During the period from 2018 to 2020, the streaming industry witnessed unprecedented consolidation as traditional media companies aggressively pursued ...
GMAT Information and Ideas : (Ideas) Questions
During the period from 2018 to 2020, the streaming industry witnessed unprecedented consolidation as traditional media companies aggressively pursued digital transformation strategies. Financial analyst Rebecca Chen's recent study reveals how two major corporations navigated this transition with markedly different outcomes. StreamCorp, originally a broadcast television company, has fundamentally restructured its revenue model—streaming platform acquisitions now account for \(32\%\) of total income, with traditional broadcast operations generating the remaining \(68\%\). In contrast, MediaGiant has maintained a more conservative approach to digital expansion. Despite participating in the same industry-wide acquisition surge, the company continues to derive \(94\%\) of its revenue from established cable and satellite services, with streaming ventures contributing only a minimal portion to overall earnings. Based on Chen's analysis, it can be reasonably concluded that ______
Which choice most logically completes the text?
MediaGiant's traditional revenue sources demonstrate greater stability than StreamCorp's do.
the expansion period created more significant changes to StreamCorp's business model than to MediaGiant's business model.
StreamCorp's streaming acquisitions were likely more expensive than MediaGiant's streaming ventures.
both companies would benefit from further diversification of their revenue sources in the current market.
Step 1: Decode and Map the Passage
Part A: Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| 'During the period from 2018 to 2020, the streaming industry witnessed unprecedented consolidation as traditional media companies aggressively pursued digital transformation strategies.' |
|
| 'Financial analyst Rebecca Chen's recent study reveals how two major corporations navigated this transition with markedly different outcomes.' |
|
| 'StreamCorp, originally a broadcast television company, has fundamentally restructured its revenue model—streaming platform acquisitions now account for 32 percent of total income, with traditional broadcast operations generating the remaining 68 percent.' |
|
| 'In contrast, MediaGiant has maintained a more conservative approach to digital expansion.' |
|
| 'Despite participating in the same industry-wide acquisition surge, the company continues to derive 94 percent of its revenue from established cable and satellite services, with streaming ventures contributing only a minimal portion to overall earnings.' |
|
Part B: Passage Architecture & Core Elements
Main Point: Chen's study shows that during the 2018-2020 streaming consolidation period, two major companies responded very differently—StreamCorp significantly restructured its business model while MediaGiant maintained a largely traditional approach.
Argument Flow: The passage establishes the industry context of streaming consolidation, introduces Chen's comparative study, then presents contrasting data about how much each company changed their revenue models—StreamCorp shifted to 32% streaming revenue while MediaGiant stayed at 94% traditional revenue.
Step 2: Interpret the Question Precisely
What's being asked? What logical conclusion can be drawn from Chen's analysis of these two companies during the consolidation period.
What type of answer do we need? A reasonable inference that follows directly from the data presented about StreamCorp and MediaGiant's different approaches.
Any limiting keywords? 'Based on Chen's analysis' and 'reasonably concluded' tell us we need to stick to what the data actually supports, not make broad assumptions.
Step 3: Prethink the Answer
- The key comparison here is between StreamCorp's significant business model shift (32% of revenue now from streaming) versus MediaGiant's minimal change (still 94% traditional revenue)
- Both companies participated in the same industry trend, but with very different results
- The right answer should capture this fundamental difference in how much each company's business model actually changed during this consolidation period
- StreamCorp clearly underwent major structural changes while MediaGiant remained largely the same
MediaGiant's traditional revenue sources demonstrate greater stability than StreamCorp's do.
- Claims MediaGiant's traditional sources are more 'stable' than StreamCorp's
- The passage gives us revenue percentages, not information about stability or reliability
- We cannot conclude anything about which revenue sources are more stable from this data
the expansion period created more significant changes to StreamCorp's business model than to MediaGiant's business model.
- Recognizes that the expansion period created more significant changes to StreamCorp than to MediaGiant
- This perfectly matches our analysis: StreamCorp shifted \(32\%\) of revenue to streaming (major change) while MediaGiant stayed at \(94\%\) traditional (minimal change)
- This conclusion flows directly from the comparative data provided
StreamCorp's streaming acquisitions were likely more expensive than MediaGiant's streaming ventures.
- Makes a claim about the cost of acquisitions
- The passage provides no information about expense or cost, only about resulting revenue percentages
- Students might assume that more revenue from acquisitions means higher costs, but that's not necessarily true
both companies would benefit from further diversification of their revenue sources in the current market.
- Offers prescriptive advice about what both companies 'would benefit' from
- The passage presents data about what happened, not recommendations about what should happen next
- Students might think they should give business advice based on the data, but inference questions ask what we can conclude from the evidence, not what companies should do