Analysis by Kata Kantor 

Towards a K-shape crisis on the cross-media market - further growing gap in Q4 2020 revenue of online platforms vs traditional media companies

What’s happening?

Ups: After a slight decline in online platforms revenues on average in Q2 2020 due to the COVID-19 pandemic, the digital native segment (and each and every company in it) proves further growth in Q3 and Q4 2020 according to the latest financial reports of publicly trading companies. 

Downs: However, the revenue trends of publicly trading traditional media companies do not seem to be so positive despite most of them having additional revenue sources other than advertising. After an average decrease of 22% in Q2 some of them started to grow, but their revenue index compared to Q1 2018 is still 15% below the base quarter’s revenue.

It means that there is a further growing gap between online platforms and traditional media companies due to the COVID crisis that might lead to a K-shape crisis.

Why is it important?

We face not only an economic crisis but a radical shift to digital because of social distancing measures since March 2020. Traditional media companies are hit by both, and the natural advantage of digital natives adds a new layer to the growing competition gap between their less regulated businesses and opportunities versus traditional media companies. Most media companies are in a less favourable position than publicly trading ones so this growing competition gap is even more significant in the long tail.

This phenomenon has to be considered in regulatory, policy-making and state aid discussions and decision making.

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Method

Source: Reported revenue collected by Whitereport, the proprietary business intelligence service of Mediaspace.

Analyzed companies:

  • Platforms: Facebook, Google, Netflix, Amazon (other revenues), Spotify, Snapchat, Twitter, Pinterest.
  • Media: NYT, Thomson Reuters, NewsCorp, WarnerMedia, Disney, NBCUniversal, Sky, JCDecaux, AMC
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