Brands, The New Media Companies/MCNs? Red Bull and Now Marriott

Disruptive times.  Transformational times.  That’s the media and entertainment world we are living in.  The rise of premium short-form video.  Related to the ascension of mobile as the most important single screen.  With you 24/7.  Especially for millennials born and bred with smarthphones in their hands.

It’s about engagement.  A new form of engagement.  Ongoing engagement.  Creating a real relationship with the user.  With different types of video content.  Authentic video content.

It’s no longer just about “traditional” media companies.  And, it’s not just about “new world” media companies (like MCNs, about which I consistently write).

Now, it’s also about brands.  Major brands.  Brands looking to transform themselves into full-fledged media companies.  No longer content simply making consumer packaged goods that touch consumers only intermittently.

Red Bull is THE prime example of this.  The poster child.  Red Bull is no longer simply an energy drink.  It is now first and foremost a lifestyle/media company (a lifestyle of adrenaline/action) that amplifies and promotes that lifestyle via brilliantly-executed media (primarily video -- Felix Baumgartner anyone?).  Cans of caffeine are only one manifestation of that lifestyle and the primary way that lifestyle/media company monetizes.  To put an exclamation mark on this point, Red Bull has established a full separate and major media operation known as Red Bull Media House.  And, if there is any doubt about Red Bull's lifestyle/media company-first strategy, have you seen its main website lately?  There is not a can of Red Bull anywhere to be found!  Now there is ongoing consumer engagement with compelling video content.  That’s the magic!

Other major brands see this -- or at least should see this -- and the potentially massive opportunity to transform themselves into something potentially much more meaningful than a company that simply sells products.  To emulate Red Bull and morph into major lifestyle/media companies.

Marriott -- yes, that Marriott (the hotel chain) -- sees this and has now entered the fray.  Marriott announced just yesterday that it is establishing its own major production studios to develop premium video content across the full spectrum of short and long-form.  Marriott hopes to become THE media company and destination for the lifestyle of global travel -- and, in particular, travel for “the next-generation traveler.”  In other words, mostly millennials.

I see this all around me.  I see this opportunity.  Major brands that already “own” -- or at least partially “own” -- a lifestyle.  NOW is the time to make that bold move.  Expand the definition of who they are.

2014 is a transformative moment-in-time in the media and entertainment world.  If brands don’t move fast, that mega-opportunity may be lost forever ...

Cut This! (The Cable Bundle, NOT The Cord ...)

Welcome to the great unbundling.

2014 is a transformative year for the media business.  We will look back several years from now and fully realize this.  So, internalize that now.

First, anyone who reads my blog knows that we are in the midst of MCN fever.  Not a fad.  But a fever.  A fever justified by the onset of a new world order -- the rapid ascension of millennial mobile video consumption and engagement which, in turn, accelerates the need for (and fuels the development of) compelling premium short form video optimized for that platform.  That means a growing need for media companies successful playing in that world.  And that means the growing importance of MCNs, which explains 2014’s accelerating pace of MCN M&A.  The latest and greatest example, of course, is this past Monday’s Fullscreen/Otter Media mega-deal (here are my predictions of which MCNs may be next).

But, there’s much much more in 2014, particularly in this remarkable month of September.  This month marks THE moment in time at which previously sacred traditional cable/satellite programming bundles -- and the decades old business models behind them -- came under serious fire by concrete actions (rather than talk) amidst this accelerating mobile and OTT video reality (and the consumers -- especially millennials -- behind it).  Yes, there has long been such talk.  But, this month there has been real disruptive action.

AT&T -- no longer your father’s AT&T with all of its remarkable digital moves in 2014 (including its acquisition of MCN Fullscreen noted above via its $500 million Otter Media joint venture with The Chernin Group) -- is leading the charge.  Yes, THAT AT&T.  Earlier this week, AT&T announced its new $39/month U-Verse programming bundle that includes HBO and Amazon Prime video, together with basic cable programming PLUS broadband.  That’s right.  HBO!  Via this new stripped down efficient package, AT&T smartly targets cord cutters (“come on back”) -- and, importantly, the increasing number of “cord nevers” (those, especially young adults, who never entered the fold in the first place due to traditional bundle pricing).  Sure this news got some real press.  But, am not sure it is fully appreciated.  This new bundle is a very big deal.  And, make no mistake, others will rapidly follow suit.

Other cases in point.  Earlier this month, Viacom licensed 22 of its live and VOD premium networks to Sony for its new OTT service for PlayStation, Sony TVs and other Sony connected devices.  And, in rapid succession, Verizon announced an early 2015 launch for its long-anticipated “virtual” MSO that is so virtual, it is wireless -- specifically designed for mobile.  And, critically, core to its new service, Verizon announced a down-sized “bite-sized” cable-lite programming package that features mobile-friendly MCN AwesomenessTV short form video, in addition to big 4 broadcaster content and NFL games (via its existing exclusive smartphone deal).

When announcing its new service, Verizon Chairman and CEO Lowell McAdam proudly exclaimed the almost unthinkable -- that “among cable programmers, there’s been an attitude shift among cable programmers toward accepting a new over-the-top model for delivering pay TV.”  And, Verizon’s McAdam was not alone.  CEO Jeff Bewkes of Time Warner emphasized the company’s growing interest in offering HBO Go as a stand-alone OTT service -- absolute heresy ... until now (as I indicated previously).

2014. Transformative times in the annals of the media business.  A time of massive new opportunities for those brave enough to pursue them (and strong enough to withstand the pain of the current disruption).

Otter Media Buys Fullscreen -- Was #1 On My Prediction List Back in April

BREAKING MCN News -- Otter Media (JV between The Chernin Group and AT&T) buys leading MCN Fullscreen at a deal reported to be valued between $200-$300 million.

Back in April, I predicted this.  In fact, Fullscreen was #1 on my MCN “hit” list in my post titled “MCNs -- And Then There Were None ... My Predictions.”

Who’s next?  MCN activity certainly isn’t stopping any time soon ...

Yahoo! Finally Buys Hulu? What It Should Do with Its $8.3 Billion Alibaba Windfall

Ready, set, GO! It is Alibaba IPO time ... right now. Set to be the biggest IPO in US history (that’s $22 billion). And, prescient Yahoo! is set to get $8.3 billion of it.What should Yahoo! do with that windfall?

VIDEO, that’s what! Video is Yahoo!’s future, plain and simple. With this massive cash infusion, Yahoo! now has the means -- like never before -- to take on YouTube ... and potentially big cable operators themselves. The BIG VISION is the massive 1-2 punch of premium broadcast television on-demand and live linear programming. All wrapped with a nice purple bow.  (I also discussed my thoughts on this subject, together with others, in Todd Spangler’s article in Variety).

Yes, Yahoo! tried to buy its way via massive M&A before -- making bids for Hulu and outright acquiring France’s Dailymotion (in an ultimately failed attempt due to French regulators). But, that was then, and this is now. Yahoo! could go back to Hulu and go for M&A v2.0.

With that single move, and if it negotiates “right” (getting the rights it needs), Yahoo! would be the differentiated home for the deepest catalog of premium television broadcaster content. Content that YouTube does not have. And, Yahoo! could significantly ramp up Hulu’s own original programming efforts to further differentiate itself from YouTube and others a la an HBO-like strategy.

One more critical ingredient -- Yahoo! could use some of that cash hoard to woo key tent-pole YouTube creators over to its platform, perhaps offering better economics among other things. And, why stop there? Why just woo? Go all in! Buy! Multi-channel networks (MCNs) are for sale right now -- and deals are happening fast and furiously (just one being Disney’s recent $500-$950 million acquisition of Maker Studios). That would give Yahoo! immediate scale for the kind of authentic, grass-roots-driven short-form video content that is absolutely critical to millennials. And, marketers need to reach those millennials in an increasingly fragmented world. Yahoo! should offer the full spectrum of content -- from long-form to short-form -- to truly do it right. Different platforms demand different premium content.

But wait, there’s more. Yahoo! could use its significantly expanded war chest to take on cable and satellite bundled services themselves. The studios have accelerated the pace of their “noises” in the past two weeks alone indicating that they may now be ready to license in an unbundled world (take Viacom and Sony for example). And, if Yahoo! succeeds in convincing its Hulu broadcasting partners to play in that world, Yahoo! has the potential to offer live linear television programming as well (i.e., a true virtual/OTT MSO). That would be potent. Yahoo! could be THE place for both premium television on-demand and linear programming. Programming that could also be re-packaged in myriad ways -- including into “bite-sized” smaller packages that are optimized for mobile viewing. That too is a critical ingredient, because mobile is increasingly where the eyeballs are -- especially those coveted millennial eyeballs.

Now, don’t get me wrong, that’s a lot of things that must go “just right” in order to make the big “IT” happen.

But, you gotta dream big, right?

And, NOW is the time for Yahoo! to do that kind of dreaming ....

MCN 101: WEBINAR - Free, Hosted By Me & Eunice Shin -- REGISTER NOW!

Lots of interest in MCNs of course -- and, you already know that my team and I at Manatt Digital Media cover the space (and all leading players across that eco-system) very closely.

So, what better time than now to host a free webinar focused exclusively on MCNs?  Yes, absolutely free.  Join me and Eunice Shin of Manatt Digital Media next Thursday, September 25th at 10:30 am Pacific (1:30 pm Eastern).  Register here by clicking on this link.  We’ll lay lay out the overall MCN landscape (including leading MCNs ... and a few “under the radar” gems) -- give our “two cents” -- and answer any and all questions.  So, now’s your chance.

Here is the formal description:

Multi-Channel Networks – What Are They? Who Are They? And Why Do They Matter?

Multi-Channel Networks (MCNs) are driving a fundamental shift in digital media production, distribution and consumption, engaging Millennials in a way that has garnered significant attention from traditional media companies and brands. With 44% of Internet traffic coming from mobile devices in 2013 and 61% expected in 2018, MCNs, which are made up of YouTube and Vine talent, have developed their expertise around building relationships with the growing mobile audience. In a recent survey among Americans aged 13-18, the top five most liked celebrities were YouTube stars. This further speaks to the influence MCNs have among our future consumers.

In a new, free webinar, Manatt Digital Media provides insider insights into what MCNs are and how they are reshaping the online video industry. Join us for this webinar and learn about the shifting online video landscape and potential business opportunities for your company or clients. During this webinar, you will:

•                  Understand what MCNs are and how they are driving transformation within Hollywood, big brands and the online video space.

•                  Discover how MCNs are leading the way for content creators and brands to more effectively reach our future consumers.

•                  Gain insights into key M&A activities, investments, and partnerships that further the growth of the MCNs’ footprint.

•                  Learn about the leading MCNs in different verticals, including sports, fashion and food.

MCN CEO Profiles -- Your Michelin Guide to Who’s Hot

All in one place -- consolidated for your consumption -- easily digestible.  Here are my recent detailed interviews and individual profiles of leading MCNs and their CEOs (ok, in one case, President & COO).  All of these MCNs (identified in alphabetical order) are important.  And, all of these execs -- each of whom I have come to know -- are passionate about (and authentically into) their individual missions.

I am a believer in each of them ... and you may find their insights to be enlightening ....

DanceOn and CEO Amanda Taylor

StyleHaul and CEO Stephanie Horbaczewski 

Tastemade and CEO Larry Fitzgibbon

Whistle Sports and CEO John West

Here’s my bonus “under the radar” pick -- which is not quite an MCN, but is in the same world --

Jukin’ Media and President Lee Essner

TV v.2014 -- “When The Walls Come Crumblin’ Down ..."

John Mellencamp’s campy song is back with a vengeance in the world of television.

Just in the past two days -- and in rapid succession -- two fairly remarkable announcements that should be rocking the media business even more than they likely are.  Make no mistake -- these are big deals, in every sense of the word.  

First, Viacom licenses 22 of its live and VOD premium network to Sony for its new OTT service for PlayStation, Sony TVs and other Sony connected devices.  And, second, Verizon announces an early 2015 launch for its long-anticipated “virtual” MSO which is so virtual, that it is wireless.  This ain't no FiOS TV -- this is TV re-imagined for your 24/7 companion.  In other words, your small screen ....  

Yes, Verizon announced that its down-sized, “bite-sized” cable-lite programming package will include the big 4 broadcasters and NFL games (via its existing exclusive smartphone deal).  But, even more symbolically and, therefore, significantly, Verizon -- in the same breath as referencing the traditional content of those august institutions -- also announced the featuring (yes, featuring!) -- of new-fangled “bite-sized” AwesomenessTV programming.  And, with that acknowledgement, Verizon elevated (rightfully!) YouTube economy premium short-form content to the ranks of “mattering” to at least some in the most senior ranks of media (a process that started earlier this year with Disney’s landmark $500-$950 million acquisition of Maker Studios -- a deal which, I believe, will be seen as a shrewd move a few years from now ... Google buying YouTube anyone?).

When making his announcement yesterday at Goldman Sachs’ annual mega-media conference (funded, no doubt, by the bank’s own special form of technical prowess during the past decade), Verizon Chairman and CEO Lowell McAdam proudly exclaimed the almost unthinkable -- that (as reported by intrepid reporter Todd Spangler of Variety, one of my favorites) “among cable programmers, there’s been an attitude shift among cable programmers toward accepting a new over-the-top model for delivering pay TV.”  In McAdam’s own words -- perhaps a bit unfortunately chosen in terms of its NFL-like imagery at this particular moment in time -- “It’s moved from almost a stiff-arm to much more of an embrace.”

And, Verizon’s McAdam was not alone.  CEO Jeff Bewkes of Time Warner emphasized the company’s growing interest in offering HBO Go as a stand-alone OTT service -- absolute heresy ... until now.  

In other words, the times, they are a-changin’ ... and consumers soon will be able to choose never-before-available smaller, more affordable premium programming packages.  

Doubt we are seeing much “embracing” about this transformation in the ranks of traditional media.  But, we are seeing acceptance.  And, acceptance is the first step in the road to recovery.  Eyeballs -- especially coveted young eyeballs -- are increasingly off traditional MSO services and on YouTube and leading MCNs (and increasingly viewing that content on mobile).  That means those younger eyeballs are increasingly less likely to pay in a “traditional” way (a reality underscored by a new study concluding that cord cutting will rise in the next 12 months -- also reported by Spangler -- and the words of Disney’s CFO Jay Rasulo).  That disruptive reality calls for non-traditional thinking -- and that is precisely what we are seeing here.

The long anticipated -- and inevitable -- dismantling of the traditional cable “bundle” is happening right before our eyes.  And, once the dam opens, it can never be closed.

2014 will be seen as a pivotal year in the world of media -- and not just because all of us are here at this moment and in this time.

Just look around you.  Watch how others around you are watching.  Especially the kids .... 

5 Questions with StyleHaul’s CEO Stephanie Horbaczewski -- EXCLUSIVE Q&A with THE Leading Fashion-Focused MCN (& Rumored M&A Target)

StyleHaul -- one of the leading and “buzz-worthiest” multi-channel networks (MCNs) around.  Vertically focused on all things fashion & beauty.  Catering almost exclusively to a young female demographic.  On the tongues of many in the media and brand business at the highest levels right now, because rumors abound that the company is in M&A “play” right now (interested potential buyers have been reported to include Hearst, Conde Nast, Amazon, and 21st Century Fox).  And, I absolutely believe this is a proverbial “where there is smoke, there is fire” situation. 

I have tracked StyleHaul for a long time now (just like I track all of the leading MCNs, including Whistle Sports which I just featured this past Thursday).  I make it a point to try to meet the CEOs behind all leading MCNs to truly understand the personalities and motivations upon which those “new media” companies are founded.  And, I have found that literally all share two key attributes -- passion and authenticity.  It is not just about the money.  It is about transforming the media industry within their own particular niche of interest.  

In that context, I have come to know StyleHaul's dynamic founder & CEO Stephanie Horbaczewski, one of the few people I know who has perhaps an even more difficult name to spell and pronounce than mine.  Stephanie is a force -- as is the company, which now counts 15+ billion network video views, 175+ million network subscribers, and 4,500+ network channels.  And, StyleHaul has a compelling multi-pronged business model comprised of, yes, ads and branded content -- but also obvious significant (uniquely powerful?) direct commerce opportunities, as well as the potential for “upsell” content.  For StyleHaul, its network of video creators, and its deeply engaged audience, the fashion itself IS the “thing.”  And fashion sells!  This is not lost on marketers and brands, of course, so the monetization opps all around are intriguing.

I am a believer.  The company will not stay independent for long.  That is virtually certain in my view (and something that I have long predicted -- well before the current rumors).

So, on with my 5 Questions -- and Stephanie’s unedited answers.

(1) What is the reason your company exists (and what problem(s) are you looking to solve)?

Social networks like YouTube and Instagram have created a new way for people, especially millennials, to communicate.  That conversation excluded brands until companies like StyleHaul created new scalable products and content that connected brands with influencers in huge multi-platform marketing campaigns.  StyleHaul is solving for the need to extend your brand message from print, TV and digital advertising opportunities to social conversation at scale.

(2) How are you different from your competitors?

The great thing about this ecosystem is that by having a number of companies with differing perspectives about the opportunities, the contributions have been vast and varied but all provide value.  We are incredibly focused and dominate fashion and beauty to the extent that we really have no direct competitors for the work we are doing.   We are the only global, multi-platform, fashion and beauty network that commands the highest levels of engagement available and can do it at this scale.

(3) Why will you succeed (and what is your single most important ingredient for success)?

StyleHaul has had a deep commitment to the importance of our influencers and our brand from day one.  StyleHaul focuses on keeping the network about quality over quantity to ensure we have the most successful campaigns and the lowest attrition and we also pride ourselves on working very closely with our industry partners like Google, YouTube, Fremantle, Gleam and Addition to deliver the strongest offering available.

(4) What makes you unique (and what do you enjoy most outside of building your business)?

My passion for this space has made me obsessive and as a result I iterate on the opportunity every day, allowing StyleHaul to continue to be a leader in the development of the ecosystem. There don’t seem to be many hours left in the day outside of my work as an entrepreneur, but StyleHaul came from combining my passions and I still love all things fashion, beauty and style.

(5) What digital media trend is most interesting to you (and what is the least)?

Most interesting: engagement. Least interesting: scale without context or appropriate application.

5 Questions with The Whistle Sports Network’s CEO John West -- My Exclusive Q&A with the Leading Sports-Focused MCN

Today’s “5 Questions With ...” (in my continuing series with leading innovators in the digital media space) features John West, founder & CEO of #1 sports-focused multi-channel network (MCN) The Whistle Sports Network, a company about which I have written several times in the past (and, disclosure, is a Manatt Digital Media client).  I believe in The Whistle and in the market opportunity they are attacking.  John and his extremely talented executive team first impressed me -- a deal guy -- by the fact that they had already inked major strategic partnerships with virtually all major sports leagues (a feat unfathomable to many, me included).  Moreover, the wild world of sports, of course, is a unique animal.  Just about nothing else matches the intensity and passion felt by sports fans -- and it is precisely that kind of passion that fuels deep engagement which, in turn, has the potential to fuel deep-pocketed monetization via multiple revenue streams (ads, branded content, sponsorships, premium content, and commerce).  

That already-massive monetization opportunity is also universal and global.  Virtually everyone on this planet likes a sport -- and follows, or is inspired by, at least one athlete or team.  That’s why today’s Q&A is particularly apt.  Today, the company announces the opening of its new London office.  But wait, there’s more.  YouTube’s former Head of Football, Jeff Nathenson, leads the new London office and will join another key former YouTuber, Julie Kikla (a founding member of the YouTube Sports team) to lead The Whistle Sports Network to inevitable new heights.  With that kind of roster of top talent, it’s no wonder that this vertically-focused MCN has already reached 1.1 billion video views and counts 7.25 million subscribers to its 156 channels.

If you are intrigued, read on.  The Q&A begins.  Here are my 5 questions answered in CEO John West’s own words:

(1) What is the reason your company exists (and what problem(s) are you looking to solve)?

Sports fans are more excited, more engaged, and more loyal to their teams and the love of the game than anyone in any field.  It’s a passion that starts young and lasts a lifetime.  That’s why there are over 50 million young fans and athletes in America alone, and hundreds of millions around the world.

But I noticed with my own family that there was no single sports entertainment destination created specifically to speak to and engage the digital generation.  There was no platform that ignored the steroids and scandals that made up most media and gave them, on any screen they wanted to use, content that was engaging, uplifting and gave them the chance to customize, discover and interact with that content on their own terms.  That’s the “underserved audience” perspective. 

From a content creator perspective, we saw the emerging multi-channel network (MCN) market and noticed that while Machinima was concentrating on gamers and StyleHaul was focused on fashion, nobody had stepped forward to own the sports vertical.

We now own that vertical from a YouTube perspective, are creating a community for those creators, and will help them migrate their content to multiple platforms like our new Xbox app.

(2) How are you different from your competitors?

We are the first sports property to combine the content, support and investment of major pro leagues like the NFL, PGA, NASCAR and Major League Baseball with the excitement, talent, fan base and focus of a new generation of digital celebrities like Dude Perfect and Brodie Smith.

Our multi-channel network launched on January 1 and quickly scaled to over 156 channels, 7.25 million subscribers and 1.1 billion views. The launch of our Xbox app last month is another step in our building a Cross Platform Network that connects with engaged sports fans and creators on every device where they spend their time.

(3) Why will you succeed (and what is your single most important ingredient for success)?

We built an incredible team, which includes founding members of the YouTube Sports and YouTube acquisitions teams, my co-founder Jeff Urban who was the SVP and head of sports marketing at Gatorade, and a sales team with experience at Major League Baseball and Yahoo Sports.  We’ve built an incredible community full of exciting content creators that are actively recruiting other top talent to join.

With the help of pro league partners like Major League Baseball Advanced Media, we’re building out multiple platforms where our under served audience can be entertained, engaged and activated.  Our target audience is at the point in their lives where they are creating lifetime commitments and lifelong patterns with brands that have been eager to join us.

(4) What makes you unique (and what do you enjoy most outside of building your business)?

What I enjoy most is the chance with my wonderful wife to be an engaged parent to our sons and daughter. That also feeds my passion for the business – knowing that we are building something they can learn from, enjoy and be educated and inspired by for years.

The mix of support and engagement from over 10 pro leagues, hundreds of content creators, and millions of fans are unique to The Whistle Sports Network.

(5) What digital media trend is most interesting to you (and what is the least)?

Our advisor and best-selling author of "Grown Up Digital” -- Don Tapscott -- splits the world into “digital immigrants” (who adopted technology as it was created) and “digital natives” (who grew up with the web and mobile as part of their lives).  Digital media began as an exercise by digital immigrants to change existing content into a new form for consumption by digital natives. The biggest change is that digital natives have taken control of the content creation and distribution themselves and are driving change from their own phones and screens. I am most interested in how eager they are to become part of a larger community and reach a larger audience.