EXECUTIVE SUMMARY
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The US is the world biggest market in the media sector, with one third of the total global media revenues. Moreover, its global influence and leadership is unparalleled in shaping the industry, imposing new trends and innovative business models. The US is home of the core of the content produced by biggest studios in the world -such as Warner, Disney, Viacom- that is distributed worldwide and dominates the world’s cultural life. More recently, the US has been the epicentre thousands of companies that make, contribute to and support digital media, drive innovation and shape the sector, such as Netflix, Amazon, Google (YouTube), or Meta in social media and metaverses.
This global leadership has huge consequences, and recent shocks have placed obstacles in this dominant position which was, until recently, unchallenged. The trade war with China, exacerbated by China’s “Great Firewall” policy which restricts the entry of foreign company (especially social media) into its territory, placed media at the heart of the commercial and diplomatic conflict; the war in Ukraine further contributed to placing on top of the agenda media companies and the strategic role they play in international spheres, from a commercial, propaganda and diplomatic perspective.
Amid this context, China’s high-tech sector developed very rapidly. With huge economies of scale, it was able to create mirror companies to the US dominant ones in each segment. These companies are now becoming key players at global level, with leadership in some areas of the world. Their popularity in the US with the rise of some services like social media TikTok (owned by Chinese ByteDance) or messaging service WeChat (owned by TenCent) are of concern not only for the US media sector, but also for the US diplomatic sphere. In 2020, former President Trump threatened to ban the ByteDance and Tencent in its territory.
In the past decades, the US media sector saw a huge activity in mergers and acquisitions and innovation, with the consolidation of Disney’s catalogue for example -through the acquisition of Marvel, LucasFilms and more recently 21st Century Fox- and the emergence of Netflix and social media. The rapid deterioration in the macroeconomic development -with a sudden increase in interest rates- is expected to inaugurate a new phase in the media market. The pace of mergers and acquisitions may slow down, and the innovation efforts of some companies (commercial, technological, consumer-driven services) may also decelerate. The sector will however continue to see innovations and new areas of development such as the metaverse are likely to be shaping it in the coming years.
The sector still benefits from a huge domestic market which allows it to develop content and new products with large economies of scale and to remain globally extremely competitive. At domestic level, Americans are amongst the biggest consumers of media, laying the base of an extremely strong internal market. Pre- COVID, Americans were consuming more than 12 hours of traditional and digital media per day, vs a world average of 7.5 hours. Combined with a population of 332 million inhabitants whose average purchase power is high, the domestic demand is high and fuelling a sector that has grown extremely concentrated and competitive.
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