The Internet and the rise of online entertainment

The proliferation of the Internet into the furthest corners of the world has brought about significant improvement (or disruption, depending on who you ask) to people’s lives. Information can be accessed in a matter of seconds; previously unavailable goods and services are now reaching the consumers without the seller being in close physical proximity. As a result, most businesses, even traditional big brands, have long ditched their reliance on brick-and-mortar stores and embraced the Internet as a business platform. One would thus conclude that the advent of E-commerce has created a paradigm shift in the way business is conducted.

When the words “Internet” and “Business” come up, one’s mind automatically conjures E-commerce, and the buying and selling of goods and services. But there is another industry which has benefitted from the Internet’s existence, on a similar level as E-commerce – the Entertainment industry. As with the consumption of tangible goods and information, people are now seeking new channels for entertainment.

Before the existence of the internet, people would seek entertainment by watching TV through cable (or visiting cinemas to watch movies), or visiting places such as amusement parks; children would be frolicking around playgrounds and gardens, or simply playing outdoors. There were also some who sought slightly more risky, yet exhilarating, entertainment – through betting and gambling at dens.

The internet has disrupted all this, however, and now people have the internet to source their entertainment. Even hard-to-replace entertainment sources such as theme parks are going to accessible to people at a location of their comfort, through the internet (and Virtual Reality hardware). But this is something to ponder on in the future.

TV – from the idiot box to your pocket

The here and now is already impressive in itself; consider the most ubiquitous entertainment source – the television (TV), more specifically broadcast visual content. The invention of TV and cable subscription opened up various forms of entertainment, in the form of movies, soap operas, live shows broadcast (including sports), and the news. But all that has then been changed by the Internet.

First came the video sharing sites, such as Youtube, where videos are uploaded and watched. Content could be shared by the average individual, in the form of amateur videos, or by professional production units. Most of Youtube’s content is free and accessible to everyone, thus the high popularity. However, majority of Youtube’s revenue being generated through advertising. Despite this, its revenue growth rate is astonishing.

In addition to free content, many TV series and movies, which were only broadcast over cable or in theatres, are now becoming increasingly available over the internet. This has disrupted the entertainment industry, and given rise to a new service – streaming video on demand. As a result, an increasing number cable subscribers are now ditching their subscriptions and switching to such services.

Youtube has also launched a new service – Youtube TV – which lets consumers watch the same number of channels as cable, for less than half the price of a cable subscription. Streaming service providers, such as Youtube and Netflix, not only provide access to existing channels and programmes, but have also produced their own series, such as Netflix’s critically acclaimed series House of Cards and Narcos.

These series and movies can be watched at any convenient time, on any device, at any location – thus video on demand. All these factors, as well as significantly lower subscription costs, make the streaming services far more lucrative than cable TV for users. It should, therefore, come as no surprise that in the US alone, Netflix has over 2 million more subscribers than the largest cable networks.

Gaming – the action now on the couch

Apart from the broadcast industry, the internet has also created a seismic shift in the gaming and sports industry. Folks from the millennial and pre-millennial generations had a different idea of recreation; physical board games (monopoly, chess, etc.) and actually stepping onto the field (or court) to play sports was how they would entertain themselves. Nonetheless, since the turn of the millennium, first through the introduction of gaming consoles, and now through the Internet, even recreation has been morphed – from actual physical exertion to virtual platforms.

First, a look at games and gaming consoles. The first few generations of consoles functioned as stand-alone systems – games could only played on the console or computer. These games could be pure fiction, or even sports. Then came the connection of the games to the Internet, where players could connect and compete against others over the internet. Despite consoles and games becoming progressively cheaper, but with better features, the gaming industry is constantly growing financially, due to higher purchase rates. Prominent game studios such as Electronic Arts (makers of the FIFA series) have seen their revenues increase over the years.

In addition, an increased number of players online also creates a new medium for advertisements, further increasing revenues. The increased number of people playing games only has now led to competitive gaming competitions– whereby players compete against one another for the championship. There is also a new line of profession as a result – ‘professional’ gamer – who earn their living by playing games competitively and winning competitions.

Gambling – Sin city at your fingertips

Up to two decades ago, people would visit the casinos and gambling dens, to seek the thrills and excitement derived from gambling. Cities such as Las Vegas, Macau, and Monaco were the places to be, should one want to indulge in this form of entertainment. Obviously most cities would have their own casino, despite being less glamorous than those in the aforementioned cities. The betting and gambling industry too has significantly impacted through the internet.

The Internet, specifically online casino owners, have identified an opportunity to reach far more people. Like with brick-and-mortar stores being given competition by E-commerce sites for shopping, people can find many games to punt a bet on, through an online casino on their PC or mobile device, rather than visiting one. Most online casinos also allow bets on live sports matches. Some platforms go as far as accepting bets on who will win an election or what will be the gender of a celebrity’s unborn child – something quite unlikely in the past.

However, unlike brick-and-mortar stores seeing their businesses affected by E-commerce, physical casinos continue to experience a surge in business, alongside the online casinos. The overall betting industry is growing at a CAGR of 5.7% annually and projected to reach over US$600 billion by 2022. The online gambling industry, specifically, is expected to grow at over 10% CAGR. The graph below also shows that the 2016 revenues have reached a staggering sum of US$45 billion.

Revenue of the online betting and gambling industries

While the Internet has significantly impacted the ways business is done in various industries, its ever-growing presence is not a death knell for all the industries. Indeed, the betting industry has seen a growth in its traditional business model, alongside the online service providers. As for the entertainment industry, the Internet could serve as a motivator to cable operators to improve their offerings or continue to be outperformed by those who provide video on demand. The Internet has also altered the business landscape – by the creation of concepts such as competitive gaming – which was previously unfathomable before the its arrival. Undoubtedly, the Internet has changed the way we are entertained.

3 comments

  1. Now a days Internet is the most important aspects in our life and we can not think to live our life without Internet. So the article is very much effective in our life.

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