The Impact of Going Digital

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Stephen Leeb
Thursday, July 16, 2015

In the 1960s Canadian philosopher Marshall McLuhan issued his famous dictum “the medium is the message”, arguing that television’s rising ascendancy over radio would change the nature of, and the way people respond to, news and entertainment—what today we call “content.”  

Today we’re in the midst of a rise in another new medium, digital platforms such as streaming over the Internet that are supplementing our decades-long love affair with television. But we’d contend that, especially when it comes to entertainment, the message has remained surprisingly unaltered. It seems the changes occurring today are more surface-deep than profound. And this is good news for companies in the business of providing or facilitating content.

We find it striking that while attendance has slipped a bit, people are still going to the movies today in droves despite the plethora of entertainment choices available on their computers and mobile devices. Blockbuster movies continue to emerge, and most important for companies in the industry, cinema receipts—with a big boost from rising concession prices—are rising in the developed world and even more sharply in developing economies. While filmmakers are embracing digital technology to enhance their films, we’d posit that those enhancements alter the movie-going experience far less than when films changed from black and white to color, or, even more dramatically, when silent films gave way to talkies.

Of course, we’d never deny that digital media are having an impact on entertainment. But the changes, which include larger screens, greater detail, 3D visualization, and better access to live events, are more evolutionary than revolutionary. Overall, rather than altering the message, digital has mainly served to vastly increase choice, both in what consumers watch and when they watch it, making it far easier to catch up with past TV episodes, for
instance. Even so, metrics show that the first night an episode or event is aired on TV is still, by a wide margin, when it attracts the most viewers, and it remains the metric the bean counters use for measuring success.

To the degree that digital media have enabled new messages, we’d point to such innovations as interactive viewing. These encompass live multiplayer games and live performances in which viewer comments can interact with the presentation. But the big picture, so to speak, is that while entertainment today may have more bells and whistles, at its core it’s still entertainment.

In a recent issue of The Complete Investor, we focus on some very appealing companies that have carved out solid niches within the entertainment industry.