It's that time of year again. No, not the holidays! It's nostalgia time -- taking a look at this past year and taking stock of our lives (both business and personal). This post focuses on the former -- strictly business. Here I look back at the 8 predictions I made in TechCrunch nearly one year ago in an article not-so-creatively titled "The Future Of Digital Media 2015." This post compares those predictions to the reality that is digital media in 2015 (understanding that we have a few more weeks to go).
I. PREDICTION (1) -- The mobile-driven, premium, short-form video economy “grows up,” and traditional media companies finally take notice on a mass scale ... International also becomes a major new battleground for these borderless video opportunities.
REALITY CHECK (1) -- This one can't be denied. 2015 was the year when the media world's new digital realities hit home on a mass scale. Too many data points to mention -- but, on the domestic front, I'll focus on one -- Comcast/NBCUniversal. This multi-tentacled media behemoth had barely made a digital move in 2014 -- but, in the second half of this year, it was practically on fire. First, it invested $200 million into Vox Media. Then, in less than one week, another cool $200 million in BuzzFeed. Then, it launched its mobile first short-form video platform "Watchable." And, in case that wasn't enough, it separately announced its longer-form stand-alone subscription OTT companion to Watchable -- i.e., "SeeSo." SeeSo launches January 7th -- just in time for CES. Now THAT's making a digital statement (which Comcast/NBCUniversal finally -- and smartly -- did). Bravo! (a network NBCUniversal owns, by the way).
On the international front, check again. International media giants -- particularly in Europe -- moved even more swiftly than their Yank compatriots. Cases in point include Scandinavian media company MTG buying leading UK MCN/MPN Zoomin.TV for a deal valued at nearly $100 million; and German media giant ProSieben's acquisition of leading U.S. MCN/MPN Collective Digital Studio -- which it combined with its existing Euro-based Studio71 MCN to create a truly global digital, mobile-first and millennial-driven media company (valued at approximately $240 million, including ProSieben's cash infusion).
II. PREDICTION (2) -- Major consumer brands follow suit and act in earnest. Massive marketing dollars shift from traditional media to more measurable digital platforms in the form of branded content (not just ads), cannibalizing the former for the first time.
REALITY CHECK (2) -- Check, again. Ad dollars shifted from "traditional" to digital/mobile in real, eye-opening ways, the magnitude of which is still not fully appreciated. Even ESPN -- THE traditional media world's cash cow -- was not immune. ESPN is the proverbial canary in the coal-mine. If it had to shed 4% of its work-force in light of new digital marketing, OTT, and consumer behavioral realities (which it recently did), then you know (or better know) that the times are a' changin.' Even Viacom -- what most pundits consider to be amongst the slowest major U.S. media company to act upon new digital realities -- made noises about placing major bets amidst these new realities. Specifically, it is reported to be developing its own Nielsen audience measurement "killer" -- a new digital measuring platform it calls "Project Gemini." But, many ask, why build slowly when you can buy or rent right now? Speed is at a premium in this brave new digital world. My vote is "buy!" Deep tech expertise is not a natural element of traditional media DNA.
III. PREDICTION (3) -- YouTube comes under siege by new competing video platforms like Facebook and Vessel.
REALITY CHECK (3) -- Check again -- with a major exclamation point this time. YouTube no longer stands alone at mass scale in this digital video world. I have written about this several times over the course of this past year. "The force" is with Facebook already in a very big way (the first of my "Star Wars" references) -- it is a behemoth alternative platform that increasingly matters to video creators (just ask major MCNs/MPNs like Whistle Sports and Mitu Networks). Same with Snapchat, which is now a bonafide media company and not just your kids' communication platform. Then, there is an ever-increasing cast of thousands, including still-very-stealth-like Vessel (would love to see some metrics/conversion rates posted by Vessel, by the way).
YouTube's competition is real, very real for the first time -- and that's precisely why it recently reacted to these competing forces (and resulting expanded consumer choice) by launching its YouTube Red ad-free paid subscription service. Even the mother of them all smartly concluded that it can't stand still (even if it had to break a few creator eggs in the process). I applauded YouTube at the time for acting, because no media company of any size should be doing anything but. Your actions may not always work, but it's experimentation time. You simply must be in the game -- and, as they say, you cannot be afraid to fail. Failure is an option in this context, because inaction simply is not.
IV. PREDICTION (4) -- Traditional pay TV packages likewise come under fire in the “Great Unbundling” that began in 2014.
REALITY CHECK (4) -- Check again -- let me count the ways! Where to begin? Virtually every media company has now (again, smartly) either launched or has announced that it is launching its own stand-alone paid subscription OTT service (NBCUniversal's "SeeSo," CBS's "All Access," ABC's "WatchABC," Univision's just-announced "Univision Now," "HBO NOW," Showtime, Nickelodeon, Comcast "Watchable," Dish's "Sling TV" ... the list goes on and on) -- not to mention all the others out there focused on particular vertical/niche programming (how about the WWE's chair-smashing pseudo-wrestling focused streaming service? It is killing it). There's gold in those vertical hills populated by a particularly rabid and underserved customer base. But, in this era of the "Great Unbundling" (which again directly impacts even media stalwart ESPN), how many of these paid subscription services can the market take? The market "noise" is great -- so there will be blood. But, in the immortal words of Yoda (who is sure to be oft quoted this holiday season), "try you must!"
V. PREDICTION (5) -- Media and tech companies will literally converge.
REALITY CHECK (5) -- "Convergence" can mean many things in this context. But, candidly, I was thinking primarily of M&A when I wrote this one (although strategically partnering counts -- and we do see media companies increasingly venturing into tech -- case in point Warner Bros' and Sony's hoped-for "Netflix Killer" OTT joint venture with SingTel in Asia named "HOOQ"). No mega-acquisitions have happened yet. Neither Google, Amazon, nor Apple (nor Alibaba!, which just bought Chinese YouTube Youku Tudou for $4.8 billion) has bought any of the major U.S. media companies. But all easily have the cash to do it. Will we see that happen in 2016? Stay tuned for my 2016 predictions near year-end.
VI. PREDICTION (6) -- On the music side, businesses move away from stand-alone services.
REALITY CHECK (6) -- Why? Because as massive as both Spotify and Pandora are (and they are), they are not even remotely profitable based on subscription revenues alone. That's why Pandora just recently (and smartly) announced two major strategic moves to diversify its singularly challenged business model. First, acquiring Ticketmaster's mini-me -- Ticketfly -- for $450 million in order to add a major new revenue stream. And now, buying soon-to-be-defunct competing service Rdio for $75 million in order to add on-demand functionality and compete head-on with Spotify and others. That last move does little to change its pre-Ticketfly one-dimensional business model. But, it is a major reaction to its long market slide over the past two years. Spotify also hears the music -- and just partnered with Songkick to add its new "Concerts" feature that gives it a hoped-for major new revenue stream. I applaud those efforts to diversify, because all stand-alone services must (as I have written several times previously). But will these moves be enough? I still don't rule out M&A (as in being eaten by even bigger fish -- in this regard, the "usual suspects" in Prediction 5 above apply here too). This could happen in 2016. Pandora is becoming cheaper by the day.
Speaking of digital music-focused M&A, Tidal has been in the news of late about secret potential M&A discussions with Samsung. But, isn't being controlled by a behemoth (rather than being independent and controlling your own destiny) everything against what Tidal is all about? I could see Jay Z wanting to partner with Samsung, but not selling. And, speaking of Samsung, don't forget that it already features its own "Milk Music" service that is powered by Slacker, the streaming service that quietly has built a significant customer base (you may be listening to it in your car right now) but is generally overlooked because it is more humbly tucked away here where I live in soft-spoken San Diego. If anything, Samsung should just buy Slacker. But, will it? Doubtful. Samsung just recently shuttered its "Milk Video" service and is exiting, not entering, the content space (except in the area of VR where it has placed a huge bet with Samsung Gear VR) (more on VR below). Of course, Samsung's overall content strategy could change again -- since the company has embodied "change" on the content side over the past couple years).
In any event, Pandora and Spotify -- the two indie mega-music services -- satisfy this Prediction #6 in my book. Let me know if you agree.
VII. PREDICTION (7) -- Gamers see real action too.
REALITY CHECK (7) -- This prediction focused on game developers increasingly transforming themselves into multi-platform media story-tellers a la Rovio. Certainly we are seeing accelerating moves and investments to that end -- and I conferred with games expert and Manatt Digital Media colleague Patrick Sweeney to get his thoughts. He pointed out that for game developers, it's not just about original IP for their stories. He gave me several examples based on existing properties -- including "Laura Craft Go" (a mobile strategy game based on Tomb Raider), "Fallout Shelter" (an interesting resource gathering twist on a classic game console title), and Pac-Man 256 (a new mobile spin on one of the most classic game titles). Based on all this action -- and Patrick Sweeney's outside objective confirmation -- I'll mark this prediction off as being a "yes."
VIII. PREDICTION (8) -- Gamers take to wearables ... we see an Oculus under every hard core gamer's tree.
REALITY CHECK (8) -- I massively undersold this one. Prediction #8 was all about virtual reality (VR) and how it stands to radically transform the gamer experience. But, 2015 represents so much more than "just games" in the fast-transforming immersive world of VR and AR. This is the year where massive bets were made (significantly more than I anticipated) to accelerate mass VR adoption in not only games, but in live "experiences" and story-telling in general (not to mention other remarkable use cases I touched upon in a recent blog post where I interviewed VR/AR thought leader Mike Rothenberg). (NOTE: My team at Manatt Digital Media recently published a highly informative VR/AR Infographic -- accessible via this link -- that lays out the overall VR/AR eco-system (and the players within it); think you may find it to be extremely useful).
No, we will not see an Oculus under every hard core gamer's tree this Xmas. I was a bit premature on that one. But not by much. Those premium VR headsets from Oculus (as well as the growing list of others including behemoths Samsung, HTC, Sony) are coming in Conehead-inspired mass quantities early 2016 (I particularly like what I see ... er, "experience" ... with the HTC Vive (which I review in this blog post after demo-ing it last week at the Slush conference in Europe)). Much like the analogous early days of game consoles, we will see millions of those premium headsets (not just Google Cardboards) sold in 2016. That means mass adoption and mainstreaming of VR much earlier than most expect.
You can take that early 2016 prediction to the bank! More coming on that front soon ....