Tuesday, March 27, 2007

Winners in the Media Industry

Corporate content owners, such as Sony, MGM, Paramount, Viacom, etc., will be the real winners in the media industry.

At this point in time, the infrastructure for efficient and reliable transfer of media has not been established. While the components that create the infrastructure are becoming standardized and commoditized, the actual setup and implementation has not. This allows service providers to capitalize on providing higher bandwidth to customers that enables them to utilize media served by content providers. Similarly, storage and control systems (such as digital rights management) have not yet been standardized.

Once these key pieces have been standardized and margins in these markets are harder to come by, the real winners will be the content owners, as they are the only ones who are able to provide true value added services. Although individuals will be able to easily provide great content in the future, they will never be able to provide a $50 million movie, which will allow the corporations to remain competitive.

1 comment:

jluethy said...

I agree that individuals are not able to create the same quality of content that the media industry can. But even if they are able to produce higher quality content (through higher budgets), I'd be worried about how they will be able to recoup their investments in the future. Just like in the music industry, other types of content (i.e. movies) are becoming more readily available through less traditional (and currently illegal) channels. As content becomes more portable, I think that these companies may need to develop new business models for recouping their investments. Right now, for movies, I think that placement ads embedded within the content may be the most realistic bet.