To start a new section, hold down the apple+shift keys and click to release this object and type the section title in the box below. Creators vs distributors: valuing the end-to-end trend Our research illustrates the value of content in today’s media and entertainment market. Distribution-only companies in our ranking have an average profit margin of just 1 per cent. By contrast, content creators generate average margins of 9 per cent. Those with both have a margin of 13 per cent, suggesting that distributors should consider investing in content if they want to boost profitability. Our analysis of the top 100 UK media and entertainment companies shows that at their origin 71 per cent began life as content creators and 19 per cent as pure distributors, with just a handful doing both. Today, almost half are hybrids – creating their own content, and delivering it direct to consumers through their own platforms and channels, rather than via a third party distributor. The movement goes both ways, with creators developing their own distribution channels, and distributors creating their own content. The trend for expanding across content and distribution is most developed in the TV market. The public service broadcasters (PSBs) started as hybrids, serving their own content to audiences on their own networks, but are now pushing out in both directions – distributing their own content via other platforms (e.g. BBC shows on Netflix), and investing in content studios to develop new formats and IP that can be commercialised abroad. Revenue at ITV Studios, for example, grew by 33 per cent in 2015 and now accounts for almost 40 per cent of total ITV revenue. At the same time, content aggregators and distributors such as Sky (and of course international competitors such as Netflix) are investing in exclusive content as a means of further differentiating their platforms and building customer loyalty. Meanwhile, the past year has seen content creators such as Disney launch online distribution platforms that serve content directly to their audience, without the need for a third party distributor. For content creators, the value of distribution lies in extending reach and in gaining direct access to end consumers. This in turn can generate new and potentially more profitable revenue streams, as well as new customer data: valuable information for internal marketing and product development teams, as well as advertising clients. Media Metrics The state of UK media and entertainment 27