The battle for watching American movies online: A pioneer, dozens of copywriters, 1-year content production by oil industry, sinking in half a trillion dollars because of competition
- Tram Ho
The United States has been witnessing dramatic explosive investments, such as the construction of railways in the 1860s, the Detroit automobile industry in the 1940s, or hydraulic cutting techniques. in this century. Now, new investments are still making huge profits, but instead of steel and sand, they pour money into scripts, sounds, screens and celebrities.
When Netflix’s “pioneering” business model was copied by dozens of rivals, more than 700 million subscribers are now watching movies online across the planet. The amount of money poured into the content of this field is huge, about 100 billion USD this year, equivalent to the amount of investment in the US oil industry. In total, the entertainment industry has spent $ 650 billion on acquisitions and programming over the past 5 years.
Today’s development is the result of 20 years of creation. New technologies and ideas have moved the music industry and now television. Nowadays, many people believe that economic change is accompanied by poor living standards, such as losing jobs, being exploited or living in the virtual world monopoly of search engines and social networks. Assembly.
However, this blockbuster business is a reminder that a dynamic market can benefit consumers, with more attractive prices and better quality. So far, the US government has not made a significant move towards this boom, but when it is certain it will reach its peak, it will have to get in the game, by making sure the market is still expanding and operating. exciting.
The entertainment business is growing rapidly, thanks to its nature. However, the industry has few tangible assets, because it relies heavily on technology to deliver its products and customers want to see new ideas. The arrival of sound in the 1920s made Hollywood the center of the global film business.
By the end of the 20th century, however, the industry was growing in favor of what was achieved, like a repetitive episode of “Friends”. It depends on old technologies, such as broadcasting on TVs, slow internet connection speeds and storing audio and video on CDs, DVDs or hard drives. In addition, the commercial approach has “attracted” customers’ money by charging high fees for old content.
The first major change took place in the music industry in 1999, when internet services soon put music production companies, such as Emi and Warner Music, under pressure. In terms of television, Netflix makes a difference when it comes to using broadband connections to sell video subscriptions, which are cheaper than cable TV companies. When the smartphone boomed, Netflix changed to make the service suitable for handheld devices.
The company acts as a catalyst for competition, forcing “old ghosts” to lower service and innovation costs, and to attract new competitors. This boom helped famous screenwriters pay handsomely as the “stars” on Wall Street, causing Hollywood studio hikes to skyrocket and surpass the media mogul of the 20th century – like Rupert Murdoch.
Amid changes and new businesses, the new business model is becoming clearer. It depends on bandwidth and devices, not on cable lines, and the number of registered users is huge without advertising. Unlike search engines or social networks, no company in the field of media and video streaming accounts for more than 20% of market share by revenue. These companies include Netflix, Disney, AT&T, Time Warner, Comcast and other small emerging companies. In addition, three other technology companies are also active, YouTube (Alphabet owns), Amazon and Apple, although their market share is still small.
This change has created unexpected profits for the economy. The first beneficiary is the consumer. They have more options, with more attractive prices, and can use many online video streaming services for less than $ 15, while the general price for cable TV service in the US is 80 USD or more. Last year, 496 new shows were produced, twice as much as in 2010. Moreover, the quality of each show is also improved, thanks to a number of Oscar, Emmy nominations and diversification of content. .
Second, workers also have more opportunities. The number of jobs in entertainment, media, arts and sports in the US has increased by 8% since 2008 and wages have increased by 5 times. Meanwhile, investors no longer profit from unusually high profits, but those who invest in “right company, right time” are very convenient. For example, a dollar invested in Netflix about 10 years ago, has now been raised to 37 USD.
However, the explosion also led to the situation burst. Unlike WeWork, most entertainment companies have a reasonable strategy, but holding too much cash is dangerous. Netflix is currently burning $ 3 billion a year and needs to raise the price of its services to 15% in order to break even, which is a difficult task as they have to compete with more than 30 other competitors. The company hopes that the rapid development of the international market will create economies of scale. As with saturation when there are too many services, the other danger is debt. The deal and the big spending has made Netflix sink in $ 500 billion in debt.
Government plays a very important role in helping the entertainment industry become competitive. First, they must prevent any company, including “giants,” from taking a large share of the content business. Secondly, they need to require companies that own content portals, such as telecommunications companies or handset vendors like Apple, to have policies that extend access and are not discriminatory. dealing with specific content production companies. Finally, the government should ensure that subscribers can transfer personal data from one company to another, so that they do not tend to use only one service.
Up to now, not many people have come to Hollywood to study economics. However, the entertainment industry also participates in the active capital market. Acquired companies, stock markets and junk bonds all boosted the sector’s restructuring. The industry’s stars are also billionaire entrepreneurs, typically Reed Hasting – the boss of Netflix. In addition, areas outside the United States also created “golden conditions” for them, by talent from all over the world and service registration from many different countries.
Source : Trí Thức Trẻ