YouTube V. Facebook, Amazon, Apple - Clash of the Video Titans (& The Role of DNA)

It's a wrap for the Digital Entertainment World (DEW) Expo in LA -- a conference in its second year that celebrates precisely what is happening now in the media & entertainment business -- which is what most call "disruption."  But, I call it "transformation" -- a positive (but authentic, real) "take" on the massive new opportunities to reach, build, and effectively engage with, an audience in our increasingly multi-platform world ... well, at least for those who accept new realities and have the resolve to act.

Yesterday, I moderated an "all about MCNs" panel with nothing but A-list executive talent.  But, MCNs are just one part of the overall digital-first video ecosystem that is at the center of the fundamental media and entertainment transformation in which we find ourselves -- an ecosystem that was birthed by YouTube, which remains the "mother of all video platforms."

Now, for the first time, even mother YouTube faces what seemed to be almost unthinkable just one year ago -- i.e., real formidable challengers.  THESE are the conversations that took place at DEW.  On the stages ... and, even more importantly in the bars of the Hyatt Hotel where liquor flowed and candid discussions followed.

YouTube "challengers" are everywhere.  And many loudly preach (more like screech) their "alternative platform" gospel to every would-be believer.

Who are these contenders?

Well, you have your primarily short-form video-focused MCNs about which I write regularly.  Leaders include broad-based Maker Studios (now owned by Disney), Fullscreen (now owned by Otter Media, the JV of AT&T and The Chernin Group) and Collective Digital Studio; fashion/beauty young female-focused StyleHaul (now essentially owned by Euro-based media company RTL Group); young male gamer-focused Machinima; foodie-focused Tastemade; sports-focused Whistle Sports; Latino-focused Mitu; urban-focused All Def Digital (with the perfect acronym ADD for our short "bite-sized" vid world); and dance-focused DanceOn.  All of these now actively look to find their audiences on as many "off YouTube" platforms as possible.

Next you have young OTT/MCN upstarts like high-profile Vessel which punches above its weight and hopes to open subscription-based distribution exclusivity windows while others (Netflix) try to slam them shut.

You also have social sharing sites like Twitter and increasingly Snapchat.  Snapchat, a media company?  Really?  Just discover "Discover."  And talk to the CEOs from the leading MCNs.  Snapchat matters. A lot.

You now even have your major brands that advertise on all of these platforms.  Lifestyle brands Red Bull and GoPro aim to be your first-choice destination for a certain, specific action/adventure segment of short-form video content that historically has found its home on YouTube.

Then, you have your established major OTTs like Netflix and Hulu who -- at least up to this point -- focus instead almost exclusively on longer-form motion picture and television content.  That will change over time.  It is inevitable.  Each must play more effectively in the mobile space -- and that means short-form video content.  Just trust me on this one.

You also have your major carriers like AT&T (via its Otter Media partnership with The Chernin Group) and Verizon (via the OnCue OTT platform that it acquired from Intel) getting into the OTT game with their own major plays.

And, of course, you have your more "traditional" cable/satellite companies entering the fray (case in point, Dish Networks' surprisingly heavily-discussed new Sling TV service which is getting real "buzz" here at DEW for what it represents).

But, YouTube's biggest challenger right now in the minds of those at DEW clearly is Facebook.  The votes are unanimous there.  Less obvious -- but real, very real -- are the other two 800 pound gorillas known as Amazon and Apple.

When considering the media ambitions of all 4 behemoths -- YouTube, Facebook, Amazon, Apple -- consider this.  While each of their ultimate video ambitions are roughly the same (essentially to "own it all" -- both short form and long form video), their individual core DNA is not.  And, that unique individualized DNA colors each company's particular video offering and opportunity, as well as the video opportunity for both brands and those who buy from them (in other words, us).

To understand what I mean in this DNA discussion of genetics, first, let's recap.

YouTube is a video destination first and foremost.  It was built for our viewing pleasure.  Plain and simple.  Yes, we can (and do) share videos.  But, we primarily come here to find something of interest and watch.  Passively.  And, YouTube makes money from ads served against that watching.

Facebook -- the video challenger on everyone's lips at DEW -- has fundamentally different DNA.  Facebook is all about sharing.  We go to Facebook to share pieces of our lives and pick up the breadcrumbs of others.  Yes, we can (and do) watch videos.  But, we primarily come here (at least up to this point) to share.  Actively.  And, so while Facebook, like YouTube, makes money primarily from serving ads, the path to (and mindset of) engagement with those ads is very different.  And, the numbers related to engagement bear this out.  Check out this excellent analysis from Advertising Age to take a look behind the curtain.

How about Amazon?  NOT a YouTube competitor, you say?  Don't be fooled.  Amazon wants to own it all.  Yes, Amazon Prime is front and center with its premium long-form movies and television.  But, take a closer look.  That's right, there it is -- something called "Amazon Shorts" that looks a lot like YouTube.  So, now we increasingly watch videos on Amazon.  But, let's face it, we still primarily come to shop, because Amazon's core DNA is commerce.  And, Amazon's differentiated genetics put it in a unique position to effectively monetize videos through commerce.  Videos serve as a marketing spend -- digital billboards that drive us into its virtual store.  Intriguing.  Very.

And then there's Apple .... don't forget this $700 billion juggernaut, of course, because although it has laid largely dormant on the video side (causing all of us to occasionally scratch our heads), let's not forget that little thing called iTunes.  And, reports just recently surfaced, once again, that Apple hopes to launch its own OTT streaming service to become our video platform of choice.  Speculation abounds that Apple's OTT play may be akin to DISH's stripped-down programming bundle approach known as Sling TV.

But, here's my guess.  Apple will not launch its OTT service unless and until its OTT package includes ESPN -- THE critical pay TV ingredient.  And, let's not forget that small little detail that Apple has a long and uniquely cozy relationship with ESPN's owner (Disney) (Jobs/Pixar, anyone?).  If Apple were able to score ESPN (just like only iTunes scored The Beatles), that move alone would be a game-changer.

Why would Apple play in the "alternative YouTube" world?  Sure, incremental revenues are nice.  But, that's not it.  Instead, Apple's DNA reflexively drives its actions -- and Apple's core DNA is not like any of the others.  It is hardware pure and simple (Samsung shares that same DNA via Milk Video).  Apple makes its money by selling "cool" metal -- iPhones, iPads, iWatches and the inevitable iTV (and perhaps even ultimately the iTesla?).  We ride the video Trojan Horse into our neighborhood Apple Stores (in the same way Apple bought Beats Music to build it's music streaming Trojan Horse).

So many video players, and oh so little time.

YouTube.  What to do, what to do?  Well, for now, YouTube remains the "must be there" platform for creators.  We also are still very, very early in the overall digital video game.  So, while YouTube's ultimate market share will be chipped away, that reality will be countered by significantly (massively) more volume.  And, just like long-form video platforms like Amazon and Netflix increasingly play on YouTube's short-form turf, YouTube will play on their home courts and seek to steal share from the in the long-form video space.

After all, many of these players' ultimate vision is to own it all -- be your single destination for all your video needs -- short-form, long-form, and everything in between.

Vendedy Wins $75K Digital Media Startup Pitch-Fest at DEW Expo 2015

Today and yesterday, Manatt Digital Media (MDM) sponsored, and participated in, the second Digital Entertainment World (DEW) Expo in LA (I moderated an A-list all-CEO MCN panel).  As part of our sponsorship, MDM contributed $50K of the total $75K prize package in the form of: (1) a $25K investment in the company (in the form of a convertible note); and (2) $25K in business consulting and legal services.

And, tonight, MDM announced the winner of this year's startup Pitch-fest ... "Vendedy" (Founder & CEO Christine Souffrant is pictured here holding the check).  Souffrant describes Vendedy as being "Etsy meets eBay for street vendors" globally -- and Vendedy's A-list partners including IBM and the Clinton Global Initiative (from which it has received funding).  

Vendedy is an incredible story -- and compelling vision.  Just watch this video.

Vendedy was pronounced "winner" by a panel of judges -- and it encapsulates the power of "digital": (1) global/borderless; (2) the impact of compelling visuals/images; (3) the power of micro-transactions in our new digital "share economy" world where even those with little can connect due to deep mobile phone penetration; and (4) the concept of social impact, which is increasingly important to millennials and all of us alike (which the studies show).

5 Questions with Ninja Metrics CEO Dmitri Williams -- My Exclusive Q&A

I met data analytics startup Ninja Metrics in February at the inaugural Digital Entertainment World (DEW) conference in LA -- where I served as a judge for the start-up pitch-fest -- a pitch-fest that Ninja Metrics won.  That alone is impressive.  So is the the team of PhD’s -- assembled and led by fellow PhD CEO Dmitri Williams -- whose mission is to optimize overall marketing dollars in social games and apps by targeting the “influencers” (whom Dmitri calls the “social whales”).   They have spent 10 years developing deep technology to do it -- and take a unique approach.

In a sea of ad-tech data-focused companies, and with its deep proprietary technology platform, Ninja Metrics is worth watching.  That’s why we at Manatt Digital Media recently invested (by the way check out our portfolio of investments).

Here’s more about the company in Dmitri’s own words:

(1)  What is the reason your company exists?

We exist to help businesses with Social Value. That’s the amount that someone is worth not based on their spending, but in the spending they generate among their friends. It’s influence, fully provable.

We spot the whales in any industry, but because we have the ability to follow actions through networks, we can also spot the Social Whales. These are customers who may or may not spend, but are responsible for up to 40% of most companies’ revenues. This is the product of 10 years of scientific research, and we’re in business to get it into everyone’s hands—from the tiny startup to the Fortune 50 company. This tech can help in any sector where people influence each other—gaming, ecommerce, video, music, investment, and on and on.

(2)  How are you different from your competitors? 

One the first things you learn in social science is that talk is not as important as action—and every other approach to finding those mythical influencers has been based on people talking. People who talk a lot, are listened to, and those who talk about certain things—those are all proxies for who’s important, but they are ultimately just guesses. They don’t yield any proof of actual actions like spending. We offer direct, testable, transparent evidence of who is influential. Rather than being in an abstract score, our results are in actions like dollars spent, shows viewed, time spent, etc. Our team, myself included, comes out of academic research. Everything we do is based on scientific methods and proof. As a result, we really don’t care what you say—we care what you do.

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

If I say a customer is worth $24 this year, and another $36 in the Social Value they generate across their network of friends, you don’t have to trust me. Our scores are verifiable because we constantly show what we estimated vs. what then actually happened. We get it right 80-90% of the time, and we always show that % as a confidence number. That builds trust, so companies can rely on the scores, budget based on them, and get constant affirmation.

Another way of answering this is the old joke “50% of advertising works, but no one knows which 50%.” We do. Our science will tell you it was that 50%, on those 6 people, which generated $54, and then another $78 across their friends. And by the way, here’s your actual ROI.

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

We’re a flat-out weird group. First, we come out of university labs and we’re not 22 years old. We’re a bunch of PhDs and engineers, but what makes us really unique is that we understand the value of both social and computer science. Social scientists are excellent at asking the right questions, but aren’t aces with Big Data. Computer scientists are those aces, but don’t have a clue why their results matter, or what to build. That kind of left-brain/right-brain division is the reason why most companies don’t create tech that both works well and addresses a real business problem. Bringing those two halves together is really hard, too. We decided a decade ago to force our teams to have each component. The result is a tough process, but one that yields superior IP that’s not just stable, but also truly useful.

But hey, if you meant me, the answer is that I happen to love understanding people, and the most entertaining place to do that is within groups and competitions. So, it’s no surprise that I’m a die-hard video game player, as well as a true degenerate poker player. So when I come to work and am tackling big data applications around people and groups, I’m a kid in a candy store. Also, I like pina coladas and getting caught in the rain.

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

The most interesting is the boom in DIY tools like 3D printing. Unleashing the creativity that’s out there outside of labs and big businesses is really exciting. Harnessing that while lowering costs is a clear recipe for innovation.

Possibly the least interesting is the hype around wearable tech and VR. Nothing is more important to people than other people. In the end, we’re social monkeys. So when I see VR headsets or cool watches, all I really care about is whether that tech is going to make people better able to communicate, share, interact and grow. Tech for tech’s sake never lasts, never diffuses. Take something as cool as Oculus. Whether that’s an awesome product will come down to whether people use it to have better experiences with other people. I’m keen to see whether developers grok that part of the human condition, or just think that better graphics and immersion are good enough. Let’s see if Facebook can leverage the overlap between the tech and the human element.

5 Questions with Dealflicks CEO Sean Wycliffe -- My Exclusive Q&A

Here is the perfect exclusive CEO Q&A for SXSW -- with Sean Wycliffe of digital media/tech company Dealflicks based in the heart of Silicon Beach.  I met Sean at the recent DEW Conference in LA after hearing significant buzz about what he/they are doing.  And, I believe deeply in the market opportunity here -- filling empty seats at movie theaters (i.e., addressing excess capacity) via strategic discounting in which everyone wins -- the movie studio, the theater owners, and the consumers.  Apparently I am not alone -- the company has had no problem finding sources of capital.

On with the questions ...

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

Dealflicks exists to get butts in movie theater seats. 88% of movie theater seats are empty, in fact, 95% of seats are empty after opening weekend. This is a major problem for theaters in the US and abroad. Since theaters generally rely on the marketing conducted by studios to promote their own films, there haven’t been many (if any) cost-efficient, effective solutions for theaters to target empty seats. Dealflicks solves this problem by only selling inventory that our theater partners designate as ‘hard-to-fill’, the 88% empty seats.

(2) How are you different from your competitors?

There aren’t any direct competitors, but we do have many companies that are close to us. Traditional online movie ticket providers (Fandango/Movietickets.com) have been very successful over the years, but they only sell full-priced tickets and charge convenience fees. As a result, they mainly focus on show times that are in high demand, so Dealflicks is complementary to their service. Daily deal sites do offer deals for movie theaters here and there, but it’s difficult to make sure that theater-goers use these vouchers for empty-seat show times vs. popular show times. Also, some retailers such as Costco sell discount tickets for certain large theater chains, but these offerings are intermittent and require advanced purchasing. Also, from the theater’s perspective, this method doesn’t allow the targeting of empty seats.

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

We’ve been able to have success over the past 1.5 years since our launch because of our relationships with exhibitors. Unlike many others, we really focus on this aspect and build long-term, personal relationships. Our business development team travels the country (see http://pando.com/2013/05/13/startup-hustle-why-two-men-decided-to-sleep-together-in-a-van-for-months-on-end/) and understands the needs and issues of each individual theater. Also, we have some great technology. There are many complex back-end solutions that we’ve implemented, and we recently launched our API (see http://developers.dealflicks.com) which allows other apps/websites to white label and sell Dealflicks’ inventory directly within their app. In fact, this is the first open movie ticketing API in the history of the US :)

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

Lol, a few things :) I’ve had a weird last 12 years: As a freshman at UCB in 2001, I experienced 9/11 just a month after school started. I somehow ended up getting involved in the pro-America movement (see http://content.time.com/time/magazine/article/0,9171,181582,00.html). Shortly after, my brother and I started a long-distance door-to-door sales, then I bought a Porsche, dropped out of school, and moved to LA when I was 19. By age 21, my brother and I grew the business to over $1M in revenue, and we bought a $1.2M home in San Juan Capistrano (I also bought a Ferrari 360). I thought I was going to be a billionaire, until the long-distance company we contracted went bankrupt in November 2004. We lost everything (well, I did keep the Porsche), and we started over selling refurbished cell phones. I struggled quite a bit in 2005, and I believe God used that experience to reach me. I joined a two-year, full-time ministry program with my church, grew in character, and then went back to UCB in summer 2008. I ended up doing well this time around, graduating summa cum laude, Phi Beta Kappa in Economics. I then had the idea for Dealficks after I graduated in early 2011.

The short story: I love skiing, basketball, watching movies, and eating great food. I haven’t drank alcohol since 2004, I’m a Seventh-day Adventist Christian, I’m now engaged to my beautiful fiancé Channchi, I’m almost vegan again (I was vegan for 1.5 years in 2006/2007), my brother and I founded/run a non-profit now called Project Pueblo, and I spend a lot of time hanging out with my family. I’m also Bangladeshi (not too many of us in the states :)

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

I’ve always been interested in the trend of alternative content in movie theaters. While it’s just starting, made possible by movie theaters’ recent conversions to digital projectors, I can’t wait for the day when major sporting events like March Madness, the Superbowl, etc. are ‘playing in theaters near you’.

In terms of the least interesting media trend to me, hmm, maybe any trends involving second screen stuff (I don’t really personally use second screens because I don’t have a TV in my apartment :)

5 Questions with Krush’s CEO Phil Shalala -- My Exclusive Q&A

My latest exclusive “5 Questions” CEO Q&A is with Phil Shalala of Krush - a SoCal-based digital media company whom I met at the recent DEW Conference.  I judged Phil’s pitch at DEW’s Startup Competition and was impressed.  No wonder -- he has deep marketing and venture capital expertise -- a seasoned entrepreneur -- who, among other things, served as CMO of Hard Rock Hotel and Casino for years in Las Vegas.

Krush is a social media marketplace focused on the lifestyle of action sports and the street-wear culture. The company’s platform enables emerging artists and brands to market their passion projects, utilize e-commerce, data and social media resources while binding the gap between personal identity and commerce.


Here we go ...

(1)  What is the reason your company exists?

Action sports and street-wear are multi-billion dollar industries with nascent tech. Krush exists to provide a platform to discover and purchase the brands and products in the space within a community of like-minded mobile users. This very defined and influential user does not currently have a platform that speaks their language. They are highly mobile and their mobile purchasing is growing rapidly. Additionally, the brands in this space have not adapted operationally to account for true monetization of data and social media. Krush exists to provide smarter tools during the brands creative cycle. For our user, Krush is a social commerce platform vertically focused around the products that influence their life. We are addressing a problem for a very influential user and the brands looking to innovate their process. (and what problem(s) are you looking to solve)?

(2)  How are you different from your competitors? 

We are vertically focused in Action sports, street-wear and the outdoor culture. We are not trying to be everything to everybody.  


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

We have multiple advantages in the space that gives us credibility. We know our customer and live the space with them. We have partnerships that will scale our user base and provide unique content. We are tapped in from the roots of a culture that allows us to adapt and create quickly. Because of this we have an ability to be first to the mobile market across multiple categories of content.  Success relies on a passionate and focused team.  Everyone needs to contribute to the vision and believe in our ability to disrupt. 

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

I’ve built many brands that represent the lifestyle of a user segment. I’ve had the privilege to work within very diverse teams inside fortune 500 brands as well as emerging brands that need to develop a market edge. I built retail, influenced marketing positioning in the beverage space, represented athletes, scaled a hospitality company, worked in casino gaming, created Day life, designed restaurants, music venues and hotels. I’m the customer first in everything I do. My vast experience creating, building and developing product that touches all aspects of a consumer’s mindset provides a different approach to building tech.  I don’t code, yet I have been tasked with solving daily challenges of building a multi billion-dollar enterprise. I get excited to use this experience inside a start up and believe we can move the needle faster. 

Outside of Krush, I try to live the message I deploy in business. Understand it- Live it- Enjoy it- if they don’t connect, time to find something else. I’m a Dad 1^st and I believe in active health, I enjoy the water and the mountains. Without our mental and physical health we have nothing. 

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

I’ve been watching the wearable tech trend closely. It is interesting to see the user adoption across all the platforms and use cases. I think it’s here to stay and the data and metrics derived from the devices have multiple industry applications. I think wearable tech has only scratched the surface of commercial health care and education.  

The “like” to me is least impressive. It’s like paper money, it looks good, feels good but it doesn’t convert.