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Perhaps no other industry has been shaken by technological disruption as much as the media. The internet took a wrecking ball to the profitable print and broadcast industries, giving rise to a whole new host of companies in the process.
The media business has, of course, survived -- but that's in large part due to the very internet that changed the industry. The web created new ways for companies to distribute written and broadcast content and for users to consume it. But the landscape is still changing in this space, and the old way of doing things is probably gone for good. Let's illustrate with 10 striking media statistics.
1. Newspaper circulation fell in 18 of the past 20 quarters through Q4 '15.
Shares of print-media companies Gannett Co. and New York Times Company have each underperformed the market over the past year. And those are some of the biggest names. According to the Pew Research Center on Journalism & Media, over 100 U.S. newspapers have closed their doors since 2004. Though some big names, such as the Washington Post Company -- which was purchased by Amazon.com (AMZN +1.25%) founder Jeff Bezos -- continue to try to make journalism work in the digital age, the outlook for the print-media industry remains gloomy.
2. Print newspaper's $100 CPM loses to broadcast TV's $37 CPM
In an era where advertisers can bid on ads using targeted demographics, locations, keywords, and more, the average newspaper rate -- quoted here in terms of cost per mille (CPM), or the cost for 1,000 views -- seems like an ineffective use of marketing dollars. Little wonder that local ad spend is expected to fall 8.7% again this year.
3. 62% of U.S. adults get news from social media
Research from Pew finds that the majority of American adults get their news from social media. Say what you will about this development -- especially in light of "fake news" scandals surrounding the presidential election -- but it demonstrates the power of new distribution channels such as Facebook and Twitter.
4. There are 900,000 cord-cutters every year
Print isn't the only part of the media industry under pressure. According to eMarketer, the number of household cable subscriptions in the U.S. will fall from over 100 million at the end of 2015 to 96.4 million by 2019, or roughly 900,000 annually. Powerhouse networks such as Walt Disney's (DIS 0.56%) ESPN network, which is the most expensive channel in the majority of cable packages, have been hit particularly hard. In fact, by the end of this year, Disney is expected to have lost 11.5 million ESPN subscribers since 2013.
5. It's not all bad news for the cable networks, though
In the near term, the election season was a bonanza for the major cable news networks. In fact, 21st Century Fox's (FOXA +0.00%) (FOX +0.00%) Fox News, Time Warner's (TWX +0.00%) CNN, and Comcast's (CMCSA +0.56%) MSNBC saw their ratings for November increase 68%, 128%, and 98%, respectively, compared with November 2015.
This performance has led to predictions that ad revenue among cable news providers could increase 15% over 2015 to top a whopping $2 billion. Such a near-term windfall could help offset some of the longer-term pain for News Corp, Time Warner, and Comcast.
6. U.S. streaming subscribers: 31% for Netflix, 16% for Amazon, 7% for Hulu
Streaming platforms such as Netflix (NFLX 1.74%) and Amazon.com's Prime Video have created a viable alternative to traditional cable providers. With the pace of innovation at Netflix and Amazon showing no signs of slowing, expect the already-massive scale of streaming giants to continue to grow in the coming years.
7. Streaming is already as large as some cable networks
Netflix today counts roughly as many subscribers as Disney's ESPN: 86 million for Netflix, versus about 87 million for the sports network. Moreover, Netflix users can't get enough of the service, streaming a mind-boggling 125 million hours of shows and movies every day, and Netflix's recent decision to allow offline downloads and viewing should only help increase its popularity.
8. There were 27 million viewers for the championship of... e-sports?
E-sports have exploded into a global form of entertainment. More viewers streamed the final of the League of Legends Championship in 2014 than watched the final round of the Masters golf tournament. Researchers estimate that the e-sports market will generate revenue of $1.1 billion by 2019, which is more than half of what the U.S. broadcast industry will produce this year (see point No. 5). Amazon.com bought e-sports' largest figure, Twitch, in 2014 for a reported $1 billion, and that seems like money well spent, given the rapid ascendance of this niche.
9. 10 billion daily video views per day are waiting in the wings
Social-media platforms such as Snapchat, Facebook, and Twitter also have a huge interest in live streaming video. The youngest of the group, Snapchat, reportedly garners 10 billion daily video views. Take it to the bank that this kind of popularity will eventually vie for broadcast-media ad spend.
10. Here's an $86 billion plan to fend off cord-cutters
In perhaps the biggest trend in the media space, the media and telecom industries are converging. AT&T (T 0.04%) has proposed a mammoth $86 billion acquisition of Time Warner, allowing AT&T to bundle its wireless service with cable programming from DIRECTV and content from Time Warner to create the only cable company to rival Comcast. However, Comcast plans to pursue a similar tactic by adding its own wireless service next year.
Key points
The media industry finds itself in the midst of an industrywide disruption. Companies quick to embrace this sea change can profit immensely, while those that fail to adapt may not survive. For individual investors, though, this upheaval creates ample room to benefit from the value being created.
