Nine Media Predictions for 2009

Media faces a perfect storm in 2009—transitioning to a challenging new digital world and a very weak economy. Media giants will continue to move from traditional content distribution models to anytime, anywhere, content-on-demand. While building new digital revenue streams, they face a dramatic pullback in consumer spending, which means advertising threatens to fall off a cliff. Can entertainment prove recession resistant?

Here are my nine predictions for 2009:

1. The media landscape faces mega shifts.

The media conglomerates are on the brink of serious change. General Electric (GE), CNBC's parent company, says it's interested in purchasing media assets. News Corp (NWS) points to its "war chest" of cash, hinting at the opportunities its five billion dollars could afford. Meanwhile CBS (CBS) and Viacom (VIA) Chairman Sumner Redstone is struggling with mounting debt which could very well force him to sell all or part of CBS.

2. Movie studios will focus and streamline to ride out the financial downturn.

Movies have traditionally been recession proof, but this time around the theatrical experience is competing with piracy and the comfort and ease of watching DVDs at home. Add the fact that movie studios' overhead is massive, and these giants will only feel more pressure to invest in sure bets like sequels and comic book franchises. Expect film financing from Wall Street to dry up, a void overseas investors will rush to fill. But because financing will be much tighter, there won't be the glut of independent films we've seen in recent years. Which means the independent films that do get made, are likely to perform better.

3. Movie theaters will pull out the stops to keep you buying tickets.

Movie theaters are bearing the weight of higher ticket and concession prices, while home theaters just get better and better. What's the solution? Digital 3-D: it can't be pirated or recreated at home, and remarkably, consumers are willing to pay more for it. Digital 3-D technology will hit a tipping point in 2009. At least a dozen major 3-D films are slated to hit the thousands of new digital 3-D theaters scheduled to be implemented. This technology will become so pervasive that studios like DreamWorks Animation will release exclusively in 3-D in 2009.

4. TV networks will fight to maintain their dominance.

The 30-second spot is still considered the best way to reach a mass audience. But broadcast TV networks are going to have a tough fight ahead. Sure, Americans will always watch television, in fact, they'll probably watch even more in this economic environment as people hunker down at home. But that doesn't mean ad prices will go up—slower consumer spending means TV networks face declining revenues. With DVR technology marketers will have no choice but to diversify beyond the 30-second spot to subtle and unskippable product placement and show sponsorship. And the broadcast nets will find viewers continue to flip past the four major channels to the increasingly high-quality niche programming in cable.

5. You'll treat the internet like another TV set.

Hulu.com (co-owned by NBC Universal and News Corp) is offering more professional content—all free and ad-supported. It's a go-to destination for everything from clips from Saturday Night Live to full-length shows from NBC and Fox. With YouTube rushing to catch up with Hulu's library of content from the TV networks and movie studios, consumers are going to have more free, on-demand entertainment choices than ever before. Forget about homemade videos of sleeping cats and skateboarding bulldogs. Your web browser will increasingly become your next on-demand TV set.

6. The music industry will find a new model, with concert tours and megastars at its core.

While CD sales continue to decline and online downloads and subscriptions fail to fill that gap, musicians and the industry behind them will focus more on a model with concerts at the core. Both Ticketmaster (TKTM) and Live Nation (LYV) have merged ticketing and talent management, setting the stage for high-stakes competition between the two companies: they'll wield exclusive talent deals as leverage to score venues and tour dates. Musicians' revenue streams—from album sales to concert tickets to merchandise—will be run as verticals by these two giants. And consumers may benefit from more competition in the arena of ticket sales, or at very least, clearer pricing.

7. The publishing industry will continue to suffer and will shift more online.

It's been a long hard road for newspaper and magazine publishers: advertising drying up and marketers shifting their dollars online. With the economy tanking, it's only going to get worse. Expect more publications to fold in 2009 as the dramatic drop in the likes of auto ads takes a real toll. There will be more consolidation as papers get snapped up at bargain-basement prices, and I wouldn't be surprised if more companies are taken private, as Sam Zell did with the Tribune Co. The solution will be online revenues, and parent companies will push to innovate and closely target ads to keep online ad dollars growing.

8. Social networks will start translating their members into advertising dollars

Social networks have yet to truly monetize their millions of loyal users, with even Facebook saying it's not focused on profitability. But expect the social networking giant to change its tune and give advertisers a new seat at the table. Facebook and News Corp's MySpace will continue to experiment and innovate on unobtrusive ways to reach users. These social networking giants face a careful balance. They must convince advertisers that they offer efficient, effective and targeted advertising. Yet they must avoid alienating users by mixing their personal information with marketing messages.

9. Video games and Hollywood will become more intertwined. Video games are still a hot commodity despite the economic downturn—a growth opportunity media conglomerates are seizing. Viacom will continue to invest in its video game division which is responsible for the hugely successful "Rock Band" franchise. Disney (DIS) will continue to develop its media properties into video games. Meanwhile video game makers are sure to take more of their sophisticated story lines to the big screen, shopping video game concepts to studios. As television becomes more interactive and video games become more cinematic, the line between the two is blurring.

Comments

[Jim Dorey:]

You are incorrect about independent film - they will maintain momentum if not break into higher ground with far more cheaper and superior digital camera technology and post production. A new RED ONE camera can be had for ~$17,000! Thats a 4K digital camera - the same one Soderbergh used for CHE (and should land Best Actor).

It has already been announced that Dreamworks Animation will release all future movies in 3D. So has Disney Animation. So has Pixar. All of James Cameron's films will be in 3D from now on. Others are working in 3D: Spielberg, Jackson, Lucas, Burton, Soderbergh, etc.

So yes, 2009 will be the tipping point for 3D and the precise moment in which you can audibly hear this happening is with the release of Cameron's AVATAR in December 2009. It will be a movie to represent our generation in the same ilk as GONE WITH THE WIND, CASABLANCA and STAR WARS. It will be when many directors and studios will say - thats it... 3D is the format we want going forward.

I have a complete listing (constantly updated) of all 3D movies coming down the pipes on my site. Also 3D theaters near you. Check them out.

2008 Dec 03 11:42 AM

[gdog:]

"8. Social networks will start translating their members into advertising dollars"

This is craziness. Social Media has yet to be proved the run-a-way success people hope for, and the ad revenue monetization is just not there, at least not the way most people have hoped it would be.

Myspace was bought for 800mm, and then turned around and singed a 4 year 900mm deal with Google, and Google claims they got hosed in the deal.

NOw facebook wants to be seriously valued at over 1billion bucks, much less 15bb? Ridiculous.

The number of internet companies with big names and audience, and not a clue on how to make money is staggering, and they all wish they had a solid business model in place now.

The mantra of "build it and they will come..." has been the cry of hundreds of failed valley startups, and little has changed. Expect some spectacular crashes!

2008 Dec 03 07:08 PM

[JChabot:]

3D in the natural world is truly "seen" only in close ups--far out, one eye is as good as two, and the perception of 3D is then created by your brain from 2D. Thus the close up pick axe scene of "My Bloody Valentine" works in 3D. But are very poor "Bolt" 3D grosses being ignored? Is the movie story, even when animated, not helped enough to justify the extra cost paid by the viewer? Is this question even being considered in the push to force high cost digital conversion?

2008 Dec 06 12:03 AM

[David H. Deans:]

Julia, I have to agree with Jim Dorey's comment -- we're going to see a groundswell of new low-budget Indie productions -- which the majors with try to emulate (both creativity and business model).

Also, your point about "videos of sleeping cats and skateboarding bulldogs" simply isn't the real focal point for the current fragmentation of the online video marketplace. Prosumer and lower-cost professional production models will further fragment the traditional market, and the results will be sweeping. IMHO, the rapidly evolving long-form prosumer video segment is the one to watch.

2008 Dec 07 12:20 PM