The Opportunity – Accelerating the Media Industry

‘We create successful businesses that exploit the unprecedented choice,
control and convenience of the broadband video economy", Peter Hamilton

We are living through a unique moment in the history of human communications: A massive technical disruption is upending established relationships across the entire commercial media landscape. Digital technologies are rendering obsolete the established relationships among content generators, packagers, distributors, advertisers, funders and service providers.  

This disruption creates enormous uncertainty and anxiety for established players that have thrived in each of these markets, but equally enormous opportunity and excitement for entrepreneurial entrants.

M&AMG helps entrepreneurs and industry leaders address these challenges successfully by devising business models that exploit new technological opportunities to replace the models that thrived under older generations of communication technology.

M&AMG approaches this challenge bystudying global markets, targeting business opportunities, devising strategies, identifying partners, developing business plans, negotiating deals, arranging finance, and forming profitable ventures.

The key to understanding the disruption and its implications is broadband. Broadband technology is driving a fundamental re-arrangement of the relationships among financiers, developers, producers, packagers, distributors, and consumers of video programming. Broadband obliterates longstanding communications barriers and reduces costs throughout the value chain, replacing a traditional economy of video scarcity with a revolutionary economy of video ubiquity.

Traditional gatekeepers face unprecedented challenges. Terrestrial TV operators, cable and satellite operators, and advertising agencies have long thrived by parceling the scarce resource of high-quality video among a desirous paying public; demand has always outstripped supply. The sudden explosion in both video supply and video distribution outlets has undermined this long-accepted central truth. And because video is an emotionally powerful medium, low-cost IPTV (Internet-protocol digital TV) similarly undermines the truths governing traditional media outlets such as print and radio.

The IP-enabled economy is expanding rapidly. Consumers can now access virtually any audiovisual content, including HDTV, anytime, anywhere, and on any video-capable device. New video-based networks and communities are emerging; each one provides new opportunities to distribute, track and monetize the exchange of video. Several metrics capture the velocity of this change and indicate its likely near-term acceleration:

  • According to comScore, nearly 123 million people in the U.S. (70% of the total U.S. Internet audience) viewed 7.2 billion videos online, in January 2007 alone,
  • According to iSuppli Corp., the number of global broadband subscribers will more than double in five years, growing from 270.4 million in 2006 to a projected 622.7 million by 2011.
  • iSuppli also predicts that household broadband penetration will exceed 50% in the United States and Japan by the end of 2007, and in Europe by the end of 2008.
  • According to Motorola, two thirds of Western Europeans under-25, but only thirty percent of over-55, have watched TV shows online.
  • The proliferation of broadband Internet has fundamentally changed the way that consumers access and interact with media content. According to Forrester Research, Inc., consumers between the ages of 18-26 spend approximately 12 hours per week using the Internet, compared to approximately 10.5 hours per week watching television
    (“State of the Consumers and Technology: Benchmark 2006,” Forrester Research, Inc., July 2006).
  • eMarketer estimates that at the end of 2006, nearly 60% of all Internet users regularly watched videos online, and approximately 80% are expected to do so by the end of 2010.
The implication is obvious: IPTV is poised to explode, following the pattern that on-line music set only a few years ago. The potential is enormous—as are the pitfalls of failing to adjust. The potential is enormous—as are the pitfalls of failing to adjust. Success in this layered and complex new world will require expertise in the technologies, the timelines, and the consequent new business models that they enable. M&AMG will provide this expertise.
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