So I have been following a series on Recode where they are tracking the mergers and acquisitions of big media production companies like the recent acquisition of 21st Century Fox by Disney, or AT&T’s acquisition/merger with Time Warner. These moves are setting things in motion that will effect how the internet works moving forward.
Net Neutrality is Dead and Big Media Is Gearing Up
In December of 2017, net neutrality was repealed. Net Neutrality was a provision that required internet service providers to offer equal access to all web content. Meaning, companies like AT&T couldn’t slow your internet speed if you were streaming Netflix in favor of faster speeds for HBO GO (which they own). But that’s exactly what is coming into play now. It seems like every couple weeks there is a new acquisition or merger by one of these major media distributors. They are clearly absorbing media creators (studios) as means of vertical integration. Vertical integration is the combination in one company of two or more stages of production normally operated by separate companies. The reason this is happening is because they are trying to catch up to the success of Netflix.
How Netflix’s Business Model is Making Older Media Distributers Change Their Ways
As you can see in the graphic above, Netflix holds a very large market cap. They have been able to build a strong consumer base that keeps them highly relevant as both a media distributer and creator. Traditional media distributors are trying to replicate this success by absorbing studios to create content within their networks. To understand this, let me explain the three basic components of media:
- Creators – the studios that make tv shows, movies, and now social content
- Distributors – networks that can reach large audiences (consumers)
- Consumers – those who watch the content created by the studios and shared through the networks of distributers
Netflix has been able to control two parts of the media cycle and thus attracted a large amount of consumers. Which makes them attractive to advertisers who want reach an engaged audience.
Distributers like AT&T, Comcast, and Verizon are all acquiring studios and media companies to build up data and sell more ad space. As the world consumes more and more media through the internet, that’s where we see Facebook, Instagram, Youtube, and all other social media coming into play.
Social Media is the New TV
In recent years, marketers are finding that television events that previously saw high viewership are grossing lower ratings than ever. Viewership is moving away from television and migrating to online platforms. This shift is more eminent with younger audiences, who watch 13 percent less traditional TV each year and spend more of their time on online platforms. I recently wrote about how Instagram launched IGTV to attract/retain more the teenage audience. Additionally, Youtube now offers traditional tv channels with Youtube TV to rival Sling, a Dish Network, and Playstation Vue, which are all online streaming networks.
With Great Change in Media Comes Great Opportunity for Marketers
Traditional media distributers are positioning themselves to reignite their advertising appeal. By consolidating their content creation they are preparing to capture/retain more consumers by offering competitive pricing on their media. For Example, AT&T owns HBO. They provide incentives for consumers on their mobile plan to be able to stream HBO GO content through their mobile data plan with no effect on their mobile plan’s data cap. But it’s not the same deal if you stream youtube videos on your phone… See what’s happening here?
By providing these incentives, they push their consumers to keep watching channels they control, which they will turn into ad dollars. Not to mention, with all the user data they can obtain they provide advertisers a much more robust level of user data and segmentation that will help drive highly targeted ad campaigns. As a business, it’s crucial you follow what’s happening with big media… they maybe our new Google Adwords.
But What Does Big Data Cost to Consumers?
More data means more of your browsing, purchasing, and social behavior will be monitored. And with most of the data being controlled by a handful of big corporations, it can be dangerously “tempting” for them to push their own content. They can also sign exclusive promotional deals with other large corporations to push sales on products through product placement in their media as well as exclusive ad spots. It’s no different than how cable TV has been handled up to now. It’s now just migrating to the internet. And as a marketer you should know that almost everything on the internet can be tracked. This along with the drop of net neutrality gives big corporations a lot of say in how the internet will be shaped moving forward.
Overall, don’t expect your internet service to be slowed down in any way. Do expect for a lot packages being offered by your ISPs that will get you hooked on streaming apps like HBO GO. But as marketers and advertisers, take note of these offerings and look into the emerging ad platforms from these ISPs as they will likely be key to marketing campaigns moving forward.
What does this mean for Creators?
As creators, it’s important to follow these trends for what happens at the top. Generally this will trickle down and effect small creators the most. For example, pivots by Youtube and IGTV to retain a teenage audience and their advertisers may warrant changes in their algorithms, monetization programs, and copyright guidelines. Keeping track of these changes gives you insight on how to craft your content specifically for these platforms. Also by understanding why these corporations are doing what they are doing, you can get a sense of what audiences are being targeted. Leveraging that information, you can build channels and profiles with content that suits each network appropriately and grow a successful business.
What do you think? Would love to hear your thoughts on how the internet is changing post net neutrality. Leave them in the comments section below!