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.