VideoInk Interview - My 2015 Reflections/2016 Predictions

(VideoInk originally published this interview on December 21st -- thanks to Todd Longwell of VideoInk to permit me to republish it fully -- here is the link to the original post).

To close out 2015, VideoInk is calling on some of the top execs in the online video business to give us their take on the most significant developments in the industry in the past year, as well as where it might be going in 2016..

First up is Peter Csathy. As the CEO of business consulting and legal services firm Manatt Digital Media, Csathy has been an agent of change and passionate proponent of digital transformation and opportunity. He’s also been keen a keen observer of the rapid changes in the streaming space, offering up regular industry analysis in his Digital Media Update blog.

What was the most important trend in the online video industry in 2015?

The push of “traditional” media companies to place big bets in digital-first media. A seemingly endless array of standalone subscription-based OTT services (including NBCUniversal’s upcoming Seeso) followed HBO Now’s path and launched or announced this past year. NBCU made other significant moves – investing $200 million each in BuzzFeed and Vox Media – and parent company Comcast launched its mobile-first video service Watchable.

What single deal, launch or failure in 2015 was the biggest game-changer for the industry?

Facebook’s focus on video changed the online video game this year, in one stroke transforming the “YouTube Economy” into a “Multi-Platform Video Economy.” Now, for the first time, YouTube has real competition and creators have choice. On the flip-side, Yahoo!’s failure to launch its YouTube “killer” service earlier this year and it’s recent exit from premium video represent a cautionary tale about the need for focus and speed.  Yahoo!’s assets, together with focused media aspirations, could be impactful.

What surprised you the most in terms of hits or misses?

VR was the biggest surprise hit this year in terms of sheer audacity and investment. While I expected VR to be a significant story in 2015, the speed at which that market is growing and in the minds of business is remarkable. 2016 will see the early mainstreaming of VR with millions of premium headsets sold. The biggest “miss” – if you can call it that – is that the MCN/MPN M&A market slowed this year. Things will heat up again in 2016, and we will see several M&A exits for those remaining MPNs with scale.

What’s the most common mistake you saw this year in the biz, whether they were made by studios or individuals?

To underestimate the speed at which everything is moving – and the need for focused action in this brave new digital world order.  This is no time to churn endless spreadsheets.  The world has changed.  You see it all around you.  For millennials in particular (the bodies marketers need to reach), media is mobile and social-first.  So, a central focus on mobile and social are necessary … yesterday.  No time to overthink it. It’s time to act.

Is there a sector of the streaming industry that you feel is chronically undervalued or ignored?Yes, those companies and technologies that can help consumers find precisely what they want and navigate intelligently through the endless and expanding flood of content.

What do you think will be the big story for the streaming space in 2016?

If you consider VR as part of your coverage, then the early mainstreaming of VR will be a massive story in 2016.  Separately, on the streaming/digital media side, significant M&A and consolidation will grab headlines throughout the year. Be prepared to be unprepared for the news to come. Everyone is scheming as we speak.

Virtual reality/360-degree video – fad or future? Why?

VR is no fad.  Virtual reality is actual reality here and now – a transformative technology that facilitates entirely new experiences, most of which we have yet to even imagine. The sheer billions already invested to date – and will continue to be invested at an accelerating pace in 2016 – will make it so. If they build it (VR), we will come. And we will be amazed.

Mobile-first distribution – overhyped or undervalued? Why?

Mobile is the first screen for millennials, plain and simple. Look around you. That’s where the kids are. And that means that all media and marketing companies need to be there, right here, right now. And not timidly, either.

Digital Media 2015 -- My Recap For TechCrunch

(A modified version of this post originally appeared in TechCrunch yesterday under the title "Scorecard: 2015 Digital Media Predictions.")

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 ....

VIDEO - 2015 - The Year In Online Video and M&A

We at Manatt Digital Media summed up 2015 -- the year in online video/digital media and M&A -- in the only way that made sense to us.  Via a video that captures the year's frenetic activity -- and the video world's overall frenetic pace -- in less than 60 seconds.  Sit back and enjoy.  And, by the way, those "swipes" you see of one company logo over another are no accident.  Those swipes either connote (i) major strategic investment, or (ii) M&A by the company whose logo overlays and envelopes the other.  Expect many more such swipes in 2016.  Oh, and one more thing.  YouTube's logo starts it all off (just like YouTube birthed the online/digital video eco-system in the first place).  But, as this video underscores, YouTube is not alone anymore.  And, 2015 was a pivotal year in that regard, as Facebook, Snapchat and a countless and accelerating string of "others" boldly announced themselves as being alternative platforms and urged us to check them out.  Which ones did you check out?

Happy Video Holidays from your friends at MDM!

VR/AR - The Year In Review (& Resources You Can Use)

2015 set the stage for VR/AR.  As Digi-Capital just reported, $1B+ was invested in VR/AR this year.  And, that's only the beginning.  2016 will be VR's break-out year -- with millions of premium (not just Google Cardboard) headsets being sold and consumer adoption I predict to be significantly greater than what most expect.  My recent panel of VR experts at the Siemer Summit all agreed on that fact.  In addition to the Digi-Capital report, this Analyst Report from PitchBook is worth reading.  And, here's our own Manatt Digital Media summary of the year in VR & AR -- in the form of an Infographic that lays out the relevant landscape (and both identifies and categorizes most of the major players within it).  Worthwhile perusing if you haven't already when we first published it a couple months back.  Here's to a very Immersive New Year!

Yahoo! Selling Its Core Internet Business? Today's Massive Wake-Up Call

What a wake-up call for all of us in the digital media business.  The Wall Street Journal reports that Yahoo!'s board is considering selling off its core U.S.-based internet business, which the market values at LESS than $0 of its $31 billion market cap (yes, that's correct according to the Journal).  If this happens, what would be left?  Yahoo!'s 15% stake in Alibaba (currently worth $32 billion) and its stake in 35% stake in Yahoo! Japan (currently worth another $8.5 billion) -- in addition to cash and other investments.

What happened here?  How can this be?

Well, Yahoo!'s media strategy certainly didn't help.  It has failed, plain and simple.  I wrote a detailed post about this back in April (titled "Yahoo Kills Its YouTube Killer - So What's Still Alive?") when Yahoo! threw up the white flag to its long-rumored, but not-to-be, YouTube "killer."

That move, as I wrote then, "demonstrat[ed] Yahoo!'s continued indecision and overall flailing (failing?) in the OTT video content space.  And, this certainly is not an opportune time for flailing -- for an unfocused/scattered/disrupted (you choose the word) video strategy (or complete lack thereof?) when the video focus/strategy/execution of others (behemoths like Facebook and Snapchat and others like Vessel) are ever more sharp, precise, resourced, abundantly clear ... and, with some, massively successful (by all accounts, Facebook is killing it)."

Sad indeed.  After all, Yahoo! had every opportunity to massively succeed -- it controlled uniquely compelling resources and ingredients (that I discussed long ago in a blog post from 2013) that gave Yahoo! the potential to drive real success as an alternative to YouTube and in the burgeoning OTT world.  But months (now years) ticked by and, alas, little came (except a revolving door of new execs and departing frustrated execs).  Yes, there was significant video activity, but no recognizable strategy to it all (nor any real reported success in those efforts).  As I reported back in April, many senior execs with whom I have spoken confirmed overall frustration time and time again.
"Yahoo!'s video "strategy" has been overtaken by confusing multiple layers of decision-making, internal conflict, and what some even called "chaos.""  Nor did it help that Yahoo! failed in its attempt to buy a controlling stake in Dailymotion, Europe's YouTube.  Not its fault (French regulators killed that deal), but still failure to launch.

Meanwhile, as Yahoo! flailed, the video world radically changed.  What once was, in essence, a YouTube-only video world for creators is now, of course, a world of multiple competing video platforms with massive competing players like Facebook, Snapchat, Netflix, Amazon, Hulu, Sling TV (and the burgeoning number of stand-alone OTTs like HBO Now).  So, as I wrote in April, and faced with those realities, "Yahoo! is running out of time amidst the current great OTT video land grab of 2015."

But, back in April, I still felt that Yahoo!'s media strategy was potentially salvage-able if it "ha[d] a major Dailymotion-like acquisition trick up its sleeve that will soon come to light and finally catapult it into the OTT video big leagues (where it absolutely could belong if it had the will and focus)."

Sadly, if The Wall Street Journal report becomes reality, that simply was not to be ...

although it could have been ....