Seven of the 20 largest companies in this year’s Fortune 500 are in the entertainment business. Another seven are health care companies. Most of the rest are in retail and banking, along with the carbon merchant, Exxon, and a professional stock trader, Berkshire Hathaway. It’s hard to get much meaning from this list until you compare it with the same list from 50 years ago.
Only one company in the 1971 Fortune list was in entertainment, CBS. There were no health care organizations in the list of our largest publicly traded companies, as that was not allowed before the HMO Act of 1973. Back then, the notion of having health care delivered by a public corporation would have struck Americans as barbaric, on the edge of insane.
The 1971 list included ten manufacturers, seven oil companies, two telephone companies and CBS. In half a century our economy shifted from manufacturing and oil to technology (briefly) before being enveloped by entertainment and health care.
More than a decade ago, walking through the headquarters of Dominos Pizza I was struck by the tagline I saw posted everywhere, “A tech company that delivers pizzas.” Across the years that followed it was an attitude I saw repeated in almost every successful organization I visited. In the past decade, every company was a tech company whether they realized it or not. Regardless what business you thought you were in, your fortunes rose or fell on your mastery of information technology and data. A new era is dawning in which every company is an entertainment company whether they realize it or not.
We could quibble over which of these seven entertainment companies in the ’21 Forbes list, Walmart, Amazon, Apple, Alphabet (Google), AT&T, Microsoft and Verizon truly belong in this category, but none of them would disagree. Alphabet has been operating on a media model from its earliest days. YouTube is its most promising unit. Microsoft and Walmart are moving as fast as they can to gobble up media properties and stake their claim to consumer attention. Apple still makes things, but their future is AppleTV and its associated media and entertainment units. Entertainment is the future of business.
Why is entertainment so important? Partly because competition for human attention has grown more intense. It’s not unreasonable to see in the rise of the entertainment industry the first glimpses of Keynes’ predicted “Leisure Society.” A sizable minority of people in the world’s developed economies are already living in a world where entertainment is ample, though leisure time is still much less than Keynes hoped. That minority is already enough to make entertainment the driver behind America’s most lucrative companies, and a force that every company has to consider in its day to day operations.
However, there’s more at work here than just lots of people with lots of free time. Entertainment is permeating everything, even time that isn’t free. You’ll often hear people say that “data is the new oil” without them mentioning where that new oil comes from. Leaders in the data age are harvesting it at the source, and the source is people giving their attention and engagement in one form or another to a technological interface. Some companies, like Tesla, are harvesting data by delivering something arguably non-entertaining like the functional need for transportation. Though not even Tesla could succeed in this venture without delivering a product long on entertainment value. Engagement feeds pipelines of data as demonstrated in the business models of YouTube, Amazon, and Walmart. Winners in the battle for data will be the masters of entertainment.
When your kid wants to go to art school or get a theater degree, congratulate them on their shrewd business sense. Every company is going to need tons of people with an entertainment or aesthetic sense to keep pace with the life or death demand for precious consumer attention. That MFA might be the new MBA.