Digital Media
The remainder of this report looks at the following digital and non-digital audiovisual media services (AVMS) sectors:
• broadcast TV;
• pay and specialty TV;
• online video subscriber and download services such as Netflix, Crave, Amazon Video and Illico; • radio;
• music, including recorded music, live concerts and revenues from publishing royalties; • online music subscription and download services such as Apple iTunes and Spotify; • online gaming, gaming applications, game downloads or in-game purchases; • app stores (e.g. Google Play and Apple Appstore);
• internet advertising • newspapers;
• magazines; • online news.
The analysis highlights four key themes.
First, all of the AVMS sectors have grown considerably over the thirty-four years covered by our project, although those that rely primarily on advertising—broadcast TV, radio, newspapers and magazines—have hardly grown at all since the financial crisis of 2008. Second, looking at things solely from the perspective of long-term secular growth trends masks the divergent fates of different groups of media in the mid- to short term, i.e. the last five to ten years. In this regard, while advertising is still the biggest source of revenue for the content media sectors, it is being eclipsed by others that depend primarily on subscriber fees and direct payments. For example, revenue for specialty and pay TV services doubled over the last decade to $4.4 billion in 2016, to $4.25 billion last year. Simultaneously, however, subscription-based and download video and music services as well as online games, apps, downloads and app stores (i.e.
20
Candian Media Concentration Research Project the digital audiovisual media services) are rapidly becoming the engines of growth across the AVMS sectors, with the combined revenue of the digital AVMS sectors soared five-fold from $763.3 million to $4 billion between 2012 and last year. Third, total advertising revenue is actually declining on a per capita basis in inflation-adjusted real dollar terms, relative to the size of the media economy, and in comparison to the economy as a whole. This reality of the media economy merits a great deal of attention but is usually overlooked. This reality of the media economy merits a great deal of attention but is usually overlooked. Lastly, the advertising revenue that does remain has shifted rapidly to the internet and is being consolidated under the control of just two internet behemoths: Google and Facebook.
In 1984, nominal revenue for all AVMS industries was $5.6 billion; in 2018, it was nearly five times that amount, or $25.2 billion. Growth was steady throughout this period until the financial crisis of 2008, except for several years in the early 1990s recession. Since 2008, however, revenue for advertising- supported AVMS sectors has fallen, sometimes dramatically. As a basic rule-of-thumb, the more a medium relies on advertising, the steeper the drop-off in revenue. In contrast, pay television services as well as the digital AVMS services that rely primarily on subscriber fees and direct payments have grown significantly, especially in the past half-decade. Figure 9 depicts the growth of the AVMS sectors covered in this report individually and overall.
Figure 10: Revenues for the Content Media Industries, 1984-2018 (current $, millions)
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 1984 1988 1992 1996 2000 2004 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 Mags Newspapers Radio Music
Online Games and AppStores Internet Adv
Total TV (includes online video) Online Video Subscription & Downloads (CMCRP) Pay & Specialty TV Broadcast TV
Source: see the “Media Economy” sheet in the Excel Workbook.
While “pay-per media” have grown steadily over the last decade, and the digital AVMS sectors have seen explosive growth in the past five years, Figure 10 also depicts the fact that the fate of the content media sectors tightly follows the twists and turns of the broader economy (see Picard, Garnham, Miege and
Vogel). This can be seen, for example, when the overall revenue line at the top of Figure 9 flattens out in the early 1990s recession and then after the 2008 financial crisis when advertising-based media (e.g. broadcast TV, radio, magazines and newspapers) saw their revenue go into a tailspin from which they have yet to recover.
21 Media and Internet Concentration in Canada, 1984-2018
“
“
Such realities can also be seen in the fact that the vicissitudes of advertising revenue have moved in lockstep with the state of the economy in Canada since 2008. During this time, overall advertising spending grew from $11.5 billion to $14.2 in current dollar terms, with almost all of that growth taking place in the last three years. Switch the metric to real dollars, however, and the story is one of stagnation, with revenue crawling up from $12.2 billion in 2008 to $13.1 billion last year, again with all of the growth concentrated in the last three years (CAGR of .9%). Figure 11 depicts the point for total advertising spending across all media and for both television and the Internet.
Figure 11: The Shrinking Advertising Economy, I—Total Advertising Revenue and for Television and the Internet, 2004-2018 (Real $, millions)
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total TV Adv (Millions)(Real$) Total Internet Adv (Millions)(Real$) Total Adv (Millions)(Real$)
Source: see the “Ad$ All Media” sheet in the Excel Workbook.
Figures 12 and 13, respectively, also illustrate the point that advertising spending is either stagnating at best or even shrinking when stated in real dollar terms. Figure 13 does so in relation to the size of the network media economy while Figure 13 illustrates the point in relation to annual gross domestic income.