Media and Communications: Background
The media and communications industry encompasses a wide variety of establishments. The media segment includes motion picture/video producers who create movies, television shows, and other videos to sell to broadcasters; publishers who produce and distribute items such as books, newspapers, magazines, and CDs, excluding software; and television and radio broadcasters.
Telecommunications is another segment of the industry. It includes both equipment from cables to telephones to services such as wireless carriers or cable providers. Telecommunications is what makes voice, data, and video communication possible, resulting in the information age. A new, quickly rising segment is the use of the internet for new media. New media includes online social networking, shopping, video, and gaming sites; as well as mobile media that can be accessed on some newer, electronic products.
Different parts of the industry were born at different times. In 1876, Alexander Graham Bell invented the electrical speech machine, the first type of telecommunications device. Since then, revolutionary changes have made telecommunications a completely different animal. The music industry experienced drastic changes in the 1920s when radio stations started broadcasting for the first time and music became accessible to many more people. Televisions first became available in the 1930s; in 1945 fewer than 7000 people in America owned one, and now most homes boast more than one.
The 1990s brought about a significant revolution in this industry with the creation of the internet and WWW (World Wide Web). These new forms of media allowed individuals the ability to reach as many people as other forms of mass media did, for a fraction of the cost. Parallel to the rise of the internet is the rise of social networking. The new media has exploded in the last decade, with many of the world’s largest corporations being found in this segment now.
Due to the Telecommunications Act of 1996, many of the leaders in the industry today are the result of mergers and acquisitions. In the telecommunications service arena, the leaders are AT&T, Verizon Corporation, and Telefónica. For telecommunications equipment, Huawei Technologies, Nokia Siemens networks B.V., and Ericsson head the pack. Vonage is a leader in VoIP, or Voice-over-Internet-Protocol.
The media and entertainment universe is dotted with many companies, from multi-billion dollar diversified conglomerate to small, independent movie studios and production facilities. Some of the big names are Time Warner, Regal Entertainment Group, Univision Communications Group and The Walt Disney Company. Deregulation of cable companies and increased bandwidth in distribution has further increased the reach of television networks. This growth has resulted in the rise of several successful networks such as ABC, CBS, NBC, and MTV.
Yahoo and Google are two major companies in the new media segment. Twitter and Facebook lead the way in social networking, while Blizzard Entertainment, with the World of Warcraft games, and Electronic Arts (EA) are leaders in online gaming.
One of the trends affecting most companies is the convergence of technology. Communications equipment is being combined today with computer technologies and other consumer electronics applications to create multifunctional devices. The most obvious of which are cell phones. Currently there are more sales of cells phones with MP3 capability than MP3 players sold and more phones with cameras than cameras sold. Additionally, with the convergence of technology cell phones and other wireless devices are being used more and more for financial transactions, from checking a bank account, purchasing online, and swiping credit cards. Wireless communication is also increasingly popular; in the United States and other developed countries, many people choose not to get a landline at all, as all their telephone needs can be met wirelessly. In developing countries, wireless technology is very important since these countries often do not have the required capital to set up a wired infrastructure.
Consumers of today’s media demand more control over their products. Consumers are no longer content to sit through a T.V. program with all of its commercials, they want to watch the program online when it best suits the consumer and with no commercials. In addition, consumers want the media products to be available on many platforms with just one purchase.
There is one major concern that has developed from this integration of media sources for many media companies—intellectual property, or copyright, patent, trade secrets and industrial design protection. Since the CD came out in the 1980s, people have been pirating what a certain legal body has already obtained rights to sell. The MP3 and DVD formats make the illegal copying of music and other materials that much easier. However, there are also people working to create new and more effective copyright protection.
The last major trend has been the major push towards entertainment with electronics and social media. One of the fastest growing markets has been that of mobile and social gaming, with games such as “Angry Birds,” and “Farmville.” The social gaming creates an environment for people to interact and help each other progress through the game. These games can be relatively simple but entertaining enough to diverge from the regular gaming market of 10-25 year old males to include people from all walks of life.
Telecommunications and media industries feed each other. Additional services offered by service providers create a need for upgraded equipment, and equipment companies have created the means for consumers to take advantage of even more services. The constant innovation and invention found in this industry will keep consumers’ interest high as they will always want the new products. This industry has much potential growth left in it, as evidenced by miles of fiber optic cables, which can transport communications at high capacity and speed that are only used to about ten percent of their capacity; it is expected that consumer demand will catch up. In addition, as consumers receive higher disposable incomes, they will begin spending more money on entertainment and media. This is a cycle that leads to growth and a favorable outlook for the industry.