The Financial Effects of the Internet
By E McCray
Fundamentals of Electronic Business
March 13, 2011
The life cycle of any business consists of change but many people desire to embrace the familiar and the need to keep everything normal. As a business increases or downsizes, change is inevitable. The internet has change the way we live. Cellular phones, flat screen television, computers, newspapers and other electronics such as the Apple’s IPOD and IPAD have some connection to the internet. If you don’t know how to use any of these products, you’re out of touch. The ...view middle of the document...
This is bad news for music artists and record companies company because it put pressure on both to put out good music and if your album/CD has one good song, no one will buy it. This is why music videos are used to promote music because everything has to be visual for consumers to listen and purchase. A greater emphasis is therefore now placed on the release and marketing of "singles" in an attempt to boost profits. (Roper, 2010)
The industry that was supposed to be immune to economic downturns looks like it's going to have some re-entry problems as the economy begins to recover. (Dawn C Chmielewski, 2011) Broad swaths of the entertainment business declined in 2010. DVD sales were off 13%. Music CD purchases plummeted 19%. Video game sales as well as concert and theater attendance also fell. Even the turnout for America's favorite pastimes — baseball and NASCAR — was down and swift changes in technology will make it difficult for Hollywood to capture pre-recession levels of revenue. (Dawn C Chmielewski, 2011)
The cable industry has been hard hit by the recession and technology. Consumers no longer view cable TV has a must-have necessity like electricity and phone service. Cable and satellite subscriptions, DVD sales and video rentals long have been the profit pillars that supported Hollywood. Although media executives continue to boast "content is king," recently released year-end data suggest entertainment companies are vulnerable to the same disruptive forces that imperiled the music and newspaper industries. (Dawn C Chmielewski, 2011)
Thanks to the proliferation of Redbox kiosks, which offer $1-a-night movie rentals, cost-conscious consumers have an inexpensive alternative to buying the DVD for $19.99 — representing a significant blow in revenue to the studios. Blu-ray high-definition discs were expected to pick up the slack, but consumers have been slow to embrace the more expensive format. [ (Dawn C Chmielewski, 2011) ]
High-speed broadband access, now available to two-thirds of all homes, is also helping to cap the onetime home video gusher. Services such as Netflix Inc. are able to pump a carousel of movies instantly into the home via the Internet for only $8 a month. The popularity of the company's streaming service has skyrocketed: 66% of Netflix's 17 million subscribers use it, eliminating the need to receive DVDs in the mail through Netflix's trademark red envelopes or to run out to the corner video store. [ (Dawn C Chmielewski, 2011) ]
Studio revenue from home video rentals amounted to less than $1.7 billion in each of the last two years, compared with $2.97 billion in 2001 — more than a billion-dollar drop in less than a decade, according to market researcher Screen Digest. [ (Dawn C Chmielewski, 2011) ] This has been a big blow to Blockbuster Video Stores who filed for bankruptcy last September. The...