Internet Publishing, Broadcasting & Search Portals
Companies in this industry publish and/or broadcast content on the internet, or operate websites designed to help people find content online. Major companies include Alphabet (owner of Google and YouTube), Facebook, Netflix, and Twitter (all based in the US), as well as Baidu, NetEase, and Tencent (all based in China) and South Korea's NAVER.
Global internet publishing, broadcasting, and search companies cater to a potential customer base of about 3.9 billion internet users worldwide. Top regions include Asia/Pacific (50% of worldwide internet users), the Americas (about 20%), and Europe (nearly 15%), according to the International Telecommunications Union. Use of the internet continues to expand globally, especially in developing nations.
The US internet publishing, broadcasting, and search portal industry includes more than 8,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $185 billion.
The profitability of individual companies depends on their ability to deliver relevant entertainment and information to the most people, and to offer advertisers desirable target markets. Advertising is a major source of industry revenue, accounting for more than half of US revenue.
Google holds the largest share in the US, attracting about 37% of total US digital advertising spending, according to eMarketer. Facebook holds the second-largest share, with about 22%. The US industry is highly concentrated: the top 50 companies account for about 80% of revenue. Sites and services owned and operated by Facebook and Google, such as WhatsApp, YouTube, and Instagram, now account for more than 70% of all internet traffic.
Companies may look to other potential revenue generators, including artificial intelligence and virtual reality, for growth. Those that can devote substantial resources to research and development efforts may have the competitive advantage. Meanwhile, data protection and privacy is a major challenge. Facebook in particular has faced criticism for mishandling user data, and may face declining traffic and advertising revenues as a result.
Companies in the internet publishing, broadcasting, and search portal industry also compete with other publishers and broadcasters, and with the internet-related businesses of leading technology and entertainment companies. Primary competitors for advertising spending include television, newspapers, magazines, radio, and billboard companies. Within internet advertising, mobile ad spend growth is far outpacing desktop.
Providers of video streaming services such as Amazon, Hulu, and Netflix are emerging as a major category in the market, as more people turn away from cable and broadcast TV and toward these offerings for their entertainment needs. Primary competitors for consumer spending on entertainment include cable and other pay TV services, movie theaters, and other forms of leisure.
Research and Development - Companies dedicate significant resources to the development and expansion of new technologies. Often 10% or more of revenues are reinvested into R&D to ensure that companies keep pace with the market. Areas of opportunity include artificial intelligence and virtual reality.
Data Protection and Privacy - Facebook and other social network sites rely on a business model that depends on users sharing personal information, but some users may be unwilling to do so. If users have concerns over data privacy, they may abandon a website in droves, resulting in declining ad revenues.
Companies to Watch:
Amazon - Internet companies are fighting for a share of the video streaming market, with industry leader Netflix on the receiving end of heated competition from Amazon. While the e-commerce giant does not earn the majority of its revenue from streaming, Amazon has made its Prime Video streaming service available in over 190 nations and territories and has emerged as a major player in a crowded field that also includes YouTube, Hulu, and internet content publishers and broadcasters.
Facebook - Once the king of social networking, the company has faced major challenges related to data privacy. While Facebook's user growth rate in the US has slowed down, its popular Instagram subsidiary is a key growth driver for the company.
Tencent - The top social networking player in China also owns WeChat, the country's most popular mobile messaging app. Tencent is also the largest video game publisher in the world by revenue. The company's popular music streaming business, Tencent Music, started trading on the New York Stock Exchange at the end of 2018, marking one of the biggest IPOs by market value in the US in several years.
Products, Operations & Technology
Sales of online advertising account for just over half of US industry revenue; sales of digital subscriptions (access to databases, e-books, periodicals,
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms