Bhuvi Gupta: Consolidation, the content economy & the consumer

01 Jun,2021

Bhuvi GuptaBy Bhuvi Gupta

 

How many times have you watched Leo the Lion roar on a screen to herald the beginning of an enjoyable few hours? Confused? I am talking about the MGM mascot.  Last week when the news of Amazon acquiring MGM Studios came, my thoughts immediately went to Leo and his survival in the ‘prime’ jungle.

 

The content jungle has truly become cutthroat and for survival of the fittest. Two years ago Disney acquired 21st Century Fox. The world over major players in Media and Entertainment are consolidating. This comes at a time when smartphones have enabled media consumption to skyrocket, platforms have solved for distribution and smartphones have enabled both easy creation and consumption. As a result, there is no dearth of content to consume. Becoming a content creator has become one of the most desirable jobs.

 

As this ‘creator economy’ flourishes, legacy players are consolidating. This is a survival tactic, because unless there are consolidation and strong economies of scale these behemoth legacy players would find it near impossible to survive in the long term. How does this affect the consumer? Does the consumer benefit or not. Let us examine the pros and cons of this oligopolistic market.

 

PRO – Customer is King – Infinite Choice

In a typical oligopolistic market, there can be a lack of innovation as customers have a limited set of options to choose from. However, due to the pressure of the creator economy and the glut of consumer choice the major players know that unless they invest in creating new content, expanding the language markets they serve and have to be on their toes to only survive (forget thrive).  Hence, enabled by their deep pockets they have high-risk appetites that raise the bar for the entire market. The ultimate winner is the customer because of the variety of content, he or she has something to consume.

 

Therefore, the creator economy is ensuring that downsides of oligopolies, i.e.

barriers to entry and a lack of choice are both non-issues.

 

CON – Market Dynamics

When fewer players exist there are two major possibilities – first, prices may become as competitive as can, in a bid to gain market share or alternatively players may collude and prices are artificially hiked to benefit all players instead. The creator economy keeps the market in check because both options are bad for the economy. However, these companies have deep pockets, and they can take advantage of these deep pockets to manipulate customers via advertising to create an illusion of competitiveness in the future.

 

CON – Manipulation by Big Media

The disadvantage of an oligopolistic structure in media and especially news media is that propaganda can become common. Whether done blatantly by some and subtly by others, big media players often employ tactics to control perception and when only a few companies control the landscape they control the narrative. This is very dangerous as across the world we are seeing inciting riots and civil unrest. To a perceptive user these manufactured biases are apparent, but how many users are perceptive?  An oligopolistic news media structure can be detrimental to a country.

 

To end, it is only 30 years that we in India went from being a monopolistic  (video) market with the state-owned Doordarshan to a pluralistic market crowded with media sources. Today, digital platforms are creating another kind of monopoly where 24/7 tracking, algorithms and resultant recommendation engines typecast people so they end up developing deep biases. While newer platforms break this dangerous cycle, by means of acquisitions this may be overcome. The US government has filed an antitrust lawsuit against Facebook, as it owns both WhatsApp & Instagram, and they claim it has monopolistic advantage.

 

It will be only a matter of time that it is forced to break up to ensure a free and fair market, but I strongly think that will be for the greater good.

 

 

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