In January 1996, Bill Gates coined the term “Content is King.” His essay on this topic started by saying, “Content is where I expect much of the real money will be made on the Internet” and went on to say, “One of the exciting things about the Internet is that anyone with a PC and a modem can publish whatever content they can create.”
Let’s flash forward almost two decades where the ability to access content is no longer limited to a TV or computer. In fact, according to a recent report by the International Business Times, Americans spend approximately 60 percent of their “digital media time” using smartphones and tablets. Furthermore, 21 percent of Millennials no longer use a desktop computer to go online and rely exclusively on smartphones and tablets to access the internet, and online content is now consumed even more by use of social media outlets such as Facebook, Instagram and Twitter (to just name a few). If you have spent any time on YouTube, it is clear to see that anyone with a garage, camera and green screen can become the next internet sensation.
With the rise of new media and the digital revolution, the question seems not only as to what content should be created but how it should be distributed and where advertising should be concentrated. While television advertising is not expected to go away, the shift to online content and advertising has risen dramatically and is expected to eclipse TV advertising by 2019, driven by growth in mobile and video, according to a recent PwC publication.
So….what is king? Content or Distribution?
Why not both? With Verizon’s recent acquisition of AOL, AT&T’s pending deal for DirecTV and with Dish Network contemplating a deal with T-Mobile, it is clear to see the media and entertainment industry’s latest trend of bringing both the content production and distribution under the same roof, which has become known in the industry as “vertical integration.”
With Verizon’s recent $4-billion purchase of AOL, it is presumed that Verizon will be able to strengthen the video that will stream over its smartphones and mobile phones (including content derived from recently acquired creators such as Huffington Post, TechCrunch and Engadget, which Verizon acquired as part of the AOL transaction).
Given the rise in content consumption through mobile devices and because licensing or buying exclusive content offers wireless carriers a way to differentiate themselves, it is easy to predict that vertical integration among content creators and distributors will continue to spike and make content distribution just as important and sought after the creation of content itself.
On an endnote, the question as to whether content is still king is a difficult question, considering the rising importance of new distribution models. However, it is clear to see that the distribution models of yesterday are quite antiquated, and the future of digital “new” media is ever so bright and exciting. One can say that the distribution of content is almost equally (or as equally) as king as the creation of the media itself.
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About Dan Landes (Manager at GHJ)
Dan Landes has over eight years of accounting experience in public accounting and is a manager within the firm’s audit practice. Dan provides accounting, auditing and general business consulting to a wide variety of companies and organizations that span across multiple industries within the greater Los Angeles area, specifically within the media and entertainment industry.
In 2013, Dan was asked to guest lecture at University of California – Los Angeles’ Anderson School of Business and had the opportunity to teach Revenue Recognition to intermediate accounting students. Dan has also had the opportunity to present a seminar at California State University – Northridge to discuss the process and various accounting aspects of film production accounting.
In addition to guest lecturing at universities, Dan also leads the firm’s recruiting efforts at the University of California – Santa Barbara, is one of the firm’s CPA Champions, is actively involved in the firm’s mentoring program and has taught various firm trainings such as Financial Statement Preparation and Supervision and Review. Dan is also a member of the 2015 CalCPA Employee Benefit Plan Conference Panel.
Dan graduated from the University of California – Santa Barbara where he received a Bachelor of Arts in Business Economics with a special emphasis in Accounting. After graduation, he worked at Pricewaterhouse Coopers within their Consumer Products Auditing Practice and later joined the audit practice at GHJ in 2009.
