Content is increasingly "king" in our multi-platform, smartphone-driven, millennial-focused world. That small screen -- and the digital-first eco-system built on top of it -- changes everything (I recently wrote about this for TechCrunch, Variety and VideoInk). That's where consumers (especially the young eyeballs coveted by marketers) engage. And, that small screen and our increasingly digital-first world absolutely are critical to tech giants like Apple, Samsung, Amazon, and Google, each of which has a fundamentally different core business model that ultimately is driven by content. I'll repeat ... that is driven by content!
Let's take a look at those business models.
Apple and Samsung are all about hardware sales (iPads, iPhones, Galaxies). Everything else is a Trojan Horse to drive those sales.
Amazon is all about e-commerce. Everything else is a Trojan Horse to drive more and more consumers into its virtual store to buy goods.
Google is all about advertising. Everything else is a Trojan Horse to maximize eyeballs and ad sales.
CONTENT is that Trojan Horse. Apple iTunes, Samsung Milk Music and Milk Video, Amazon Prime, and YouTube are the names of those individual stables. And, the goal of each service is to have the deepest and best performing stable of horses -- and increasingly unique ones (i.e., exclusive/original programming) -- so that consumers jump on and ride their services instead of the "other guys'."
For these tech behemoths, content (movies, television) essentially functions as pure advertising. Content is the means to an end, and ROI is not measured by the content service itself. That's why stand-alone highly challenging economics that apply to pure-play services like Spotify, Pandora and Netflix don't apply to these tech behemoths. Content is essentially a loss-leader. That content is THE most critical form of advertising to fuel their underlying business model.
But, merely because this is the reality (i.e., that content is viewed as a marketing spend) isn't necessarily a bad thing from a creative (or consumer) standpoint. In fact, the fundamental goal of all story-telling -- including in this "Trojan Horse"/advertising scenario -- is to captivate an audience. The better the story-teller, the more listeners they will attract. How they monetize those listeners IS the question.
Let's take a look at the flip-side of this -- i.e., the studios. The smartphone's small screen is having major impact on the studios. These studios have played effectively for years in the big/bigger screen worlds of theatrical and TV. But, small screen, digital-first, millennial-focused video content is not in their DNA. That's why Disney bought Maker Studios for up to a near-$1 billion. And, this confusing new multi-platform smartphone driven world order makes "traditional" major studios (and the moguls who run them) feel vulnerable. And, that vulnerability makes them more open to possibilities.
And, that leads to the perfect M&A storm. Tech giants who increasingly covet content. And, content-creators who increasingly scratch their heads about their next act (but are experts in story-telling and creating bigger screen premium content).
This is simple math that leads to one logical conclusion -- a tech giant could very well buy one of these major studios this year (this was #5 of my 8 predictions in my TechCrunch guest article).
Which studio? One logical choice could be Warner Bros. Remember, Rupert Murdoch made a big play to swallow Warner Bros. up last year -- an attempt that failed, but perhaps exposing a crack in the veneer of this and other major studios. How about Sony? It certainly has had its well-publicized challenges.
Which of these tech giants is most likely to make that bold move? Apple certainly has signaled its willingness to move in that direction, buying Beats on the music side for $3 billion. How about Samsung? Its newly-launched Milk Video service needs to differentiate -- and studio content could be the ticket. Amazon? Bezos just scored big wins as a premium TV-like content creator at the Golden Globes. It has also quietly created its own YouTube alternative universe. Movies are the natural "next act" (in fact, Amazon just yesterday announced a major theatrical motion picture slate strategy and "traditional" media exec to run it). And then there's Google. Yes, you would think that it needs to be Swiss (neutral) with the "mother of all video distribution platforms" that is YouTube. But, don't forget that Google has wanted to play hard in the premium video content development game for some time -- and is widely reported to be undertaking bold new major content development initiatives.
Think this is a stretch? Not at all. Each of these tech giants certainly has the cash to pull it off. Yes, THAT is likely in 2015. A tech giant may buy its way into the content game this year by acquiring one of the major Hollywood studios.
Content is increasingly "king" in our multi-platform, smartphone-driven, millennial-focused world. That small screen -- and the digital-first eco-system built on top of it -- changes everything (I recently wrote about this for TechCrunch, Variety and VideoInk). That's where consumers (especially the young eyeballs coveted by marketers) engage. And, that small screen and our increasingly digital-first world absolutely are critical to tech giants like Apple, Samsung, Amazon, and Google, each of which has a fundamentally different core business model that ultimately is driven by content. I'll repeat ... that is driven by content!
Let's take a look at those business models.
Apple and Samsung are all about hardware sales (iPads, iPhones, Galaxies). Everything else is a Trojan Horse to drive those sales.
Amazon is all about e-commerce. Everything else is a Trojan Horse to drive more and more consumers into its virtual store to buy goods.
Google is all about advertising. Everything else is a Trojan Horse to maximize eyeballs and ad sales.
CONTENT is that Trojan Horse. Apple iTunes, Samsung Milk Music and Milk Video, Amazon Prime, and YouTube are the names of those individual stables. And, the goal of each service is to have the deepest and best performing stable of horses -- and increasingly unique ones (i.e., exclusive/original programming) -- so that consumers jump on and ride their services instead of the "other guys'."
For these tech behemoths, content (movies, television) essentially functions as pure advertising. Content is the means to an end, and ROI is not measured by the content service itself. That's why stand-alone highly challenging economics that apply to pure-play services like Spotify, Pandora and Netflix don't apply to these tech behemoths. Content is essentially a loss-leader. That content is THE most critical form of advertising to fuel their underlying business model.
But, merely because this is the reality (i.e., that content is viewed as a marketing spend) isn't necessarily a bad thing from a creative (or consumer) standpoint. In fact, the fundamental goal of all story-telling -- including in this "Trojan Horse"/advertising scenario -- is to captivate an audience. The better the story-teller, the more listeners they will attract. How they monetize those listeners IS the question.
Let's take a look at the flip-side of this -- i.e., the studios. The smartphone's small screen is having major impact on the studios. These studios have played effectively for years in the big/bigger screen worlds of theatrical and TV. But, small screen, digital-first, millennial-focused video content is not in their DNA. That's why Disney bought Maker Studios for up to a near-$1 billion. And, this confusing new multi-platform smartphone driven world order makes "traditional" major studios (and the moguls who run them) feel vulnerable. And, that vulnerability makes them more open to possibilities.
And, that leads to the perfect M&A storm. Tech giants who increasingly covet content. And, content-creators who increasingly scratch their heads about their next act (but are experts in story-telling and creating bigger screen premium content).
This is simple math that leads to one logical conclusion -- a tech giant could very well buy one of these major studios this year (this was #5 of my 8 predictions in my TechCrunch guest article).
Which studio? One logical choice could be Warner Bros. Remember, Rupert Murdoch made a big play to swallow Warner Bros. up last year -- an attempt that failed, but perhaps exposing a crack in the veneer of this and other major studios. How about Sony? It certainly has had its well-publicized challenges.
Which of these tech giants is most likely to make that bold move? Apple certainly has signaled its willingness to move in that direction, buying Beats on the music side for $3 billion. How about Samsung? Its newly-launched Milk Video service needs to differentiate -- and studio content could be the ticket. Amazon? Bezos just scored big wins as a premium TV-like content creator at the Golden Globes. It has also quietly created its own YouTube alternative universe). Movies are the natural "next act" (in fact, Amazon just yesterday announced a major theatrical motion picture slate strategy and "traditional" media exec to run it). And then there's Google. Yes, you would think that it needs to be Swiss (neutral) with the "mother of all video distribution platforms" that is YouTube. But, don't forget that Google has wanted to play hard in the premium video content development game for some time -- and is widely reported to be undertaking bold new major content development initiatives.
Think this is a stretch? Not at all. Each of these tech giants certainly has the cash to pull it off. Moreover, such a move certainly is not unprecedented. Let's not forget that consumer electronics giant Sony bought its way into the content business 25 years ago when it acquired Columbia Pictures. And, remember, competing CE company Matsushita, not to be undone and in rapid succession, bought MCA/Universal (which it unloaded soon thereafter to Edgar Bronfman and his alcohol dynasty).
Mixed results, for sure. But, these are very different times indeed for the "media plus tech" equation.
The math is right.
The times are right.
Don't be surprised by it.
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