Digital Media Threatens Conventional Media Advertising

When a Lehman Brothers analyst downgrades your whole industry, it kind of makes you sit up and take notice. You'd think an announcement like that would ripple through the internet knee jerk mechanism called the Stock Market. Especially hit might be stocks like The Walt Disney Co., News Corp., CBS Corp., Time Warner Inc. and Viacom Inc..

Oh, wait - that did happen. Earlier this week, Lehman Brothers analyst Anthony DiClemente predicted that digital technology, ie: digital media, will have an impact on DVD sales, and hence, the profits that the TV and movie industry tends to rely on. Just like it did the music industry. It's noted that profits have already dropped ~12% per Blu-ray disc products that are offered as iTunes downloads.

Part of the issue is the attitude of the younger generation to not want to keep movies they watch. Disposable entertainment in this age of iTunes and Netflix.

And sadly, DVD sales are on the decline which may seem to back up his observation, or it could just be the economy, so I don't want to give that stat too much credit.

DiClemente added that DVR's are also hurting the advertising revenue that the TV industry has become accustomed to.

Media Format and Ratings

Of course, earlier I touched on the dangers that television programs face in the relevance of the soon to be antiquated Nielsen system as more and more shows are DVR'd and downloaded from iTunes, as Jericho showed. After Jericho got trashed in the ratings for it's beleaugered 2nd season, it was the most downloaded show on iTunes. The math (logic) just doesn't add up, but the advertising dollars do, as far as network execs are concerned, and their fat paychecks are dependent on!

Despite the disparities that we, the viewers are suffering when quality content gets dumped, they say that studios are trying to get ahead of this technological deficit. (Great, then bring back Jericho and Journeyman!)

Despite putting shows online with limited advertising, the revenue from those efforts is only a small fraction of what they make. They say it's due to the smaller internet audience, and that might be true.


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