The efficiency analysis of media companies: An application of DEA and Malmquist indices

Abstract

As the global entertainment and media market is expected to multiply, media companies, such as streaming services, television networks, and broadcasting companies, play critical roles in providing TV and movie content, the industry's fuel. Almost all players of small and large sizes in the industry spend enormous resources on content and expand their investment to retain global and regional content to win the battle of viewership. However, the efficiency of investments varies for media companies. Measuring efficiency has been crucial as all firms strive to achieve better productivity. In particular, estimating the efficiencies and productivities of firms producing and offering intangible assets, such as TV and movie content, and valuing the content on firm performance are challenging. With our longitudinal data about local and global media companies from 2019 to 2022, we first used a Data Envelopment Analysis (DEA) to answer which firms in the media industry have effectively exploited their resources to achieve better firm performance. In addition, with the Malmquist analysis, we show how the efficiencies and productivity of content providers change along with the dynamics of the media industry that the media industry has recently faced. Our understanding of the global media companies' efficiencies from diverse perspectives offers several theoretical and practical implications for the streams of efficiencies and competition in the media industry.