How Media Is Reaping Benefits From The Internet

by CXOtoday News Desk    Sep 17, 2014


The media and entertainment industry is no longer being wiped out by the Internet. It’s now reaping the benefits from the latter; finally finding new ways to make money from the Internet, according to a report by Ernst & Young.

Businesses including cable operators, publishing houses, television broadcast networks and even music labels believe that the online medium is helping them garner profits and reduce costs, says the report, adding that the global media and entertainment industry (combined) is expected to see average profit margins of 28 percent, outperforming the S&P 500, the London FTSE 100 and Japan’s Nikkei index.

According to the report, cable operators will have the widest margins of 41 percent on average because of their forte in the broadband businesses. Even though people aren’t adding cable subscriptions and in many instances cutting the cord on cable television, companies like Comcast and BrightHouse enjoy the benefits of adding Internet services to homes that are already plugged into their cable networks.

“We are seeing that digital is very much driving profits now, instead of disrupting it,” said John Nendick, who co-authored the report.

The interactive media segment, which includes firms such as Google, Netflix and Facebook, has seen profits climb at a 19% pace, while the publishing segment, which includes the New York Times Co and Gannett, has been growing at just one per cent. “Publishing and information services companies continue to see declining advertising and subscription revenues,” he said, adding that while digital revenues are growing, this only makes up a very small portion of overall revenues.

However, the transformation of India’s online news landscape has been dramatic of late. Experts believe that the winds of change is not only taking a toll on print news sources, but is likely to hit television news viewership as well, as the traditional media platforms are losing its hold on the next generation of news consumers.

According to a comScore report, the online readership of news and information content on a daily basis in India alone has seen a significant growth with 9.4 million average daily visitors on the Internet, up 34% over last year.

Ralph Simon, CEO of London based Mobilium Global believes that information sites will driven by emerging technologies such as social and mobile.

“In this new landscape of mobile internet access, where the same tasks often occur on different devices, media houses must go for specific design and apps for mobile and a multi-device strategy that can reach both the users of tablets and smartphones,” he says.

However, Simon says that online ad revenue just isn’t enough to support most media and entertainment companies. As a result they need to explore a combination of emerging business model. The market for video content and infographics is also expected to accelerate in recent years, triggering the growth of these entities – if digital heads of these companies can leverage the full potential of the platform, the industry can make substantial money from the Internet.