Defining the Essentials of the Media Industry

Objective

After completing this lesson, you will be able to define industry characteristics, challenges, and opportunities faced by a business in the Media industry.

Media Industry Characteristics

This image depicts the three main media industry characteristics: customers, products, and employees/talent. The customers image shows a woman smiling at a tablet while she orders an item; the products image shows a man looking at a production machine while holding a CD in his hand; the employees/talent image shows two actors sitting in front of a camera crew, discussing a scripts content.

Customers: Our customers distribute and sell content to businesses and individuals through wholesale and direct-to-consumer models. Audiences are customers for media companies and serve as products for advertisers. Revenue comes from sales, rentals, subscriptions, license fees, and advertisements.

Products: Our media customers create and sell a broad portfolio of products, including:

  • Physical media (vinyls, CDs, DVDs)
  • Digital goods (movie downloads, streaming subscriptions)

Content is broadcast via free over-air services or pay TV. These are intellectual properties. Our customers generate revenue through licensing deals and royalty payments to creative talent.

Employees/Talent: The industry depends on full-time employees and a large contingent workforce. Labor unions set rules for safety, working conditions, compensation, and labor division.

SAP Media Customers

This image depicts the different types of SAP media customers through five different pictograms– film and streaming, publishing and premium content, ad/talent agencies and production services, gaming, and music. The film and streaming section is represented by a video camera pictogram. The publishing and premium content section is represented by a book pictogram. The ad agencies, talent agencies, and production services section is represented by a laptop pictogram. The gaming section is represented by a pitch pictogram. The music section is represented by a sound wave pictogram.

At SAP Media, we categorize our customers into five groups:

  • Film and Streaming: Companies producing and distributing movies and TV shows, including traditional studios, broadcasters, and digital media
  • Publishing and Premium Content: Producers of print media products like newspapers, magazines, journals, professional information, and books. These companies also sell data and licenses to corporate clients.
  • Ad Agencies, Talent Agencies, and Production Services: Providers of creative services (writing, photography, filming) and consumer/market research for brands
  • Gaming: Involves developing, producing, and distributing games
  • Music: These companies publish, produce, and distribute music. These companies also manage artists and organize events, like festivals or tours.

How Consumers Engage with Media

This image depicts the four main ways consumers engage with media: physical media, broadcast and cable TV, PCs and mobile devices, and film theaters. The physical media section is represented by a woman reading a book; the broadcast and cable TV section is represented by a couple sitting on a couch watching a TV; the PCs and mobile devices section is represented by a family gathered around a tablet watching content; the film theaters section is represented by a group of friends watching a film in the cinema.

Consumers engage with media through various channels depending on the type of media.

  • Physical Media: This includes books, magazines, and newspapers on printed paper, along with Blu-rays and DVDs for movies and TV shows, CDs for music, and game discs.
  • Broadcast and Cable TV: Consumers watch live or prerecorded movies, TV shows, sports, news, and more on a scheduled basis set by the broadcaster. This is often referred to as "linear broadcasts".
  • PCs and Mobile Devices: With services like Netflix, consumers stream a vast array of content on demand from devices such as PCs, mobile phones, and tablets.
  • Film and Theaters: Consumers experience media in person by watching films on large screens with sound systems in a shared environment at cinemas.

General Business Models

There are six business models, split into Business-to-Business (B2B) models, and Direct-to-Consumer (D2C) models.

This image depicts the different types of Business to Business models through three different pictograms– production services, gaming, and agencies. The production services section is represented by a pictogram of one person behind a desk and another buying an item from the cashier. The gaming section is represented by a pitch pictogram. The agencies section is represented by a pictogram of someone giving a presentation of research.

Business-to-Business (B2B) Model

  • Production Services: Creating content (for D2C businesses)
  • Gaming: Developing and distributing games (for D2C businesses)
  • Agencies: Offering creative services and research for brands
This image depicts the different types of Direct-to-Consumer models through three different pictograms– streaming, broadcast, and classic publishing. The streaming section is represented by a pictogram of a laptop. The broadcast section is represented by a video camera pictogram. The classic publishing section is represented by a pictogram of a book.

Direct-to-Consumer (D2C) Business

  • Streaming: Subscription-based or pay-per-use content
  • Broadcast: Content delivered as advertising or pay TV
  • Classic Publishing: Selling single copies and advertising revenue

Lesson Summary

Media companies serve both businesses and individuals through wholesale and direct-to-consumer models, generating income from sales, rentals, subscriptions, license fees, and advertisements. They create and sell physical media, for example, CDs or DVDs, as well as digital goods, for example, movie downloads and streaming subscriptions, while broadcasting content through free or pay TV services.

Customers: Film and streaming, publishing, ad agencies, gaming, and music companies

Consumer Engagement: Via physical media, broadcast & cable TV, PCs and mobile devices, and film theaters

Business Models: B2B production services, gaming, agencies, D2C streaming, broadcast, and classic publishing

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