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The Edison Project Research & Executive Education

“I find out what the world needs, then I proceed to invent.” - Thomas Edison

This Should Be the Best of Times for the Media and Entertainment Business

“For the first time, a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economic sector in the vast majority of countries around the world.”

- National Intelligence Council, Global Trends 2030

S I G N P O S T S O F T R O U B L E

“There's going to be an implosion where three or four or maybe even a half-dozen megabudget movies are going to go crashing into the ground, and that's going to change the paradigm.”!

- Steven Spielberg speaking with George Lucas at USC, June 2013

The The Digital Interregnum

The The Old Gateway

The New Gateway

53% Facebook Ads, 46% You Tube Views

5 Billion Smart Phones by 2016

1%@ 50 cents=$25 Million

Cable Television

“Cord cutting used to be an urban myth. It isn’t anymore.”!

- Moffett Research

Television

“Is it reasonable for 75 million who don’t want ESPN to pay for the 20 million who do, at a false price?”

– Barry Diller

If affiliate fees started to decline, Disney could offer ESPN over-the-top for $15/month, and keep all the revenue.

Home Entertainment

“Consumers are choosing different ways to watch our product, and we’re not going to see any one of them go back to historical levels.”

Dennis McGuire, President, Paramount Pictures Home

Entertainment

On Demand World

Average viewers!40 Million

Average Viewers!8 Million

Online Advertising

“With demand clearly growing as more ad dollars shift online and the industry’s constant endeavors to increase the value of its ad inventory through improved targeting, more creative executions, new ad formats and effectiveness measurements – CPMs should be increasing. But this is not happening. Why not?”

- Commscore, The Economics of Online Advertising

Per Capita Entertainment Expenditure

1998-18-34 cohort-$340/year!!2012-18-34 cohort-$232/year!

Source-Consumer Expenditure Survey, Bureau of Labor Statistics!

Thought Experiment"• What is the potential 2020 Home Entertainment Spend?!• With 5 Billion Smartphones by 2016!

!!

Top 10% spend $28/mo=$170 Billion!Next 40% spend $10/mo=$240 Billion!Bottom 40% generate $5/mo in Ad Revenue=$120 Billion!

Total=$530 Billion"!!2012 Global Consumer spending on entertainment=$140 Billion"

Source:IHS Global

Hurdles to the Next Boom

1. The Curation Problem"

2. The Advertising Problem"

3. The Piracy Problem"

4. The Network Monopoly Problem

The Long Tail Is a Myth

Human Man Or

Machine

Price Discrimination

The Barriers to Change

Bots & Ad Supported Pirates

B Network Competition

IP TV

T H E N E W S C R E E N S

The Oculus Rift

S I G N P O S T S O F O P P O R T U N I T Y

The New Manufacturing

Could it be that the current production and distribution system is simply not capturing the possibilities of this new world?

Research Pillars

The New Metrics and Measurement

The New M&E Ecosystem

The New Screens

The New Creators and Makers

The New Business Models