chapter 10 enhanced version media convergence october 22, 2000

Chapter 10

Enhanced Version

Media Convergence

October 22, 2000

ZOP-BOK-Media Convergence - 4-28-00

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Supporting Slide 10-A:

A Technographic’s view of New Consumer Internet Adoption

Early Adopters

Mainstream

Laggards

Time

A Technographics View of New Consumer Internet Adoption

Source: Mary Modahl, “Now or Never: How Companies Must Change Today to Win the Battle for Internet Customers” Harper Business, 2000

Number of new on-line

customers


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Supporting Slide 10-B: Dot-Com spending in Traditional Media

Source: Advertising Age


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Supporting Slide 10-C:

Top Dot-Com and Online Service Advertisers

Source: Advertising Age


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Supporting Slide 10-D: How Offline Media drives Online Media


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Supporting Slide 10-E:

Online Users Use the Internet as Supplement for News

Note: *Based on weekly online news consumersSource: Pew Research Institute

A Supplement, Not a Replacement*


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Table 10-1: Primetime Viewing Shares of Free and Cable

Television Networks

Note: For all television viewing Monday-Sunday, 8-11pm EST. Due to multiset use and independent roundings, totals add up to more than 100. All Other includes the FOX network, UPN, WB, other independent stations, pay cable and public televisionSource: Cable Advertising Bureau, Cable TV Facts (1999)

Primetime Viewing Shares of Free and Cable TV Networks1985-1998

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1985 1990 1991 1992 1993 1994 1995 1996 1997 1998

All Other

Basic Cable

Network Affiliates


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Exhibit 10-1

Media Fragmentation, 1960’s to 2010’s

Source: Business Week, February 16,1998

Most Americans watch the Big Three Networks every night

UHF Stations bring more choices, and the fledging cable industry intoduces a few new channels like HBO and Turner’s TBS Superstation

The VCR becomes commonplace, letting consumers watch recorded shows and movies whenever they want. Cable explodes, with new networks like CNN and MTV.

Digital compression and two-way networks allow cable companies to offer even more channels and services. DBS services grow more entrenched. As TVs are linked to the Internet, new programming delivered via the Internet takes hold. Result: 300 choices at any moment.

Broadcasters may use high-definitionTV spectrum to launch more channels. Internet chat evolves into networked virtual reality games, interactive movies, and other activities being hatched by MITs media lab and others. News Corp. forecasts 1,000 channels, now called “context windows”.

Direct-broadcast satellites are introduced offering hundreds of channels. Cable systems are slowly upgraded with more channels

1960s 1970s 1980s 1990s 2000s 2010s

TV faces the worst audience fragmentation of all. Here, News Corp. tracks and forecasts the explosion of TV-viewing choices available in any given hour. Once there were three options; soon there will be 1,000

TV faces the worst audience fragmentation of all. Here, News Corp. tracks and forecasts the explosion of TV-viewing choices available in any given hour. Once there were three options; soon there will be 1,000


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Supporting Slide 10-F: Trends in TV News Viewing

Age March 1995 April 1996 Difference

18 – 29 36 22 -14

30 – 49 42 35 -7

50+ 62 62 0

Source: Pew Foundation


18 – 29 64 51 -13

30 – 49 72 63 -9

50+ 77 76 -1


18 – 29 25 19 -6

30 – 49 30 24 -6

50+ 32 33 +1

Trend in Regular Viewership by Age (%)Network Nightly News

Local TV News

Cable News Network (CNN)


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Exhibit 10-2

America Online Welcome Screen


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Exhibit 10-3

Monster.com Home Page


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Table 10-2

Monster.com User Statistics

Monster.com Key Metrics — December 1998 to January 2000

Note: *As of December 1999Source: Bean Murray Institutional Research, Monster.com, Media Metrix


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Exhibit 10-4

CBS Marketwatch Home Page

CBS Evening News

CBS Marketwatch Weekend

Dewes Traffic

Dewes Traffic


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Exhibit 10-5

ABCNews.com Home Page

ABC TelevisionABC Television

ABC TV Affiliates

ABC TV Affiliates

ABC RadioABC Radio




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Exhibit 10-6

Sony Playstation 2

Games: Runs PS1 titles, but new PS2 . will make the old ones look

like Pong

Games: Runs PS1 titles, but new PS2 . will make the old ones look

like Pong

DVD Player: Can play digital movies right out of the box. Not a bad

deal just for that.

DVD Player: Can play digital movies right out of the box. Not a bad

deal just for that.

Music CD’s: PS2 spins them, too. Pressed for space? Give the old

player away.

Music CD’s: PS2 spins them, too. Pressed for space? Give the old

player away.

Internet: In 2001, Sony says, you can add Net connectivity. Browse

and buy.

Internet: In 2001, Sony says, you can add Net connectivity. Browse

and buy.

Download: Also next year; store and replay digital music and video

from the Web

Download: Also next year; store and replay digital music and video

from the Web


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Supporting Slide 10-G:

Point - Counterpoint on Mega-Media Mergers

Pursue Media MergersPursue Media Mergers

Increased fragmentation of the media suggest that media mergers are the only way to grow through “synergy.”

When executed properly, using content across different media platforms, can yield substantial media benefits.

A combination of media companies build a portfolio of media brands that the public have known and trusted through the years. Larger media companies have more resources to invest in new product ventures

Increased fragmentation of the media suggest that media mergers are the only way to grow through “synergy.”

When executed properly, using content across different media platforms, can yield substantial media benefits.

A combination of media companies build a portfolio of media brands that the public have known and trusted through the years. Larger media companies have more resources to invest in new product ventures

Don’t Pursue Media MergersDon’t Pursue Media Mergers

Media mergers don’t work because of cultural clashes between the acquiring and acquired companies.

Media mergers are costly. Joint ventures are a more realistic way to pursue new opportunities.

Large media companies discourage innovations because of pressure to please Wall Street and to show a financial return for a merger.

Media mergers don’t work because of cultural clashes between the acquiring and acquired companies.

Media mergers are costly. Joint ventures are a more realistic way to pursue new opportunities.

Large media companies discourage innovations because of pressure to please Wall Street and to show a financial return for a merger.


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Supporting Slide 10-H: Time Devoted to Media Use “Yesterday”

* All figures are from February 1994 except for computer use which comes from June 1995Source: Pew Foundation

Time Devoted to Media Use “Yesterday”* (%)


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Supporting Slide 10-I: List of Recent Mega-Mergers

1995 Disney and Capital Cities / ABC

1995 Time-Warner and Turner Broadcasting

1995 Westinghouse and CBS Inc.

1996 SBC and Pacific Telesis

1996 NYNEX and Bell Atlantic

1996 US West and Continental Cable

1996 Thomson and West Publishing

1998 America Online and Netscape

1999 AT&T and Comcast

1999 Viacom and CBS Inc.

2000 America Online and Time-Warner

2000 Tribune Company and Times Mirror Company


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Supporting Slide 10-J:

Point - Counterpoint on Future of Newspapers

Newspapers will surviveNewspapers will survive

Local newspapers provide differentiated content with local news coverage not found in the national news sites.

On a local scale, local newspapers sites are usually the most visited news sites within a local market.

Newspapers can create a portal site for their communities, similar to Boston.com, which will protect both their editorial and classified advertising franchises.

Local newspapers provide differentiated content with local news coverage not found in the national news sites.

On a local scale, local newspapers sites are usually the most visited news sites within a local market.

Newspapers can create a portal site for their communities, similar to Boston.com, which will protect both their editorial and classified advertising franchises.

Newspapers will not surviveNewspapers will not survive

In the future, news sites such as MSNBC will be able to provide local news through its affiliates, eliminating the need for local newspapers.

On a national scale, the broadcast and cable networks, such as CNN, MSNBC, and ABC News.com dominate the news sites online.

Revenues of newspapers are threatened by the creation of vertical online classified companies, such as Monster.com

In the future, news sites such as MSNBC will be able to provide local news through its affiliates, eliminating the need for local newspapers.

On a national scale, the broadcast and cable networks, such as CNN, MSNBC, and ABC News.com dominate the news sites online.

Revenues of newspapers are threatened by the creation of vertical online classified companies, such as Monster.com


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Supporting Slide 10-K:

Point - Counterpoint on Cross Media Ownership

Relax/Eliminate Media Ownership RulesRelax/Eliminate Media Ownership Rules

Existing Federal laws prohibiting cross-ownership of a television station and a newspaper in the same market or limiting the number of television or radio stations that a single media company can are outdated.

With the individuals having increased access to other sources of media, such as cable channels and Internet sites, concentration of media in single market cannot be achieved. Media usage is much more fragmented today than ever before

Existing Federal laws prohibiting cross-ownership of a television station and a newspaper in the same market or limiting the number of television or radio stations that a single media company can are outdated.

With the individuals having increased access to other sources of media, such as cable channels and Internet sites, concentration of media in single market cannot be achieved. Media usage is much more fragmented today than ever before

Maintain Media Ownership RulesMaintain Media Ownership Rules

Existing Federal Laws need to be maintain to ensure the public’s interest and to keep competition

Local newspapers and television stations continue to dominate the media in local markets. Allowing cross-ownership will reduce the number of choices for viewers, readers and advertisers.

Existing Federal Laws need to be maintain to ensure the public’s interest and to keep competition

Local newspapers and television stations continue to dominate the media in local markets. Allowing cross-ownership will reduce the number of choices for viewers, readers and advertisers.


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Supporting Slide 10-L:

Point - Counterpoint on Protecting Copyright Laws

Protect Copyright LawsProtect Copyright Laws

Artists have the right to earn a commission for each incremental copy of their work

Allowing consumers to freely distribute an artist’s work will diminish the value of the an artist’s talent

Even in a digital age, copyright laws need to be enforced to protect the value of an artist’s work

Artists have the right to earn a commission for each incremental copy of their work

Allowing consumers to freely distribute an artist’s work will diminish the value of the an artist’s talent

Even in a digital age, copyright laws need to be enforced to protect the value of an artist’s work

Loosen Copyright LawsLoosen Copyright Laws

Consumers have the right to make copies of the artist’s work at no incremental costs once the consumer has paid the initial fee for it

Consumers have the right to distribute copies of the work to whomever they choose

In a digital age, copyrights laws cannot be realistically enforced. There is no difference between copying an MP3 file and making a recording of the artist’s work off the radio

Consumers have the right to make copies of the artist’s work at no incremental costs once the consumer has paid the initial fee for it

Consumers have the right to distribute copies of the work to whomever they choose

In a digital age, copyrights laws cannot be realistically enforced. There is no difference between copying an MP3 file and making a recording of the artist’s work off the radio


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Addendum 10-A: Primetime Viewing Shares of Free and Cable

Television Networks

Note: For all television viewing Monday-Sunday, 8-11pm EST. Due to multiset use and independent roundings, totals add up to more than 100. 1Includes the FOX network, UPN, WB, other independent stations, pay cable and public television

Source: Cable Advertising Bureau, Cable TV Facts (1999)

Primetime Viewing Shares of Free and Cable TV Networks, 1985-1998

1


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Addendum 10-B: Penetration of Technologies into U.S. Households -1999

98%

47%

68%

98%

98%

96%

75%

43%

72%

42%

91%

55%

51%

33%

25%

44%

13%

99%

0% 25% 50% 75% 100%

All televisions

Color TV

B&W TV

Basic Cable Television

Radio

Telephone service

Corded phone

Cordless phone

Cellular phone

Answering machine

Home fax machine

VCR

CD player (audio)

PC

Camcorder

Online services

Video game unit

Satellite Dish

Penetration of Service / Device in U.S. Households

Source: Jeff Pelline, “America’s Love Affair with PCs Heating Up,” San Francisco Chronicle (January 6, 1995), p. A1; Robert Rubin, “Understanding the Interactive Home: Look Beyond the Hype,” Digital Media (December 5, 1994); p.8; and “Hollywood might upstage its record-setting 1994 performance, “Los Angeles Business Journal (December 26, 1994), p.16


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Addendum 10-C:

Changes In Information / Entertainment Services from 1990 to 1999

98%

47%

68%

98%

98%

96%

75%

43%

72%

42%

91%

55%

51%

33%

25%

44%

13%

97%

96%

50%

51%

99%

98%

97%

25%

31%

68%

19%

23%

10%

15%

3%

99%

0% 25% 50% 75% 100%

All televisions

Color TV

B&W TV

Basic Cable Television

Radio

Telephone service

Corded phone

Cordless phone

Cellular phone

Answering machine

Home fax machine

VCR

CD player (audio)

PC

Camcorder

Online services

Video game unit

Satellite Dish

Penetration of Service / Device in U.S. Households


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Addendum 10-D:

Statistics From Kaiser Foundation Report

Source: Kaiser Family Foundation

Kids and MediaResults of a study measuring how much media children are exposed to . Times are in hours and minutes.


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Addendum 10-E: Top 100 Daily Newspapers in the United

States by Circulation


Top 100 Daily Newspapers in the United States by Circulation, 1998


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Addendum 10-F: Top 100 Daily Newspapers in the United

States by Circulation (Cont.)




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Addendum 10-G: U.S. Advertising Expenditure, All Media

*



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Addendum 10-H:

Top 100 U.S. Magazines by Circulation — 1998

Note: Leading Audit Bureau of Circulation (ABC) magazines by average paid combined circulation per issueSource: Magazine Publishers of America, 1999

Top 100 U.S. Magazines by Circulation, 1998


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Addendum 10-H:

Top 100 U.S. Magazines by Circulation — 1998 (Cont.)

Note: Leading Audit Bureau of Circulation (ABC) magazines by average paid combined circulation per issueSource: Magazine Publishers of America, 1999


Total Top 100 248,718,172 1.86%


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Addendum 10-I: Top 50 Magazines by Advertising Revenue

Source: Magazine Publishers of America, Publishers Information Bureau Publications Ranked by Revenue, January-December 1998



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Addendum 10-J:

New Books and Editions Published by Subject 1980-1998

Production of American books reached an all-time high of 68,175 titles in 1996, before dropping to 65,796 in 1997. Preliminary figures for 1998 indicate a more dramatic decrease, to 56,129, a decline of nearly 15 percent.

Note: Comprises new books (published for the first time), and new editions (with changes in text or format). Includes mass-market paperbacks. Excludesgovernment publications, books sold only by subscription, dissertations, periodicals, quarterlies, pamphlets under 49 pages. 1 Preliminary

Source: R.R. Bowker Co., The Bowker Annual: Library and Book Trade Almanac.(1991). Used with the permission of R.R. Bowker®, a unit of Cahners Business Information


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Addendum 10-K: Top Cable Channels - 1998

Source: National Cable Television Association, Cable TV Developments (Spring, 1999).

Top 15 Cable Television Networks, 1998


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Addendum 10-L: Top multiple systems operators

Source: TV Digest, May 12, 1997 by permission from Warren Publishing

Top 10 Multiple System Operators, Data in Millions, 1997


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Addendum 10-M: Radio Stations by Primary Format

Note: As of November of each year.Source: M Street Corporation, 1999.

Radio Stations by Primary Format, 1990-98


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Addendum 10-N: Recorded Sales by Genre, Format, and Age Group

Note: Figures represent a percentage of that year’s total U.S. dollar sales. 1Includes soundtracks, children’s music and other categories not shown separately. Totals may not add to the 100 percent due to “Don’t’ Know / No Answer” responses

Source: Recording Industry Association American, 1998 Consumer Profile (1998)

Recorded Music Sales by Genre, Format, and Age Group, 1987-98

chapter 10 enhanced version media convergence october 22, 2000

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