Internet Publishing, Broadcasting & Search Portals
Description
Companies in this industry publish and/or broadcast content on the internet, or operate websites designed to help people find content online. Major companies include Alphabet, Meta, Netflix, and X (all based in the US), as well as Baidu, NetEase, and Tencent (all based in China) and NAVER (South Korea).
Global internet publishing, broadcasting, and search companies cater to a potential customer base of about 5.16 billion internet users worldwide. Top regions include Asia/Pacific (over 50% of worldwide internet users), Europe (nearly 15%), and the Americas (about 16%), according to Data Reportal. Use of the internet continues to expand globally, especially in developing nations.
The US internet publishing, broadcasting, and search portal industry includes more than 8,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $165 billion.
COMPETITIVE LANDSCAPE
The profitability of individual companies depends on their ability to deliver relevant entertainment and information to the most people, and to offer advertisers desirable target markets. Advertising is a major source of industry revenue, accounting for more than half of US revenue.
Google holds the largest share in the US, attracting about 30% of total US digital advertising spending, according to Statista. Facebook holds the second-largest share, with about 25%. Amazon holds about 10% share of the digital ad market. The US industry is highly concentrated: the top 50 companies account for about 85% of revenue.
Companies may look to other potential revenue generators, including artificial intelligence and virtual reality, for growth. Those that can devote substantial resources to research and development efforts may have the competitive advantage. Meanwhile, data protection and privacy is a major challenge. Facebook in particular has faced criticism for mishandling user data, and may face declining traffic and advertising revenues as a result.
Companies in the internet publishing, broadcasting, and search portal industry also compete with other publishers and broadcasters, and with the internet-related businesses of leading technology and entertainment companies. Primary competitors for advertising spending include television, newspapers, magazines, radio, and billboard companies. Within internet advertising, mobile ad spend growth is far outpacing desktop.
Providers of video streaming services such as Amazon, Hulu, and Netflix are emerging as a major category in the market, as more people turn away from cable and broadcast TV and toward these offerings for their entertainment needs. Primary competitors for consumer spending on entertainment include cable and other pay TV services, movie theaters, and other forms of leisure.
Competitive Advantages:
Research and Development - Companies dedicate significant resources to the development and expansion of new technologies. Often 10% or more of revenues are reinvested into R&D to ensure that companies keep pace with the market. Areas of opportunity include artificial intelligence and virtual reality.
Data Protection and Privacy - Facebook and other social network sites rely on a business model that depends on users sharing personal information, but some users may be unwilling to do so. If users have concerns over data privacy, they may abandon a website in droves, resulting in declining ad revenues.
Companies to Watch:
Amazon - Internet companies are fighting for a share of the video streaming market, with industry leader Netflix on the receiving end of heated competition from Amazon. While the e-commerce giant does not earn the majority of its revenue from streaming, Amazon has made its Prime Video streaming service available in over 190 nations and territories and has emerged as a major player in a crowded field that also includes YouTube, Hulu, and internet content publishers and broadcasters.
Facebook - Once the king of social networking, the company has faced major challenges related to data privacy. While Facebook's user growth rate in the US has slowed down, its popular Instagram subsidiary is a key growth driver for the company.
Tencent - The top social networking player in China also owns WeChat, the country's most popular mobile messaging app. Tencent is also the largest video game publisher in the world by revenue. The company's popular music streaming business, Tencent Music, started trading on the New York Stock Exchange at the end of 2018, marking one of the biggest IPOs by market value in the US in several years.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sales of internet advertising account for about 65% of US industry revenue; sales of video and audio programming packages, and databases and other collections both make up about 10%.
Advertising revenues are generated through differing fee arrangements, including fixed fees (also called "fixed fee per impression"), "cost-per-click" (CPC), and "cost-per-thousand" (CPM). Fixed fees are paid for the right to have advertising displayed, CPC fees are determined based on the number of users who click on a specific link, and CPM sets a flat rate for every 1,000 views an ad gets. A newer model called programmatic advertising uses automation to buy and sell digital media space.
Search portals serve as users' gateway to the internet. The portal used determines the type of advertising a user sees, and the websites that a user ultimately visits. Portals operate through proprietary technologies that search for Web pages based on the keywords and phrases entered by users. Effective Web search technology returns the most relevant Web pages based on the keywords entered. Google developed an algorithm, created at Stanford University in California by the company's founders, that displays web pages based on their popularity as measured by links from other sites. Other search companies use their own technology.
Many news and publication sites are "aggregator" sites, meaning that they collect and display news stories from multiple other websites; this is also known as "in-licensing" of content. News sites are typically updated several times per day, and may include multiple news stories that rotate or scroll across the screen as users spend more time on the site. News and other sites that include graphics, pictures, and video, and change content frequently, use simple computer languages such as Java as well as content management systems to allow even nonspecialized staff to easily update pages.
Game sites offer users access to online games that may be played against the host computer or against other online players. Many of the games can be variants of traditional computer games adapted for network and multi-player use. Some sites offer unique formats such as nostalgic games, which appeal to older generations who grew up going to arcades.
News aggregators, internet publishers, and other entertainment sites rely on a value-added approach to content. Since they often do not create the content available on their sites, they must add value to the products; the most popular way to do this is through advertising, as sites can offer advertisers the opportunity to target messages to specific consumer groups. Aggregators in particular can add value by organizing information in a certain way or by offering unique search capabilities for premium content.
Global internet publishing, broadcasting, and search companies cater to a potential customer base of about 5.16 billion internet users worldwide. Top regions include Asia/Pacific (over 50% of worldwide internet users), Europe (nearly 15%), and the Americas (about 16%), according to Data Reportal. Use of the internet continues to expand globally, especially in developing nations.
The US internet publishing, broadcasting, and search portal industry includes more than 8,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $165 billion.
COMPETITIVE LANDSCAPE
The profitability of individual companies depends on their ability to deliver relevant entertainment and information to the most people, and to offer advertisers desirable target markets. Advertising is a major source of industry revenue, accounting for more than half of US revenue.
Google holds the largest share in the US, attracting about 30% of total US digital advertising spending, according to Statista. Facebook holds the second-largest share, with about 25%. Amazon holds about 10% share of the digital ad market. The US industry is highly concentrated: the top 50 companies account for about 85% of revenue.
Companies may look to other potential revenue generators, including artificial intelligence and virtual reality, for growth. Those that can devote substantial resources to research and development efforts may have the competitive advantage. Meanwhile, data protection and privacy is a major challenge. Facebook in particular has faced criticism for mishandling user data, and may face declining traffic and advertising revenues as a result.
Companies in the internet publishing, broadcasting, and search portal industry also compete with other publishers and broadcasters, and with the internet-related businesses of leading technology and entertainment companies. Primary competitors for advertising spending include television, newspapers, magazines, radio, and billboard companies. Within internet advertising, mobile ad spend growth is far outpacing desktop.
Providers of video streaming services such as Amazon, Hulu, and Netflix are emerging as a major category in the market, as more people turn away from cable and broadcast TV and toward these offerings for their entertainment needs. Primary competitors for consumer spending on entertainment include cable and other pay TV services, movie theaters, and other forms of leisure.
Competitive Advantages:
Research and Development - Companies dedicate significant resources to the development and expansion of new technologies. Often 10% or more of revenues are reinvested into R&D to ensure that companies keep pace with the market. Areas of opportunity include artificial intelligence and virtual reality.
Data Protection and Privacy - Facebook and other social network sites rely on a business model that depends on users sharing personal information, but some users may be unwilling to do so. If users have concerns over data privacy, they may abandon a website in droves, resulting in declining ad revenues.
Companies to Watch:
Amazon - Internet companies are fighting for a share of the video streaming market, with industry leader Netflix on the receiving end of heated competition from Amazon. While the e-commerce giant does not earn the majority of its revenue from streaming, Amazon has made its Prime Video streaming service available in over 190 nations and territories and has emerged as a major player in a crowded field that also includes YouTube, Hulu, and internet content publishers and broadcasters.
Facebook - Once the king of social networking, the company has faced major challenges related to data privacy. While Facebook's user growth rate in the US has slowed down, its popular Instagram subsidiary is a key growth driver for the company.
Tencent - The top social networking player in China also owns WeChat, the country's most popular mobile messaging app. Tencent is also the largest video game publisher in the world by revenue. The company's popular music streaming business, Tencent Music, started trading on the New York Stock Exchange at the end of 2018, marking one of the biggest IPOs by market value in the US in several years.
PRODUCTS, OPERATIONS & TECHNOLOGY
Sales of internet advertising account for about 65% of US industry revenue; sales of video and audio programming packages, and databases and other collections both make up about 10%.
Advertising revenues are generated through differing fee arrangements, including fixed fees (also called "fixed fee per impression"), "cost-per-click" (CPC), and "cost-per-thousand" (CPM). Fixed fees are paid for the right to have advertising displayed, CPC fees are determined based on the number of users who click on a specific link, and CPM sets a flat rate for every 1,000 views an ad gets. A newer model called programmatic advertising uses automation to buy and sell digital media space.
Search portals serve as users' gateway to the internet. The portal used determines the type of advertising a user sees, and the websites that a user ultimately visits. Portals operate through proprietary technologies that search for Web pages based on the keywords and phrases entered by users. Effective Web search technology returns the most relevant Web pages based on the keywords entered. Google developed an algorithm, created at Stanford University in California by the company's founders, that displays web pages based on their popularity as measured by links from other sites. Other search companies use their own technology.
Many news and publication sites are "aggregator" sites, meaning that they collect and display news stories from multiple other websites; this is also known as "in-licensing" of content. News sites are typically updated several times per day, and may include multiple news stories that rotate or scroll across the screen as users spend more time on the site. News and other sites that include graphics, pictures, and video, and change content frequently, use simple computer languages such as Java as well as content management systems to allow even nonspecialized staff to easily update pages.
Game sites offer users access to online games that may be played against the host computer or against other online players. Many of the games can be variants of traditional computer games adapted for network and multi-player use. Some sites offer unique formats such as nostalgic games, which appeal to older generations who grew up going to arcades.
News aggregators, internet publishers, and other entertainment sites rely on a value-added approach to content. Since they often do not create the content available on their sites, they must add value to the products; the most popular way to do this is through advertising, as sites can offer advertisers the opportunity to target messages to specific consumer groups. Aggregators in particular can add value by organizing information in a certain way or by offering unique search capabilities for premium content.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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