Category Archives: New Media

My Favorite Slide Explaining Apple, Google and Amazon’s Domination of Entertainment Companies like Disney

Market Caps of Content Companies vs Distributors via BTIG

I LOVE LOVE LOVE this slide from Rich Greenfield at BTIG. His whole presentation is definitely worth the watch but this one graph truly says it all. (And I’m always trying to pull it up online to share in meetings… so I’m also posting it here to make that much easier.)

In the presentation, Rich first shows market caps of the companies below the line — all of our beloved entertainment creators. We see them in print and on every screen and think of them as massive, powerful companies. Then, he layers on the market caps of the “platforms” and distribution companies that sit between those companies and their audiences… and it’s easy to see how those content co’s are dwarfed.

Rich is looking at this through almost exclusively through a lens of financial analysis and market value… which might not tell the WHOLE story, but it paints a pretty dim picture for content creators and brand owners: Content is not king.

Some things worth noticing (many of these points are made by Rich):

  • None of the entertainment companies below the line — even the juggernaut, Disney — has a meaningful direct-to-consumer platform… they all depend on the companies above the line to reach their audiences
  • Apple could buy Disney in cash
  • Google or Apple could buy the entire entertainment industry in cash, except Disney
  • Every one of the distribution companies above the line have meaningful plans to make their own content that they own completely and perpetually (in other words, they could start to make their own content without depending on the content companies and their brands)
  • Netflix isn’t even on here but its market cap around $70B, making it bigger than everyone but Disney
  • Neither is Snap… it’s much smaller than Netflix at $20B (as of this writing), but it still stacks up above Viacom, Discovery and others
  • The digital-oriented distributors like Facebook, Apple, Google and Amazon have incredible volumes of data and knowledge describing their audiences, which is a huge advantage in content creation
  • While some of the content companies have partnered with and invested in the FANGS companies, they’ve missed their chance to buy one of them or build their own; Hulu is the only example and they half-heartedly participate in it
  • Nobody has been able to successfully create a large “direct to consumer” platform with content or brands alone… Netflix had to use DVD rentals, Amazon is using ecommerce, Spotify is using music and UI. In other words, we haven’t seen someone earn lots of subscriptions and ad revenue by only saying “we have ESPN.” It’s always content paired with some other strategy.

What Rich calls the “punchline” is this great thesis: content companies — especially Disney — have to make an acquisition in order to complete their business. What should they buy? Well, all of their options SUCK. Netflix is too expensive. Snap and Twitter don’t come with subscriptions. Pandora or Spotify aren’t video platforms.

That punchline explains many of the plays we see being made around the industry: Twitter continuing to pursue video in an attempt to demonstrate its value as a video platform. Time Warner selling itself to AT&T. Netflix spending billions on original content. NBC investing heavily in Snap. The list goes on…

Work at a Digital Media Company? Here’s How Much It’s Worth

We’re in a huge boom of VC-backed media start-ups with tons of investment in digital media brands that are growing because of the obvious shift of consumer attention from print and radio to mobile and internet. And if you work at one of these, you might be wondering how much your equity is worth or when/what the co’s exit prospects are.

There’s a pretty neat article on Medium called The Art and Science of Online Media Exit Valuations. It’s a simple 101 about how media companies are being valued these days based on interviews with real media investors and detailed research on these types of companies.

If you’re just looking for the so-called “multiple valuation” punchline, here it is:

Digital media companies tend to sell for between 2.5 and 5 times (2.5–5x) revenues from the previous, or “trailing,” 12 months.

Also:

Most digital media companies sell for about 8–12x EBITDA.

I find it interesting how investors prioritize different types of revenue. Digital media is generally very TBD in the business model department and part of the excitement to me is how much experimentation we see in this space: loyalty programs, tip jars, paywalls, merch, licensing… but according to Dorian Benkoil and Rafat Ali’s research, four areas add big value. These could kind of be used as a playbook for CEOs and strategists trying to bump their valuations:

  1. Subscriptions services — because these are much more predictable than advertising
  2. Paid research
  3. IRL events/conferences/parties, and…
  4. Databases of user info (very lacking for co’s in the distributed media world)

Annoying, Unskippable Ads Get a Really Bad Rap — And Might Be Better for Us


Jason Hirshhorn piqued my interest quickly (maybe accidentally?) in the mix of his rantnrave on Redef today [bolding from me]:

All advertising is content, some more enjoyable than others. Sometimes the less enjoyable ads sell product better, using less of a viewer’s time.

That’s a great trade off for a viewer! The advertiser gets to sell HARD in exchange for not much of your time. I’d take that any day.

And yet, most advertising “quality scores” (a fundamental component of bidding algorithms aka getting a low CPM) would penalize an ad for local-car-dealership-style of hammering jingles, prices, locations and calls to action. And skippable ads obviously disincentivize consumers from watching brisk but sales-ey ads… they get annoyed and hit skip. It’s all in the name of “the user.”

I’m afraid that the ad networks, ad tech and technologists are favoring more insidious, “engaging” branded-content type ad creative because it supposedly puts the user first. We know that branded content is sometimes just manipulative… hiding the fact that it’s advertising in favor of engagement. So we need to be open to unskippable, “less enjoyable” ads and heavy calls to action — because sometimes they can be annoying, but they use less of our attention… and attention is way more valuable to the user and the platform.

An Outrageously Common YouTube Watch Time Misconception – The Real Definition

Watch Time is the most important metric that YouTube uses to promote and drive audience to a video. In a way, it’s the most important metric on any platform. Netflix uses very similar information to decide on the shows it renews, greenlights and licenses. Snapchat, Amazon and Facebook have been known to use a similar engagement metric too. But there’s one secret side of watch time that most creators completely miss.

The “basic” definition of Watch Time is how long people spend watching your video. Cool. It’s not how many people watch your video… it’s how long all of those people watch it for. And this is fine, colloquial way of looking at Watch Time. It’s a proxy for how engaged your audience is with your content. And that’s about all the information YouTube provides you with in the Watch Time section of your Analytics.

But it’s missing one, extremely important distinction. One critical precept of the definition. So many people miss this and it’s fundamental. Watch Time is not about how long people spend watching your video. It’s about how long people spend watching other videos, after they’ve watched yours. That’s right. Your video’s engagement only matters to the extent that it gets people in the mood to watch more content.

Don’t believe me? Read more about when YouTube announced this! It’s also defined in the YouTube Playbook like so:

YouTube optimizes search and discovery for videos that increase watch time on the site.

How could YouTube judge me based on something the users do after they watch my video? It would seem like you have no way of controlling what people do after watching your content. But that’s not true! Think about this from a psychological perspective. Your job is to engage viewers. If you’re successful at that, you should be able to increase watch time on the entire site of YouTube.

How? Firstly, you can just make “binge-worthy” content that hypnotizes people into watching subsequent videos in your series. Make sure you’ve got never-ending “rising conflict” to keep people hooked and subscribed. Or you can make videos that are incredibly effective at framing or promoting other videos that aren’t yours. In that way, you can actually boost watch time by simply being an outrageous curator.

You can also avoid things that are apt to get people out of the content-consuming mood.

  • For instance, don’t drive people off YouTube… it’s unlikely that they’ll come back. Don’t tell people to search, donate to your Patreon or go to your own .com.
  • And don’t make extremely short videos because it just opens more opportunities for people to get distracted. Short-attention-span content begets short attention spans — flakey users who will leave YouTube.com.
  • Another common misstep: pushing commenting and “liking” and sharing at the end of a video. In my experience, those actions are very low weight to the YT algorithm compared to watching more content. Asking people to be contribute in the comments or respond to a prompt will kick them out of consumption mode and into productivity mode.

Of course, there are reasons to break all of these rules in the name of your business model or goals… but you have to be aware of how they’re impacting watch time.

Reframe how you think about engagement and it might inspire you to address watch time in completely new ways. Remember this common misconception and you’ll have a secret edge compared to Creators who have no clue.

Insanity:

Another day at the L.A. Times. In case you didn’t know: the Tribune Company, its owner, is dying along with every other newspaper on the planet.

The thing that strikes me day after day — whether I’m at the L.A. Times, or talking with a studio friend, or sitting in a film class — is this: You can’t do the same thing over and over again and expect different results. The economy is no excuse — some media companies are doing okay right now.

New Media is hard, but it’s not as un-paved as people keep saying it is. There are ways of making money. There are ways of finding an audience. But they aren’t the same as the old ways.

My Thesis prez

I’m finished with college. Next semester, I’ll be taking yoga and independent studies. It ought to be a hoot.

But my capstone presentation was about web video distribution. Appropriately, I streamed it online. About 50 people were in and out during the live stream and hopefully they were all thinking, “I can’t wait to hire this kid in May!” Maybe not.

I’m especially proud of a concept I’ve engineered called “segment parsing.” I introduce it in the video — but there’s more to come soon.

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Sealing panels

We’ve put together a pitch for a panel concept at 2009’s SXSWi Festival, and 30% of sealing the deal is a poll of potential conference attendees. Even if you’re unlikely to attend the conference, it’d really be swell if you voted for it. It’s called “The Student 2.0 Revolution” and it’s about how Web 2.0 is shifting the playing field on college campuses and the administrators who stand in the way of that.

The ironic part about whoring out a self-promotiomal blog post on this is: does anyone read this blog? And even if someone does, wouldn’t they already know about the panel? Well, either way, it can’t hurt.