lecture midterm ai

List and describe the four major macroenvironmental factors and how they impact entertainment media firms

Political/legal forces shape regulation; economic forces affect costs and spending; social forces shape audience tastes and habits; technological forces change how media is made and distributed.

Provide an example of a political-legal factor that has recently or is currently affecting the media industry

In 2026 the FCC repealed the 39% national TV ownership cap and replaced it with case-by-case review which may affect broadcaster mergers and consolidation.

Define GDP?

GDP is the value of final goods and services produced within a country during a given period.

How are higher interest rates impacting the entertainment industry? What about high inflation rates?

Higher interest rates make financing productions and technology investments more expensive and can restrain consumer spending. Inflation raises operating and content costs while squeezing household budgets; some viewers may cancel or choose cheaper ad-supported plans.

How does the value of the dollar relative to foreign currencies affect U.S.-based media firms?

A stronger U.S. dollar makes foreign earnings worth fewer U.S. dollars when converted and can make U.S. content more expensive for overseas buyers. A weaker dollar can help exports and foreign earnings but raise the cost of imported inputs.

Discuss the 3 major takeaways from the article we reviewed on the demise of Blockbuster and the rise of Netflix

Netflix answered customer demand with a more convenient subscription model; Blockbuster failed to adapt to new technology and business models; companies must adapt before old assets and revenue habits become liabilities. The article frames this as creative destruction.

What is marketing myopia?

Marketing myopia is focusing too narrowly on a company’s product instead of the customer need it serves which can cause the company to miss changing demand and new competitors.

List and describe 3 of the key social forces we discussed. How do they specifically impact the entertainment industry?

Demographics: different generations use different platforms; lifestyles: on-demand and mobile viewing affect formats and schedules; audience tastes: younger viewers’ interest in creator-led social video and free ad-supported content draws attention and advertising away from traditional TV.

List and discuss each of Porter’s Five Forces

Rivalry among current competitors; threat of new entrants; bargaining power of buyers; bargaining power of suppliers; threat of substitute products or services. Together these forces shape industry competition and profitability.

List and describe 3 barriers to entry

High startup costs and economies of scale; established brand loyalty and differentiation; limited access to distribution channels.

What is meant by the term economies of scale? How can economies of scale be achieved by media firms?

Economies of scale occur when per-unit costs fall as output grows. Media firms can spread fixed content and technology costs across more viewers or reuse brands and content across platforms.

Provide an example of product differentiation within the entertainment industry

Disney uses its recognizable brand across television web music and merchandising to distinguish its offerings.

What are some functional areas in which media firms rely on large amounts of capital?

Content development and production; talent and sports-rights acquisition; distribution and streaming technology; marketing; facilities and equipment.

What are switching costs?

Switching costs are the money time or effort a customer must spend to move to another provider; examples include rebuilding a watchlist or losing bundled benefits.

What are ways by which new firms can gain access to a distribution channel?

They can build a direct website or app; license content to an established distributor; partner with a streaming platform or network; or use social platforms to build an audience before seeking broader carriage.

Discuss 3 circumstances under which buyers are especially powerful

Buyers are powerful when a few buyers control much of the market; when they purchase large volumes; or when competing products are similar and buyers can switch easily.

What is a substitute product? Provide an example of one within the entertainment industry.

A substitute satisfies the same customer need in a different way; for example streaming video can substitute for a cable TV package.

Describe 3 scenarios under which suppliers are particularly powerful

Suppliers are powerful when only a few control an essential input; when their input is unique and has few substitutes; or when switching suppliers is costly or difficult.

What is an example from the entertainment industry of the impact of the bargaining power of suppliers?

Sports leagues control must-have live rights. ESPN has faced rising sports-rights costs and the NBA’s new 11-year media deal distributes games across Disney NBCUniversal and Amazon which illustrates competition to secure valuable content.

What is retransmission consent?

It is a broadcaster’s negotiated permission for a cable or satellite provider to retransmit its broadcast signal; the parties may negotiate compensation or other terms.

Which cable network is by far the most expensive for cable providers on a per-subscriber basis?

ESPN; it earns more than $10 per cable customer per month which is more than any other cable network.

Describe viewing and subscriber trends for cable networks

Cable viewing and subscriber homes have declined as viewers cut the cord and shift to streaming. In May 2025 cable had 24.1% of TV viewing and its viewing was down 39% from May 2021; ESPN’s subscriber homes fell from over 100 million at its peak to fewer than 60 million.

List and describe the four major factors which dictate the intensity of competition

Industry structure: the number and relative size of rivals; demand: slow growth pushes firms to compete for existing audiences; costs: high fixed costs create pressure to fill capacity; exit barriers: sunk investments or obligations keep firms in the market.

What are some of the major ideas discussed in the article “State of the Streaming Wars?”

A recent State of Streaming report says subscriber leadership has stabilized; monetization and revenue per user matter more than raw subscriber totals; and profitability depends on disciplined pricing spending and content costs.

What is an exit barrier? Provide 2 examples of exit barriers within the entertainment industry.

An exit barrier is a cost or obligation that makes it difficult to leave an industry. Examples include specialized studio equipment with little resale value and long-term content or sports-rights contracts that are costly to unwind.