The landscape of media is undergoing a tectonic shift as the way people consume information, entertainment and even communicate with each other has been transformed by innovation and technology.
Investment analysts say it’s a fascinating time for the media industry — social, mobile, digital and broadcast platforms are converging to create new opportunities to connect with global audiences. They say the future of news, entertainment and communications is under construction.
“Change is a constant in media,” says investment analyst Brad Barrett. “But the pace of change has definitely accelerated. The technology that’s now available and the infrastructure that’s in place has allowed new companies to grow incredibly rapidly.”
In essence, the race is on to provide content to consumers any way they want. “People no longer watch TV by appointment in the living room — they watch on laptops, tablets and smartphones. The mantra of the industry is, ‘We want people to be able to consume media anywhere, anytime, on any device,’ and we’re moving in that direction,” investment analyst Andrei Muresianu says.
This move to an on-demand world is being paced by a mix of changing technology, demographics and consumer tastes, investment analyst Jim Kang says.
“For two decades, content creators and pay-TV providers had a mutual interest in preserving the conventional distribution model, in which households pay $100 or more monthly for cable or satellite service,” says Jim. “However, the proliferation of internet options, combined with dissatisfaction over rising pay-TV fees, has prompted consumers to look for alternatives.”
The media industry may sometimes be fast changing, but that doesn’t necessarily put long-term investors at a disadvantage. Sometimes, it’s a case of believing in what will happen, not when.
“The pace of change has accelerated and it’s hard to predict when something’s going to happen,” Brad says. “But because we take a long-term approach and have a high conviction in our investment thesis, short-term volatility can actually play to our strength, especially when fear is overdone, because we can watch things play out.”
Take the recent concern over cord-cutting. While the headlines may sometimes indicate that millions are cutting the cord on their cable TV, that isn’t quite the case.
“First, the saving grace of the business is that consumers are reluctant to cancel their traditional subscriptions for the time being because of the sheer mass of content available, their desire for that specific content, like sports, the high reliability, and how deeply television is ingrained in their lives,” Brad says.
But, Brad and other analysts caution, this is no time for complacency. “Technology is disrupting many industries, perhaps none more so than media,” he says.
We live in a transformational time:
- Technology and innovation have led to new business models that are disrupting the old ways.
- The race is on to provide consumers with information and entertainment any way they want, on any device, at any time.
- Companies that are poised to take advantage of these changes have the potential to reap new profits, and provide investors with opportunities that few could have imagined a decade ago.