Vintage radios on wooden shelves.

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The Enduring Power of Legacy Tech Businesses: A Case Study in Economies of Scope

In the realm of AI, cloud computing, and blockchain, such salient inventions seem the only players who matter in making money in the tech domain. As time has shown, however, plenty of the most successful business models have been those which do not reinvent the wheel but deal with actual existential value for over 60 years. Radio advertising, TV advertising, and phone communications, in 2025 too, still stand as revenue-generating potentials. Their wealth, user quality, and reach exist in such a state that creates a niche that is lucrative over a long period. The principle behind the resilience can be effectively seen through and economic concept called - economies of scope. This principle reveals how companies that participate in more than one business line in a given industry can actually retain a profit for an extended time.

The Resilience of Legacy Technology Models

Traditional advertising and communications are steadily growing in the era of digital marketing and streaming services. The global radio advertising market was worth an estimated $37 billion in 2023, and that solid chunk of demand still remains efficient even in the face of digital disruption. TV advertising revenues in the United States alone hit $65 billion in 2024, revealing that the old form of media thrives for some years to come.

By combining different related activities, these industries have been able to benefit from economies of scope, allowing companies to spread costs over many revenue-generating activities. An example of this would be a television network that can still run profitable operations by selling advertising slots across traditional airing as well as streaming services. First of all, the telecommunications companies providing bundled offerings of fixed lines, mobile phone plans as well as the internet broadband do garner customer retention and lifetime value.

Case Study: AT&T and the Telecommunications Industry

One of the most compelling examples of economies of scope in legacy tech businesses is AT&T.AT&T started as a phone company but quickly grew from a fixed-to-mobile and wired-to-wireless communication sector. Subsequent company acquisitions saw the entry of satellite broadcaster DirecTV, through which AT&T began rolling out telephone and internet broadcast services. Though with an advance in streaming and mobile use, the company dramatically launched an initiative that kept wired infrastructure relevant in the field of telecommunications.

By bundling services, AT&T reduced customer acquisition costs and increased user retention. This strategy not only allowed the company to maintain profitability in traditional telephone communications but also positioned it as a major player in the digital economy. As of 2024, AT&T reported revenues exceeding $120 billion, much of which was still derived from its legacy telephone and cable operations, proving that these traditional businesses remain highly lucrative. Niche services pioneered by ATT such as 900 or 1300 numbers from Telcoworks works have spread globally and are enduring, powerful legacy tech industries.

The Power of Radio and TV Advertising

Radio advertising is another example of a legacy business that continues to thrive due to economies of scope. Major networks like iHeartMedia operate both traditional FM/AM stations and digital streaming platforms, allowing them to sell advertising packages across multiple formats. Advertisers continue to see value in radio due to its loyal listener base and targeted reach, particularly in local and regional markets where digital advertising struggles to achieve the same level of engagement.

Television advertising follows a similar trajectory. While streaming services such as Netflix and Disney+ have gained subscribers, traditional TV networks have adapted by offering hybrid models that combine live broadcasts with on-demand streaming supported by advertising. This approach allows networks to monetize content through both subscription fees and ad placements, leveraging their existing infrastructure for maximum efficiency.

Why These Niches Continue to Work

The enduring success of these industries can be attributed to their ability to scale efficiently while maintaining a high-quality user base. Businesses that rely on economies of scope benefit from reduced costs across multiple revenue streams, which helps them maintain profitability even as consumer preferences evolve.

Additionally, these industries capitalize on brand trust and widespread adoption. Consumers continue to rely on radio, television, and telephone communication despite the availability of newer alternatives. The familiarity and established nature of these services create a competitive advantage that new, disruptive technologies struggle to replicate.

Conclusion

The assumption that only cutting-edge technology businesses can thrive in the modern economy overlooks the lasting profitability of legacy industries. Through economies of scope, businesses like AT&T, iHeartMedia, and traditional television networks continue to generate significant revenue despite technological shifts. While newer innovations capture media attention, these well-established models quietly maintain dominance by efficiently leveraging infrastructure, bundling services, and capitalizing on consumer habits. As businesses seek sustainable and scalable opportunities, legacy tech models remain some of the most reliable and profitable niches in the modern economy.