Wave of media mergers signals major shift in TV landscape

Gone are the days that you turn to your TV to watch your favourite shows, all on demand. With streaming services accessible on the go, the cable industry is in decline, but media partnerships between traditional cable providers and content makers is changing the game.
A federal judge has approved the $85 billion mega-merger of AT&T and Time Warner in June, potentially ushering in a wave of media consolidation while shaping how much consumers pay for streaming TV and movies. (AP Photo/Richard Drew)

As content becomes more on-demand and on the go, thanks to streaming services like Netflix, Hulu, and CraveTV, media companies are fighting over who will create and own the content.

According to an online survey by Canadian Internet Registration Authority, over 70 per cent of Canadians with home internet subscribe to a streaming video service.

Netflix alone accounts for 53 per cent of what Canadians subscribe to, and for a moment the streaming company beat Disney as the most profitable entertainment company.

In an on-demand streaming world, you've got to know who your customer is so you can know exactly what content to promote to them.- Michael D. Smith

Last Thursday, AT&T acquired Time Warner in a $85.4 billion US deal.

Apple recently announced it's teaming up with Oprah on a multi-year, multi-million dollar deal to create original content.

AT&T's rival Comcast, which acquired NBC in 2011, has plans to bid for Twenty-First Century Fox, competing with Disney.

But Disney has upped their offer from $52.4 billion to $71 billion.

Over the top content is the new TV guide

Media firms plan to be both the distributors and creators of content, providing traditional TV packages topped with streaming services of original content.

Over-the-top (OTT) content is the fitting term that describes what it means for traditional TV suppliers to offer streaming services with their subscriptions.

Rahul Telang and Michael D. Smith are professors at Carnegie Mellon University. They co-authored the book Streaming, Sharing, Stealing: Big Data and the Future of Entertainment.

Telang teaches information systems management and Smith teaches information technology and marketing.
Rahul Telang (Carnegie Mellon)

"We are going to a world where we will have vertically integrated companies," said Telang.

"We will see more mergers, more consolidations, [and] the difference between cable and internet will actually fade away even further."

Market research firm Convergence Research Group predicted in an April report that by the end of 2020, 10.6 million Canadian households will be signed up with streaming services.

That's four per cent higher than the projected 10.2 million traditional TV subscriptions in Canada.

"The key shift we've seen here is the importance of owning the customer and owning the customer data. In a broadcast world that just isn't that important, because you're sending the same thing to everyone." said Smith.
Michael D. Smith (Carnegie Mellon)

More data, less privacy

Consumers are winning the deal of on-demand content and personalization, but media companies have enormous data about consumers' taste and viewing habits.

Content creators know what you'll like based on your precise watching history.

Smith sees this as a necessary model for businesses to thrive in the new internet-driven market.

"In an on-demand streaming world, you've got to know who your customer is so you can know exactly what content to promote to them," he said.

Of course, more data also means higher risks of data breaches, explained Telang.

"It's not a matter of if, it's just a question of when it will be breached. It's part of the next life, where data is an asset, where data will be utilised, and some of the consequences of that will be born for both the consumers and firms."

(Ben Shannon)