January 14, 2019

An Evening With The Media

The night before the chaos of CES. I got to spend some time with media juggernauts. The panel was curated by MESA president, Guy Finley, along with Paramount Pictures Futurist, Ted Schilowitz, Ooyala founder & CTO, Belsasar Lepe, Needham & Company’s Laura Martin. The conversation touched on and explorethe business of video. It was an insider insight into what it means for media to global in the future.

One of the things that became vividly evident was that portability is what drives the content. The concept of snacking which is a term for stopping and starting video stared with Tivo the grandfather of DVR.  Snacking continues to be a norm thanks impart to the constant advancement of mobile devices. According to Laura Martin (DTC) Direct to consumer might be were the market is going at full steam. She states that Disney is trying to lead that charge. In fact, Laura believes that this strategy will soon be adapted by none other than the behemoth Netflix because they own so much of their own content. If this is true that means that gone are the days of (OTT) Over the Top. OTT loosely translates in laymen’s terms to companies don’t own the content. DTC means the content provider owns it.

 If Netflix can’t get access to capital markets, they will bankrupt themselves. They have one year of cash on their balance sheets. ~Laura Martin of Needham & Company’s

Niche was covered and so was a term I was not yet familiar with until this panel discussion. The term hyper local is relating to or focusing on matters concerning a small community or geographical area. Meaning a movie like Bird Cage with an A-list actress Sandra Bullock will get people into Netflix but they stay for the local content that is relevant to them and was produced there. That is why so many media companies are investing a disproportional amount internationally. To have maintain subscriber growth or get enough ticket sales to cross over to the $1 billion-dollar club you need a strong hyper local international market. For example, as of this writing Aquaman has $287 million in ticket sales in the Untied States, however international it has $732 million. That is not a typo. The data is available on IMBDpro for all to see.

Another avenue of revenue from streaming delivery of content is the ability to intergrade interactive elements. This is an idea that is highly popular amongst game companies. When implemented well like it is in a little game you might have heard of called Fortnite fans and the company love it. The netted over $1 billion in 2018. While many other games have made just as much their first year after launch, none has done it using the free model the way Fortnite did. Microtransactions for dances, clothes, gear and the like were a great business model for Epic the developer of the game. Users were actually looking forward to purchasing virtual goods with micropayments. The when it is done wrong customers will rebel. This was the case with EA and its loot box problems across many of its games. Never the less microtransactions are here to stay and thanks to a change in gambling laws; headed into live sporting events and media content.  

Belsasar Lepe imagines a time not too far off where leagues such as the NBA would have the ability to sell customers just the 4th quarter of a game with   commentary from your local teams point of view.  This hyper local focus will allow advertisement to reach the right target market at the right time. You could also move that into DLC and micro-transactions. So, let us say you want to bet on if Steph Curry will make a 3 pointer from beyond 30 feet or if the Bears will make a field goal. You could pay to play against other fans in real time. That is basically what happens today with one day fantasy leagues.  

I moved from the all-in cable hell that I was in. I have complete control. Oh, by the way I’m buying $150 in subsections in addition to the pipeline. How much is too much? ~MESA president, Guy Finley

Content exhaustion is a real thing. That was a to the point statement for one reason because that is how a lot of customer, Guy Finley and myself being one of them. Cutting the cord might have been the best thing to happen finically to media companies and from a content standpoint great for customers as well. However, when it comes to the choices, we are back at square one. Customers are bombarded with a plethora of streaming and live tv content. The option range is vast and diverse from industry leaders such as Netflix and HBO, niche content providers like Crunchyrol to hyperlocal providers like Eros Now and Hotstar. The difference in understanding how good content is provided to the customer will determine where those customers spend their streaming dollars as they continue to discover new providers that cater to their wants. For instance, in the case of HBO vs Netflix; HBO makes a very limited amount of content per year however they are at such a high quality that the value to its subscribers is unquestioned. While Netflix makes massive amounts of content and utilize very little marketing. Disney and Warner are about to enter the OTT space. What will happen when Netflix has to go against these companies that not only have massive amounts of diverse content but also invest in an incredible amount of affective marking?

What will change in the future?

The form factor for media consumption will change in the next 2 to 3 years. The phone as we know it now will not be the what we have in the future. We stated with a brick, then cords, then flip to the little black rectangles we have today. Tomorrow these devices will be foldable and wearable. If CES is any indication; we are closer to that future than one might think. On the content front there will be a healthy mix of AR/VR similar to how we have IMAX in theaters today.  

Software wise over 10 years there will be a gamification of media. There will be 5 major content producers in the world. Yes, it will be a monopoly but it has to happen. ~Laura Martin of Needham & Company’s

Laura believes that there will be a gamification of media within the next 10 years. Fortnite has shown how lucrative proper implementation that appeals to end user can be. I don’t think this one is that far off. The Netflix show Black Mirror recently had a one-off episode called Bandersnatch where you could made decisions to alter where the story goes. This was so appealing my daughter had me go to another room so we can watch at the same time and discus what choices were made. If we had to pay for this ability most likely we would. The challenge comes in when we are asked to paid to go back and change our decisions. I personally would not but for the classic movie Momento I would in an instant.

Now last topic that was talked about for the future of media is user data. Some members of the panel believe that one day our date will become our currency. For instance, what if you could sell your personal data for a service or goods? Say give Comcast your permission to sell your viewing habits to the local pizza shop so they can add a pop up right before start of movie night. Right now, we have accepted that our privacy is something that we hold dear and some of us are will be willing to pay for it to remain private.  How much would you pay to keep your data private from Facebook. Another way to look at this question is; how much would you charge a company for the privilege of your data?