the Industry?

In Media Res was asked to look at recent news in the media industry. We found the most important new in the media industry is that competition is heating up. Google Inc. just introduced its own online music player that would work closely with Google Plus- the Google Inc. social network. “Google Music” is the current name of the product that Google is working with. This online music source would work much like an iTunes or the newer Spotify in a way that Google customers would share their musically libraries with their Google Plus contacts who could listen to the music for free, however the catch is you may only listen to it free once. After the one free listen, the song would be available for downloading for 99¢ per purchase, which currently is cheaper than iTunes purchase rate of $1.29. However, controversy has struck Google Inc. in regards to the participation of all four major-label companies. Without the participation of Universal Music Group, Sony Music Entertainment, Warner Music Group, and EMI, the four major-label companies, dissatisfaction of customers is bound to be an issue. Without all four major-label companies this also compacts the amount of songs available for listening and downloading, for many customers they want all the convenience of a one-stop shop. Google Inc.’s competitors though have all waited until the guarantee of all four major-label companies before issuing their music services.

Online music is becoming a major trend. While Google Music is still in its elementary phase, there are certain glitches that still need to be worked out. Google Inc.’s competitor, iTunes, according to Wall Street Journal, is about to start an online music listener that will create revenue for the company as well as all the major-label companies. Spotify-a new online music listener that allows sharing between Facebook friends launched their product over the summer. Even Spotify has revenues of $10 a month for the ad-free smartphone version and $5 a month without ads. With all the competition in online music players, Google Inc. may have a hard time breaking into the music industry.

Hello to Hulu

When looking at the current events in the media industry, our team at In Medias Res always keeps an eye out for the many ways that media sources are available to viewers. Today, you don't need to TiVo a show in order to keep up with it. At least, not as long as you have Hulu.

Hulu. a website that has been making selected episodes (and sometimes entire seasons) of television shows available to the masses, is jointly owned by Walt Disney Co, News Corps, and Providence Equity Partners LLC. Its owners had decided to put it up for sale. And now... well, if you were dreaming of owning Hulu, your opportunity has passed. Hulu is off the market and will continue under the same ownership.

What's in store for Hulu? It's best put in this interview with Sam Schechner:

According to the Wall Street Journal, the owners are trying to re-draw the lines of their ownership. Imagine the way US, UK, and Russia drew lines around Germany and Berlin after WW2, and the way they designated who would be in charge of what. Well, hopefully, the overall process will be a lot more cohesive than that. The last thing we need is a "Cold War" of online videos!

Still, the owners (Disney, etc.) failed to find a high bidder that would agree with their terms. Dish Networks and Google were the last two serious contenders. Dish Networks was bidding around $1.9 billion and Google, while offering $4 billion, had its own terms in mind. So the whole deal was thrown out, and Hulu stays under the same ownership- perhaps with redrawn lines.

At In Medias Res, we are excited to see what becomes of Hulu in the long run. As they continue to add more and more content and to seek more Hulu Plus subscribers ($7.99/month gives subscribers more access to shows and movies). But it's still possible that it will change hands down the road. The website may be split between more global media giants when the licensing agreements will be renewed in a few years.

Incoming Revenue Among Key Entertainment Companies

When looking into the movie and entertainment industry, perhaps no name is bigger than Walt Disney Co. With fields in media ranging from music to sports, they seem to hold a strong presence everywhere in the industry. From 2007 to 2010, Walt Disney Co. brought in the most revenue among its competitors. In 2007, their annual revenue was $35.510 billion, which increased to $37.843 billion, dropped to $36.149 billion, and then increased again to $38.063 billion in 2010. Throughout this four-year span ranging from the beginning of 2007 to the end of 2010, Walt Disney’s closest competitor was News Corp. News Corp’s respective revenues from 2007 to 2010 were $28.655 billion, $32.996 billion, $30.423 billion, and $32.778 billion.

While Time Warner dominated in terms of revenue from 2005-2008 (bringing in over $40 billion each year), they took a turn for the worse during the recession. From 2008-2009, Time Warner’s revenue nearly cut itself if half, dropping from $46.984 billion to $25.785 billion. Like other companies in the industry, Time Warner was able to bounce back in 2010, increasing its revenue by $1 billion.

Going across the Pond and Beyond

In Medias Res was asked Do players in your industry manufacture overseas?

We chuckled significantly over this question because we can hardly remember when the media industry went global. It seems so long ago that it’s hard for me to picture a time when this wasn’t the case.

A lot of key players manufacture overseas and have divisions and branches in different continents. It is an especially smart move in the media industry, because to intrigue an audience, content must be relevant to them, and “giving the people what they want” is more easily done when you understand the culture and values of your audience. Therefore, it’s really essential to be setting up shop overseas in the media industry.

Let’s think about News Corp. Its net money flow currently is $17.84 million and that’s not too shabby. It’s in the top five of the global media giants. And News Corporation is careful to cover all its bases globally.

You may have heard that BBC (British Broadcasting Company) is the “largest broadcaster,” but News Corp has extended itself into more mediums and done so on a larger scale. For example, News Corp’s UK division, News International, prints many newspapers like Today and The London Paper. News Corp Europe television broadcasts specifically in certain countries- like Romania and Bulgaria. News Limited, which we could consider to be the Australian brand of News Corp, has great outreach too, offering many magazines and television shows.

Equally important in manufacturing overseas are the translations that are necessary for offering products overseas in the media business. TV shows are translated- in some cases, like cartoons, even dubbed over. Magazines and newspapers are reprinted- and it’s not as easy as “copy & paste”-ing everything into “Google translate.” News Corp owns the publishing house, HarperCollins, and while it is headquartered in New York, translating novels and published works is essential and a big part of manufacturing internationally. And it’s not just News Corp. Many do it, just to keep up with the global audience. Manufacturing overseas is part of the global aspect of this industry.

Foreign Media Giant

While most large corporations in the media industry are all US based, there are some that are some large foreign corporations. Bertelsmann AG, the largest non US media giant, is a perfect example of this. This shows that the company operates in 63 countries and employs more than 100,000 people. With operation in every form of media, Bertelsmann AG is extremely powerful. With Random House, it is the world’s biggest publisher in books and publishes magazines all across Europe, including the magazines Femme and Prima. They also own tons of TV and radio stations across the world.

Oversea Key Media Industry Players

There are a few key players in the media industry that are not from the United States. One of the major new companies in Britain is the British Broadcasting Company. According to their website, BBC is “the largest broadcasting organization in the world.” Setting up their headquarters in the center of Britain, London England and staffing more than 23,000 people, it deserves the title of largest broadcasting organization. BBC is a public service broadcaster that reaches 10 national radio stations and 40 local radio stations with a website accessible to all. BBC provides their customers with” news and information in 32 languages.” BBC is run under the Royal Charter, which is “an accompanying agreement that recognizes its editorial independence and sets out its public obligations in detail.” In other words, it is a letter from the monarchy that grants the power to an individual or business. With international business becoming more popular, BBC surely has made goals to keep their status as largest broadcasting organization by sticking with quality, focus, efficiency, and market impact.

I believe it is important for companies in the media industry to be non-US owned, especially news companies. It is important for the world to know each others news and to care for one and other. That is what BBC is aiming to do. By broadcasting in 32 different languages, and being located in the center of the world, British Broadcasting Company is making the effort to get citizens of other countries to care for those in need. For example when Haiti had their earthquake, not only did the United States give money to help the country, but the United Kingdom, Sweden, and many others gave as well. Please refer to the table according to The Guardian. International business is becoming more important in our everyday lives, especially with companies like BBC in the news.

Key Factors to Global Success of the Walt Disney Company

Of all the companies in the media industry, the one that seems to be of the most globally successful is The Walt Disney Company. It had expanded into almost all countries worldwide from the U.S. to Indochina. The company received revenue of 38.1 billion dollars this year. Key reasons for its tremendous success are summarized to six major ones.

The most creative of these reasons is that the company has an international expansion strategy in which includes fixed assets. There are Disneylands around Paris, Hong Kong, California and Florida, Disney Resorts in Shanghai, Tokyo and Hawaii, Disney Cruise Line, Disney Vacation Club and Disney Card Club. They try to create a two-way communication by developing these clubs and parks. All which allow international and global involvement.

It had not only expanded to almost every country in the world, but it also has expansion strategies in Japan, Europe, US, India, Latin America, Hong Kong, and Russia.

Brand image is very important to any media company and Walt Disney and his following CEOs made a great job in creating it. One major factor to start and boost this image is Mickey Mouse, the most recognized cartoon character in the world.

It is apparent that Disney flourishes in not only the TV industry, but in several other fields. It has diversified into travel, theatres, film production, live-action, publishing and radio. This has allowed it to further succeed and spread its brand name.

Another very smart tactic is the strategic alliances it created with companies worldwide “to help with producing branded consumer goods, as well as supplying its theme parks”. Its most current one is its alliance with Apple’s iTunes which sells Disney movies, programs and movies.

Last but not least, Disney offers internet options to its consumers in order to involve them as much as possible. Their website offers access to e-ticketing, products and information about them. These are available on their website, but they also have a blog (BlueSky) that provides more in-depth communication with consumers.

Google Ceases to Amaze

Google seems to be getting involved in everything these days. Google recently entered the social networking industry with Google+ and now it seems they will be entering the world of online music stores. Google is now entering competition with Apple and Amazon in a race to create services that combine retail sales and remote music storage. Google's cloud service, Music Beta, and Amazon's Cloud Player both let users store music online, but neither of them have licenses from all the music companies. Due to this, users must upload most of the music that they want stored on their system. Google, though, is talking to three major music companies, Vivendi SA's Universal Music Group, Sony Corp.'s Sony Music and Access Industries Inc.'s Warner Music Group. Music Beta currently allows people to upload up to 20,000 songs. Apple is at this moment leading the race with their recent release iCloud. However, Google's Music Beta is still in an invitation-only testing mode, so we can expect it to become much larger threat to Apple and Amazon.

Social Networking FTW

This week, In Medias Res was asked, “What is the competitive landscape of the media industry in the US?” and we will be answering this question specifically in terms of popular social networking sites, like Facebook and Twitter, as they have been utilized most by other businesses implementing social media as a tool to further themselves.

That's because even established companies (Google, Time Warner Inc., Disney, etc.) seem to be rethinking their business models to incorporate websites, mobile functions, and social networking sites in order to make their products more accessible.

But what is the social media medium doing to the competitive landscape exactly?

The company’s branding, or the way it gets is name out, is done through the outreach it has online. The top social networking companies are as follows:

Facebook (700 mil. monthly viewers)

Twitter (200 mil. monthly viewers)

LinkedIn (100 mil. monthly viewers)

MySpace (80.5 mil. monthly viewers)

Ning (60 mil. monthly viewers)

Google Plus+ (32 mil. monthly viewers)

The viewership alone should not be telling of the competitive landscape of social networking sites in the media industry. It also depends how these web sites are used by other companies- outside advertising being how a lot of them make money. According to USAToday, Facebook, specifically, stands out as a promoter of small businesses, making coupons, special offers, and more available to followers/users.

The newer of these social networks, Google Plus+, has tried to revolutionize social networking accessibility by having "friend circles" and allowing Google hangouts (or video chats) for large groups of people. As a user of both Facebook and Google Plus+, I find Google Plus+ to be more fun and creative to use. But ol' reliable (Facebook!) is what seems to draw me in- simply because it seems like everyone uses it! It's hard to compare social networking sites when Facebook and, as of late, Twitter seem to be much more mainstream than the rest.

While Facebook is used by a lot of small businesses, Twitter is being utilized by some very smart companies, too. The online retailer, Zappos, and Comcast are using Twitter to further public relations and advertise their company.

When you get down to it, these popular social networks offer many different things: LinkedIn, specifically, serves as a way to distribute your resume to potential employers. All these unique groups come with downsides to them too: MySpace has a lot of spam and an outdated look to what used to be a site meant for artists to share their work and music; Facebook used to spam their users' in-boxes and many people are dissatisfied with the changing formats; Google Plus+ is very exclusive and you can't make an account without being invited by a current user. As for Ning, and other popular social networking sites like Hi-5, -they simply have not established themselves enough to make as much of a mark as Facebook and Twitter.

It would be interesting to fast-forward 5 years and see what we're still into. I don't know if Facebook will stay on top- or if a completely different player will take us by storm. So far, the competitive landscape of the media industry- as far as social media goes, is such that it is dominated by Facebook and Twitter, with some other competitors fighting for third place.

Apple's Steve Jobs Died

The biggest news in the history of modern technology has come out the past week: Apple’s Steve Jobs died at the age of 56. His death will not only affect Apple as a company but also the media industry as a whole.

There are short-term and long-term effects resulting from Steve Job’s death. Some of these effects will be discussed through this blog post.

The death of a legendary creator is most of the times an advantage to the sales of his creations. This can be applied in any field/industry. Let’s take the music industry for example. The death of the king of pop, Michael Jackson, resulted in a boom in his songs and album sales. The same thing is expected to happen to Steve Job’s iCreations and specially his latest iPhone 4S. People would want to grab the opportunity of owning a device that was created by a legend-to-be.

This affects other competitors in the media industry. Some might have an HP and plan to keep it for another year and then get a new one. But with the Macbooks running out and out of date (with time), they will rush into buying a Macbook Air instead. This influences the sales of HP PCs and other complements such as Windows XP.

Some are suspecting the company’s ongoing success in the long run. At some point, Steve’s modern designs will become old and so Apple is under the pressure of following in his footsteps of creating newer and more unique devices. “In 1985, the company began a steady decline that saw it drift to the margins of the computer industry” all because Steve Jobs was fired. It was only when he came back to the company that it started to rise again in 1997. That being said, some believe that the exact thing will happen to Apple’s sales today.

If this is proves to be true, it will be an advantage to other PC companies and their complements as their devices will rise in demand and therefore have their years of prosperity.

Pandora takes over the car industry

Trends in the media market are surely growing for a more technological age. According to IBIS, some of the top consumer trends are companies teaming up together to create better products, 3D technology, and a last growing trend is connectivity. A company like Pandora, an online music source that allows you to create playlists based on genre, artist, or song, is teaming up with car companies such as, Ford, BMW, and Toyota. According to Pandora’s help website, Pandora, Ford, and Microsoft have worked on technology called SYNC ® that allows customers to use hands free technology with their smartphone to play their Pandora playlists and control them with the vehicles controls.

This is extremely helpful, especially to the music sector of the media industry. Pandora is a company that selects songs based on your personal liking. I think that Pandora is a growing figure in the music industry personally. It is also a free website, which is cheaper than iTunes, paying $1.29 per song. However, there are some down sides to Pandora. You cannot choose your own songs to play; they randomly choose songs based on your artist, song or genre you pick to listen to. This could also be an advantage because it opens you up to new songs and artists. I also think it is smart for Pandora to be moving into the car industry. I wouldn’t mind taking my Pandora list on the go.

Differentiation Between Facebook and Google+

Different media companies are like any other company in that they are always fighting to differentiate themselves from their competitors. Companies want to detract as many consumers from their competitors as possible. This is done through differentiation. A current important struggle between two media companies is occurring when Google launched its Google+ to directly compete with Facebook. I will be focusing on the difference between Facebook and Google+ as opposed to Google as a whole. This article gives a good idea of the differences.

For the social media world, companies try to differentiate themselves in a number of ways such features unique to a company or number of users. Examples of ways that they differentiate themselves is that Facebook has hundreds of millions of users and google+ has many new features that Facebook does not. One of the key features that Google+ has is that it lets users create groups among their friends to create privacy. This is different from Facebook where everything you post is visible to all your friends. While Google+ is still in its experimenting phase, we can see it as being major competition in the near and long term future.

Pricing Trends in Media

The book Entertainment Industry Economics: A Guide for Financial Analysis by Harold L. Vogel provides great insight into how the entertainment industry works. Starting on page 292, the book gives an analysis of how pricing works when comes to advertising. When it comes to communicating with potential customers, perhaps the most efficient means is through advertisements. As one would expect, pricing for TV spots can vary depending on where a business is trying to receive airtime. While some prices can be found through research, many of the transactions between businesses and local stations have unpublished prices. The price for an ad spot can depend on multiple concepts. Broadcasters usually sell air time to businesses using the concepts of gross rating points (the sum of all the ratings figures), frequency (the number of times an ad is used), and reach (the number of households exposed to the message). Advertisers assess the expenses of delivering a message on the basis of cost per thousand households (CPM), which indicates how much half a minute will cost during a specific time of the day. The image above shows, the CPM trends for network TV compared to newspapers over the past 30 years.