Internet Publishing & Web Search Portals

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 6,800 Internet publishing and web search firms in the US provide online media, broadcasting services, and search capabilities for the Internet. Internet publishing firms help clients develop and distribute online media including books, magazines, journals, newspapers, greeting cards, directories, coupon books, atlases and guides, dictionaries, yearbooks, and comic books. Internet broadcasters stream music, videos, video games, news, worship services and other live and recorded digital media. Web search portal firms primarily generate and maintain massive, searchable databases of Internet addresses and content, but may also offer services such as email, auctions, news, and exclusive content.

Rapid Technology Changes

The ways that people search for and consume information and entertainment are constantly evolving.

Cookies, Privacy & Regulation

The use of “cookies” by web portals, advertisers and content providers allows them to mine user data themselves, reducing internet publishers’ control over that data and their ability to sell it.

Industry size & Structure

The typical Internet publishing and web search portal firm operates out of a single location and generates about $32 million annually.

    • The Internet publishing and web search portal industry consists of about 6,800 companies which employ about 290,200 workers and generate about $217 billion annually.
    • Most companies are small - about 82% have a single location and 70% employ less than 5 workers.
    • The industry is concentrated with the 20 largest firms accounting for 74% of industry revenue.
    • Large publishing and broadcasting firms include Kindle Direct, Blurb, Lulu, Issuu, Evites, Wikipedia, Statista, Pandora, YouTube and Netflix.
    • The largest search portals are owned by technology and telecommunications firms: Alphabet (Google), Microsoft (Bing), Verizon (Yahoo) and Facebook Business. Large vertically-integrated portals include Kayak (travel), Amazon and eBay (e-commerce), LinkedIn (jobs) and WebMD (health).
    • The industry is geographically concentrated with 25% of establishments located in California, 9% in New York, 7% in Florida and 6% in Texas.
                              Industry Forecast
                              Internet Publishing & Web Search Portals Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              Apr 28, 2022 - Netflix Customer Base Shrinks
                              • Netflix’s customer base fell by 200,000 subscribers during the January-March quarter of 2022, the first contraction the streaming service has seen since it became available throughout most of the world other than China six years ago. Netflix projected a loss of another 2 million subscribers in the April-June quarter. Netflix CEO Reed Hastings said that he now believes that outsized gains during early states of the coronavirus pandemic may have blinded management. “COVID created a lot of noise on how to read the situation,” he said in late April.
                              • The pandemic drove huge consumer demand for online entertainment, news, and other content. Some industry watchers note that demand for streaming services may wane as the pandemic gradually subsides and consumers seek more out-of-home experiences. Netflix beat profit expectations and met analysts’ projections for revenue in the fourth quarter of 2021, but the firm’s shares suffered amid a slowdown in subscriber growth. The company said it expects to add 2.5 million subscribers in the first quarter of 2022, well below the 3.98 million added in Q1 2021. Analysts had expected 6.93 million new subscribers in Q1 2022. While some strong content additions drove subscribership in Q4 2021, Netflix said its new programing for Q1 is weighted on the end of the quarter, which is expected to slow subscriber growth. Netflix announced a price increase in the US in late January, which may suggest that growth in the US and Canada is near peaking. Most of Netflix’s growth in Q4 2021 came from outside the US, a trend that has continued over the past several quarters.
                              • Media conglomerates were entering the streaming space through M&A activity before the pandemic, but industry watchers suggest the health crisis accelerated the trend. As more content aggregators have emerged (Disney+, Peacock, HBO Max) and vie for more viewers - and the lines between content, distribution and tech continue to blur - consolidation has intensified. In May, AT&T announced it had reached a deal to merge its WarnerMedia division with Discovery Inc. to create a new, public company – Warner Bros. Discovery. The deal, which is expected to close in the second quarter of 2022, will create a new media player with streaming services (HBO Max, Discovery+) and cable channels (Discovery, HGTV, CNN, and TBS), and the Warner Bros. TV and movie studios. Later in May, Amazon announced plans to beef up its Prime Video offering with the purchase of MGM Studios for $8.45 billion. The deal would give Amazon access to MGM’s stable of 4,000 movies and 17,000 TV shows and augment Amazon Studios’ TV and film production operations. In August, Comcast and ViacomCBS announced they have teamed up to launch SkyShowtime, which will provide Comcast and ViacomCBS content in 20 European countries.
                              • The pandemic accelerated the growth of e-commerce. Industry watchers expect the shift in consumer behaviors to have long-lasting effects, which will spur further investment in the online sales channel. Shoppers moving online during the pandemic drove search ad revenue higher. A wider reopening of the US economy and accelerated vaccine distribution kept digital marketing spending strong in Q3 2021, according to customer experience management firm Merkle. However, the pandemic-driven spike in traffic on most platforms in Q3 2020 made for some tough year-over-year comparisons in Q3 2021. Paid search clicks were off 10% compared to Q3 2020, and organic search visits fell 3%. However, most platforms' overall spending was up year-over-year amid higher cost-per-click (CPC) and cost-per-1,000-impressions (CPM). Merkle noted that digital marketing dollars have tended to follow the ups and downs of the pandemic. When cases are high, consumers shop online more, and retail performance increases while organic searches for travel go down. The opposite pattern emerges when COVID-19 cases drop.
                              • US ad spending remained mostly resilient during the coronavirus pandemic, buoyed by the agility of digital media formats. Total US ad spending in 2020 declined 1.3% to $227 billion, according to ad firm MAGNA. A 10% rise in digital ad spending was insufficient to offset a 16% drop in linear ads. US ad spending increased 25% in 2021 to $284 billion compared to 2020, according to a revised outlook released in December by MAGNA. Digital ad spending (search, social, video, banners, and digital audio) grew 31% in 2021 and reached $442 billion. US ad spending in 2021 saw broad-based growth across all major industry verticals, led by (technology +29%), retail (+28%), entertainment (+27%), and finance (+25%). Pandemic-related supply chain disruptions – primarily the semiconductor shortage – could affect 2022 marketing and ad spending in some affected verticals, including automotive, consumer electronics, and toys and games. MAGNA expects total North American ad spending for 2022 to rise more than 12% compared to 2021. Global digital advertising revenues are forecast to grow 17% in 2022.
                              • The pandemic continues to be a boon for the home entertainment industry. US spending on subscription video streaming and sales of both digital and physical copies of movies and TV shows rose 9.5% to nearly $8 billion in the third quarter of 2021 compared to the same period in 2020, according to DEG: The Digital Entertainment Group. However, the DEG totals don’t include premium video-on-demand (PVOD) revenues which studios aren’t disclosing publicly. With movie theaters closed during most of the pandemic, some movie studios experimented with releasing new films straight to premium video-on-demand (PVOD) or through their streaming services. Hollywood studios are expected to continue the trend. US spending on digital video streaming increased 17% to $6.4 billion in Q3 2021. Steaming services got a boost from a rollout of fresh programming that had been delayed due to production shutdowns earlier in the pandemic.
                              • More households are choosing to eliminate their pay-TV in favor of streaming services as the COVID-19 pandemic shrinks some consumers’ budgets and increases concerns about the economy. The rate of cord-cutting is expected to slow in the coming years, according to Digital TV Research. Pay-TV services are expected to lose about 16 million North American subscribers between 2020 and 2026. Satellite will fare the worst with a loss of 7.5 million, followed by digital cable TV, which is expected to shed about 5 million. Internet protocol (IPTV) TV subscriptions will drop by about 3.4 million. Cord-cutting slowed in Q1 2021 as 22% fewer customers dropped their service compared to how many did so in Q1 2020, according to Next | TV. However, the top five publicly traded pay-TV firms still lost nearly 1.6 million subscribers in the first quarter. Cord-cutting continued in the second quarter of 2021 as pay-TV firms that together hold 95% of the market shed more than 1.2 million subscribers, according to Leichtman Research Group. According to Leichtman, the top seven pay-TV firms lost another 700,500 subscribers in the third quarter of 2021.
                              • TV ratings firm Nielsen was criticized by executives at traditional media companies who asserted that Nielsen undercounted TV viewership during the early months of the pandemic when most Americans were spending more time in their homes, according to The New York Times. Nielsen acknowledged some undercounting due to issues with device maintenance in some Nielsen homes during the pandemic. Nielsen announced a new metric to measure streaming services’ overall share of TV viewership relative to traditional cable and broadcast TV. Nielsen debuted another new metric – called The Gauge – to measure streaming services’ overall share of TV viewership relative to traditional cable and broadcast TV. Streaming accounted for 26% of viewing in May. Streaming climbed to a 27% share in June and 28% in July. In the following months, streaming’s percentage of TV time changed little, and it remained at 28% in December.
                              • Marketers leaned even harder on digital ads to connect with customers as the pandemic dragged on. Alphabet posted Q3 sales of more than $75.3 billion, up 32% compared to Q4 2020. The company’s profit soared to nearly $21.9 billion – more than double what it was in Q4 2019 before the pandemic. Google’s ad business – including Search, Maps, and YouTube – rose to $61.2 billion, up 32% over Q4 2020. YouTube’s ad sales rose nearly 26% year-over-year to $8.6 billion.
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