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[Kang So-young] Big changes lie ahead for media industry

By Korea Herald

Published : April 25, 2018 - 17:43

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The conventional TV era is expected to come to an end. Trends have changed to TV-centered content received via set-top boxes, such as cable TV and internet-based online video-streaming contents.

The impact from the emergence of “Over the Top” services, resulting from the swift development of information and communication technology, has spelled the end for the conventional TV age. Even the number of households with no TV has been increasing.

The top issue in the cutting-edge media industry is now mergers and acquisitions and OTT services. In late 2017, a planned Disney-Fox deal drew worldwide attention because the joining of the two major studios displayed the “survival competitiveness equation” in the industry: It is not enough only to secure content, but securing new platforms is also essential.

In terms of content, the $52.4 billion deal involving Disney’s popular intellectual property has fueled the expectations of cinemagoers. Disney acquired Pixar in 2006 and Lucasfilm in 2012, and its deal for 21st Century Fox struck in December is expected to be finalized by the summer of 2019.

The deal with Fox would bring the rights for X-men and the Fantastic Four back to the Marvel Cinematic Universe under Disney, and allow viewers to watch offerings such as “Frozen,” “Toy Story,” “The Avengers” and “Avatar” all through the same service.

In terms of platform, Disney -- which already held 30 percent of streaming company Hulu -- will become the platform’s majority shareholder through the 21st Century Fox deal, doubling to 60 percent. Disney has the opportunity to mold itself into a dominant player in the US pay for broadcasting market -- traditionally represented by conventional network, cable and satellite TV -- and keep online streaming businesses Netflix and Amazon Prime from taking the lead in that realm.

In 2018, OTT services have been a noticeable trend. Netflix acknowledged the potential of Korean movies by investing in last year’s “Okja,” directed by Bong Joon-ho. Netflix, which entered the Korean market in 2016, is scheduled to run a permanent team in Korea from May. The company is set to compete with local players CJ E&M and Lotte Cinema.

Particularly, the broadcast media industry is changing the pattern of our lives through the development of wireless internet communication technology, the evolution of mobile devices and active convergence between broadcasting and communication under the pretext of economies of scale. The standstill -- or rapid decrease -- in domestic viewership could be directly correlated with this new consumption pattern.

However, it is too early to pop the champagne on Disney’s acquisition contract for 21st Century Fox, as the US Department of Justice has recently decided that AT&T’s $108.7 billion acquisition of Time Warner violates the antitrust law. The case between the government and private sector began under the pretext of “monopoly and intensifying competition” in federal court in Washington in November, and has put strain on the media industry and Wall Street alike.

“This is a different kind of merger (from AT&T-Time Warner). We‘re hoping the government takes a look at this from a consumer point of view,” said Walt Disney Chairman and CEO Bob Iger. “We will create more high quality content on a global basis and deliver it to consumers in a more exciting way.”

The result of the AT&T-Time Warner antitrust case is expected next year, with the Disney-Fox M&A not expected to be finished until summer next year. The process of the M&A deal is expected to be smooth, neither in the terms of its timing nor the law.

The unpredictable world media market has already become a jungle. The Disney-Fox deal could result in higher prices by allowing the emboldened, merged entity to exercise greater influence in the market, rather than offering more varied contents.

Netflix released 13 episodes of the drama series “House of Cards” all at once in February 2013, in a then-unprecedented move. The full-season release fed viewers’ hunger for “binge-watching” over the weekend or late into the night, creating a new paradigm in online contents -- and now a new norm.

The media industry thrives by analyzing its customers through big data to differentiate its products. As we look forward to the future of the media industry, we should seek to understand not only its contents, but also develop media literacy.


Kang So-young
Kang So-young is a professor at Seoul Digital University. The views reflected in the article are her own. – Ed.