In a report on what 2007 will bring for a variety of industry groups, Business Week talked some on traditional media and entertainment, and it doesn't look too good for them next year.
The report projects that advertising growth will be slowing down. That, along with the continuing fragmentation of the marketplace, is a cause for a lot of uncertainty.
According to the report, Standard & Poor's stated that the areas that have the most potential for gains are Hispanic TV, outdoor advertising, and cable networks.
With the potential to see increased postage rates and increasing operating costs, coupled with declining ad growth, newspapers and magazines, for the most part, don't look like they'll have a very good year. That doesn't even include the increasing online competition they all face.
The film industry will continue to face a world that is changing almost by the day. The sale of DVDs are slowing, and the hope that HDTV would bring some growth, is being hampered by the battle to see which format or standards will be adapted. That and the slow response to embracing movie downloads as a revenue stream, makes that side of the equation difficult to know how it will contribute to the bottom line.
Theaters may be the most vulnerable of all as competition is all around them, coming from every side. Those that don't adapt alternative means of revenue, besides films showing, may be in for very difficult times. The strong impulse by consumers to consume media at home is a powerful competitor to their growth.
The transition period in the music industry also makes it almost impossible to know how profits and revenue will work out over the long-term as well. The question is how far will physical CD sales decline, and how much digital downloads will make up for it. All across media, the uncertainties will continue all through next year at least.
The solution to the HD crisis is pretty simple. Support both formats. In a digital age there is no reason why both studios can't sell their content on HD-DVD and on Blu-Ray. In the end the consumers will decide which format wins, which is the way it's going to end up anyway. The difference though is that consumers won't feel like their expensive HD players are going to be worthless if they know that there will be content to support it. In an age where scarcity is all but elminated because of the internet, there would always be a market for those who bought the losing format. It may mean that blu-ray owners will end up having to rent their movies from Netflix, but it's a much different market then when video stores didn't have the capacity to carry the betamax tapes after VHS won. The only thing that is stopping this from happenning is greed. Consumers won't benefit from a monopoly on HDTV DVD and they're not going to let the studios benefit until they agree to let the markets decide what the standard will be.
Posted by: davis freeberg | December 9, 2006 7:52 PM | Permalink to Comment