Vertical and Horizontal Integration
Vertical and horizontal integration also help in understanding the level of concentration in an industry. In vertical integration, one considers how the company
controls different aspects of production and distribution within a market, while
horizontal consideration looks at activities across markets.
In analyzing the social media industries, there are some examples of vertical
integration found among some of the firms. Google's YouTube is part of an
integrated set of useful sites that Google markets as a group. Facebook has made
several acquisitions, including the 2012 purchase of Instagram to add a photo-
sharing tool to its social networking site. At this early stage, there is not a
widespread practice of vertical integration across the social media industries.
Regarding horizontal integration, there are limited examples. Facebook started
as a site only for college students but has since expanded both domestically and
globally. Linkedln has done a good job in creating markets for both individuals
and businesses, and offers basic services and premium services for subscriptions.
Zynga has successfully introduced several popular games appealing to different
demographic groups. News Corporation, owner of the Fox networks, acquired
Myspace to add social media to its holdings across media industries only to sell the
entity years later for a huge loss.
While there are limited examples of vertical and horizontal integration in the
social media industries at this early stage, future growth and development should
trigger more action as firms begin to consolidate to achieve scale and economic
efficiencies. We can also expect mergers and acquisitions to occur among social
media firms, where some will be buyers and others sellers.
Vertical and Horizontal IntegrationVertical and horizontal integration also help in understanding the level of concentration in an industry. In vertical integration, one considers how the companycontrols different aspects of production and distribution within a market, whilehorizontal consideration looks at activities across markets.In analyzing the social media industries, there are some examples of verticalintegration found among some of the firms. Google's YouTube is part of anintegrated set of useful sites that Google markets as a group. Facebook has madeseveral acquisitions, including the 2012 purchase of Instagram to add a photo-sharing tool to its social networking site. At this early stage, there is not awidespread practice of vertical integration across the social media industries.Regarding horizontal integration, there are limited examples. Facebook startedas a site only for college students but has since expanded both domestically andglobally. Linkedln has done a good job in creating markets for both individualsand businesses, and offers basic services and premium services for subscriptions.Zynga has successfully introduced several popular games appealing to differentdemographic groups. News Corporation, owner of the Fox networks, acquiredMyspace to add social media to its holdings across media industries only to sell theentity years later for a huge loss.While there are limited examples of vertical and horizontal integration in thesocial media industries at this early stage, future growth and development shouldtrigger more action as firms begin to consolidate to achieve scale and economicefficiencies. We can also expect mergers and acquisitions to occur among socialmedia firms, where some will be buyers and others sellers.
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