New
media companies are not recouping all of that lost value to traditional media, according to
Oliver Wyman's 2009 State of the Industry Report. Instead, market value
is flowing to other sectors.
For media companies, 2008 was a very bad year. The
sector lost 47% of its market value in 2008, to $409 billion, a steeper
decline than most broad stock markets.
The mobile communications sector gained in share of
total CMT market value, in part because consumers are more willing to
view content on mobile devices, and because telecoms operators have
developed business models that offer content as a loss-leader in order
to generate healthy margins on subscriptions.
"Media companies risk becoming add-ons to the telecoms players'
plans," said Robert C. Fox, head of Oliver Wyman's Communications,
Media, and Technology practice. "They face the challenge of better
understanding what consumers actually want and will pay for, as well as
finding new areas of growth in emerging markets and through online
advertising models."
Over the period 2003 through 2008, some value shifted from
traditional to new media — but the absolute loss in traditional media
was not offset by the absolute gains in new media.
Traditional media —
including media agencies, publishing, and broadcast and entertainment
— lost 32% of its market value, or $137 billion, while new media
(online content and services) gained 102% or $58 billion.
The State of the Industry report ranks media companies in a
Shareholder Performance Index (SPI). The calculation of the SPI, which
is based on a five-year moving “window” of data, enables consistent
comparison of shareholder returns by adjusting for the volatility of
returns, differences in local interest rates, and mergers and
acquisitions. Overall, the media sector posted an SPI of 104, with only
the online content and services sub-sector ranking much higher, at 167.
Media agencies posted a dismal 69 and publishing a 92, while broadcast
and entertainment came in at 110.
The top three SPI media performers were Tencent Holdings of Hong
Kong (No. 1 among all CMT companies), Naspers of South Africa, and NHN
of South Korea.