VidCon Grows Up -- Too Fast? The Authenticity Dilemma (My Review)

The new video world -- it's all about authenticity -- about approachability -- about connection.  That's why 8 of the 10 "stars" that matter most to teens are grass-roots, home-grown YouTube/digital video personalities (and not manufactured traditional Hollywood celebs) (note: I use "YouTube" in this post as a short-hand for all digital-first platforms, including Vine, Facebook, Snapchat, Vessel, etc.).

But what happens when those YouTube stars grow up, make money, and become the more "traditional" celebrities that represent the precise antithesis of how it all was supposed to be in the first place?

THAT's what this past week's VidCon 2015 represented -- and embodied itself -- because the YouTube "celebrity's" struggle is VidCon's own struggle.

Last year, VidCon -- a previously important, yet still quaint, gathering of YouTube stars, Viners and the fans who adore them -- broke through into the more mainstream business world at meaningful scale.  I attended it.  Was blown away by it.  And especially enjoyed the purity and energy of it, as thousands of fans (mostly teen girls) screamed and mobbed their favorite digital celebs (mostly teen boys) in a form of never-ending Beatle-mania.  At the time, one year ago in a widely-read post, I remarked that as much as I felt I knew the new digital world order prior to attending VidCon 2014, I didn't really understand it until I was truly immersed in it -- immersed in what drove the whole YouTube economy in the first place.  The creators.  The fans.  And, the authenticity, approachability and connection between them.  No YouTuber was off limits to their fans at last year's VidCon -- the connection was made (frequently physically).  You needed to be there -- to experience it -- to truly "get" it (I labeled it a "must attend" event at the time).

This year was different.  You could feel it.  I did.  I remarked at it.  Was disappointed by it.  Even a bit nostalgic about it.

To a certain extent, VidCon 2015 represented innocence lost.  The fans' screams were fewer.  Quieter.  Muted.  The frenetic running to see their favorite creator was reigned in.  Slowed.  Controlled.  And those previously eager, open and hyper-connecting YouTube personalities were visibly less accessible -- and many seemingly wanted it to be that way.  As I drove away one night, I noticed black Escalade after Escalade hidden in the back alleys of the Anaheim Convention Center, whisking many of those fast-becoming more "traditional" YouTube celebrities away from their fans.  Distancing them.  Separating them.  Breaking (with accelerating speed) the fundamental tenet of YouTube authenticity -- i.e., accessibility and connection.

By all conventional measures (i.e., pure numbers, overall organization), VidCon 2015 was a smashing success.  VidCon organizers have built a world-class, "must attend" event.  And, the media, brand and tech worlds of business finally took notice en masse and attended in droves as I urged them to.

But, that very business success -- just like the increasing business and financial success of YouTube celebrities -- is a double-edged sword.  The young, innocent, no-holds-barred and still-upstart YouTube world of last year has grown up fast this past year into a more mature, more cautious world that is beginning to feel more "traditional" ... and, somehow, a bit less "authentic" as a result.  

I understand this of course.  It's inevitable.  The natural order of things.  Digital-first is now simply first -- i.e., "traditional" -- for millennials.  That's why it's increasingly (and properly) first for the media world that wants to reach them.  It's increasingly (and properly) first for business, period ("billions of dollars" of business).  And, it's now increasingly (and understandably) the first business -- vocation -- for myriad new home-grown, bottoms up creators (YouTube trumpeted the fact that 50% more of them made 6 figures this year than last).  VidCon -- as I also learned -- had no choice but to install new security procedures and fan controls as a result of all of these forces.  To protect those YouTube celebrities (and the fans themselves) from last year's frequently unbridled hyper-enthusiastic-driven forces (including near-stampedes) -- all motivated by the purest and most innocent of intentions -- that apparently (and understandably) frightened many (and potentially endangered some).

But VidCon -- here's my challenge to you.  Let's not control too much next year.  Let's open up more tickets for fans.  Let's allow (encourage?) more screaming.  Let's bring back more access.  Fewer limousines (more "regular," non-traditional new world electric cars perhaps that represent a new ethos for millennials?).  Fewer velvet ropes (I admit, I was guilty of sponsoring one such event myself).  And, YouTube stars -- let's not control too much of that original spontaneous and pure motivation and passion that fueled your creativity (and your fans' love for it) in the first place.  Let's not buy into the same trappings that disconnected traditional Hollywood celebs from your fans and made you "stars" in the first place (I mean, do you really need limousines?).  Remember, YOU are defining the new rules of celebrity and artist/fan engagement.  You have a chance to break the mold.

To be clear, money and business that flow from creativity and passion are not the enemy here.  Money enables the artist to devote himself or herself to the very act of creation -- and business provides the means and screens to create and be seen.  I'm in that business.  Believe in it absolutely.

But, let's not let the pendulum swing too far.  Let's, together, not lose sight of what moved us and the overall YouTube movement (and what it represents) in the first place ... authenticity, approachability, and connection.  

I certainly don't have the answers.  Maybe there are none.  But, let's, together, at least reflect upon this while we are still relatively early on in this digital transformation and before the forces behind it themselves become, well, simply conventional ....

Facebook v. YouTube - My VidCon Interview

VideoInk's Todd Longwell interviews me at VidCon -- discussing Facebook versus YouTube (is it really a zero-sum game?) and all things video.  The meat of the interview starts at the 90 second point.

YouTube's VidCon Keynote - The 4 Big Stories

YouTube CEO Susan Wojcicki took center stage at VidCon day 1, giving a 20 minute keynote and then answering some astute, challenging questions from BroadbandTV CEO Shahrzad Rafati for 20 minutes more.  These were no softballs -- question is whether Wojcicki saw these questions in advance.  Didn't really seem like it, because several of the most challenging questions (see below) were somewhat awkwardly deflected (guess which ones? Yes, those questioning YouTube's economics).



Here are my HEADLINES/KEY STORIES from the YouTube Keynote and Q&A:

(1) THE ECONOMICS STORY -- We all know many in the industry (certainly YouTube's increasing number of competitors) slam YouTube for its 55/45 economics they say are unworkable for creators (Jason Calacanis anyone?) -- and work for YouTube only.  Raft directly asked Wojcicki about YouTube's own direct revenues and creator monetization.  This was Wojcicki's most unsatisfying answer, as she rather obviously (and not the most artfully) deflected it.  She didn't respond to the "YouTube revenue" question at all, instead pointing out that creators soon will have more opportunities to monetize via subscriptions and YouTube-funded originals.  "Some can even write books."  And, in her presentation, she also emphasized that 50% more creators made "six figures" this year than last on YouTube.  Yes, that's true of course.  YouTube can be (and has been) a great launching pad (case in point -- YouTube now counts nearly 25 creators with over 10 million subscribers, each of whom will now have a diamond "button").  The question is, however, (i) how many creators and what percentage of overall creators earn six figures (unanswered) and (ii) how many (and what percentage of) creators can really monetize beyond their 55/45 split.

(2) THE FACEBOOK STORY -- One year ago, YouTube was essentially the only game in town for creators.  Not anymore.  Facebook, Snapchat, Vessel ....  Raft asked Wojcicki about Facebook (and cited its increasingly impressive number of views metric) -- and how she felt about seeing YouTube creators now "off" YouTube and on other platforms.  Wojcicki didn't directly mention Facebook, but she implicitly did -- stating that YouTube believes that viewer engagement (as measured via actual "watch time") is more important than the number of views (meaning that YouTube believes Facebook's reported metrics are less meaningful -- which may be true, by the way).  She also highlighted the fact that YouTubers spent 60% more time watching videos this year than last (which is a truly impressive number).

(3) THE VR/IMMERSIVE STORY -- This may be THE product story for YouTube at VidCon this year.  Watch out all you VR startups out there who want to be "the YouTube for VR content."  YouTube wants to be the YouTube for VR -- and is moving fast.  A key initiative is to showcase more and more 360 video, including "immersive" 3D 360 video.  To underscore this point, YouTube gave away free Google Cardboard to all keynote attendees.

(4) THE STEALTH VERTICAL FOCUS (& MCN THREAT) STORY -- While Wojcicki emphasized YouTube's top 3 product priorities as being "mobile, mobile, mobile," the real story here is YouTube's direct attack on vertical-focused video digital-first companies on and off YouTube (i.e., MCNs).  One key selling point to creators and MCN viewers has been focus -- "if you are a gamer, come to Machinima, we are the home to content that matters to you and you only" (you don't need to sift it out from all the noise).  YouTube's new answer to this critique (and the growing success of vertically-focused, yet significantly smaller, competitors) is to create and launch separate vertically-focused channels, each with their own separate mobile apps.  First, YouTube Kids.  Next, YouTube Gaming.  And, third, YouTube Music Key (which may be launched under a new name).  And, you can bet this is just the beginning.  So, watch out MCNs, the hand that feeds may be biting back.  Your MPN strategy is right on.

VidCon This Week - "Must Attend" - Here's Why

[VidCon -- the premier "gathering place" for the new digital economy and ecosystem -- starts later this week in Anaheim, California.  I'll be there Thursday and Friday -- including co-hosting an exclusive event with YouTube.  

If you don’t know VidCon, you should.  In fact, you must.  It's all about everything that IS digital video -- YouTube, YouTube “celebrities,” all new "off YouTube" video platforms (like Facebook, Snapchat, Vessel), Viners, MCNs, OTTs, and all of the brands, ad-tech companies, data analytics companies, VCs, and others that support them.  This one is NOT to be missed.  

Here’s why.  Here’s my in-depth article after experiencing my first VidCon last year.  This should give you an idea of why VidCon matters.]

VidCon 2014 --  like the 1892 Chicago World’s Fair that heralded a new era of disruptive technology (how do you like that reference?) -- this may be the event upon which we look back and say, for media companies, brands, and marketers, “this was the moment that defined the mainstreaming of premium short form video content and consumer engagement via technology and the fundamental overall transformation of the media and marketing business in general.”

That is no hyperbole -- that analogy is apt, and this sea change is real, very real.  And to “get” -- really “get” -- that fundamental point (from which fundamental strategic shifts inevitably must follow -- or not, at your peril), you just gotta be there.  On the ground.  At VidCon.  You just gotta see and “feel” the energy of the throngs of 10-20 year old kids who scream and swarm -- a la “back in the day” with The Beatles (another bell-weather of things to come at that time) -- every time they saw a YouTube “star”.  Those shrieks -- that frenzy -- happened every 10-15 minutes (or more) throughout the 7 hours I attended my first VidCon yesterday.

And those 7 hours cemented -- even more deeply -- what I had already concluded (but hadn’t really “felt” on a mass scale with the new generation of consumers -- i.e., the kids that media and brands want and need to reach right now).  That you better get on the bus in this transformed YouTube economy or forever be left behind (this picture of the kids with the signs says it all).  I was not alone with the deep internalization of this point.  Long-time digital media exec David Hyman -- who founded MOG music (acquired by Beats Music) and with whom I interacted “back in the day” at Musicmatch when he was with Gracenote (acquired by Sony) -- summarized it perfectly.  In his words, “This Blows My Mind!”  I violently agreed.

But it is not just about the fans.  VidCon brings together industry execs and the creative community together with the fans -- something that is rarely done at industry conferences (Comic-Con is another rare example).  And here’s the point -- all media companies and brands need to have their minds blown.  We are in the midst of a sea-change people.  Fundamental sea-change.  The media business -- and the way that marketers/brands engage with consumers -- will never be the same.

But, the vast majority of media and marketing execs still just don’t “get” it (or don’t want to “get” it and hope to wish these transformative/disruptive changes away).

One glaring example.  YouTube apparently invited the top 100 brands to attend VidCon -- to experience it -- on their dime.  Yes, YouTube offered to pay for all of their expenses.  But you know what?  Only 30 of those 100 brands took them up on that offer!  That is insane!  Those other 70 marketing execs should be, um, demoted!  They will be if they don’t change their mindsets fast, because their worlds are being rocked right now.  And, the pace of this transformation (disruption, or whatever you want to call it) is accelerating.

 Here is another example.  These 10-20 somethings “think different” -- they just do.  The world of YouTube has wired their brains differently -- and their sensibilities are just different (and in many ways, refreshing).  Gone are the days -- at least for them -- of the traditional definition of “Celebrity.”  Yes, they still may like the boys of One Direction, but “celebrities” of this new media age are fundamentally different from the celebrities of yore.  They are relatable.  They are approachable.  They are authentic.  They are just simply “regular” kids who somehow amassed a frenzied following using the YouTube platform.  That’s why, no matter how many times they were accosted at VidCon yesterday, they stopped, talked and took pictures with the kids who adore them.  Again, the only way to really “get” this is to attend VidCon -- to swim in that sea of kids -- to watch how they react.  To watch how they cry after meeting their favorite YouTube “star” (yes, I saw several girls crying because that experience was simply overwhelming).  If you have any doubts, just watch these two videos (the first shows screaming girls flock to YouTube “star” Ricky Dillon -- and the second shows fellow stars Kingsley and Lilly Singh take the stage for a Q&A).  VidCon 2014, among other things, was Coachella for Kids! (I coined that, so don’t use unless you give me royalties ...).

 One more glaring example underscoring how the media world has changed for Gen Z took place when legendary media mogul Jeffrey Katzenberg took the stage for a fireside chat following a panel of digital media/YouTube economy execs.  In the words of a colleague who attended that event, “the room was packed, but half the people left when Katzenberg took the stage.”  To be clear, this is no slam on Katzenberg.  He absolutely fills (and overflows) a room in the “traditional” media world.  But, that’s the point.  That world is gone.  Nothing is “traditional” anymore.  For media execs.  For marketing execs.  (Fortunately for DreamWorks, Katzenberg “gets” it -- that’s why DreamWorks is ahead of the curve with its acquisitions of MCNs AwesomenessTV and Big Frame, as well as its recent launch of YouTube network Dreamworks TV (about which I recently wrote)).  Doesn’t mean that “traditional” media has no role in this brave new world -- it just means that so-called traditional media platforms (TV, motion pictures, etc.) are now just part of the overall multi-platform spectrum and world in which we live.

VidCon 2014.  For me, the single most important and “must attend” industry event of the year.  I would argue that it should be the same for media, marketing and brand execs.

Digital Media's Top Deals, Developments - Q1/Q2 2015 - Your "Cheat Sheet" (& My Predictions)

[REVISED -- to discuss the significance of yesterday's breaking news about German media giant taking a controlling position in leading "under the radar" MCN Collective Digital Studio and to include today's reports that Facebook is developing its own streaming music service a la Spotify and Apple Music]

Six months ago, in an article titled The Future of Digital Media in 2015, TechCrunch posted several of my predictions for the digital media world in 2015.  I later expanded that article for this blog to discuss my Top 10 Digital Media Predictions for 2015.  It's now time to look back at the first 6 months of the year in digital media -- look at the top deals, developments and trends (top 2 trends so far are (1) the accelerating "off YouTube" video movement, and (2) the industry's justified virtual reality (VR) obsession -- more on both below) -- and see how my earlier predictions stand up.  Consider this your "cheat sheet" of important activity in the digital media eco-system.    

Here are my original Top 10 Predictions below -- juxtaposed against where we stand now.


I.  PREDICTION (1)  --  this one was really a two-parter:

PREDICTION (1) Part 1 -- The mobile-driven premium short-form video YouTube economy “grows up,” and traditional media companies finally take notice on a mass scale.  Shell-shocked studio executives internalize that digital-first platforms are where they must be to reach smartphone-obsessed millennials.  MCN acquisitions will quicken as more studios jump into the M&A game rather than try to figure out this new content platform themselves.  Some leading MCNs ripe for acquisition include ... sports-focused Whistle Sports (in which Manatt Venture Fund is invested). 

THE REALITY FOR PART 1, 6 MONTHS LATER 

Interestingly, for the first 6 months of 2015, the pace of MCN-related M&A had slowed -- and had been replaced by an accelerated pace of more cautious strategic investment as media companies struggle to develop their digital-first video strategies and are too afraid to go "all in."  That "lull" proved to be temporary, punctuated by today's breaking news of German media giant ProSieben acquiring a majority stake in leading MCN Collective Digital Studio (CDS) (an MCN that had been flying somewhat "under the radar").  ProSieben had already owned 20% of CDS, so the deal (which values CDS together with its other MCN Studio71 plus significant new cash at $240 million) is logical.  Strategic investors frequently "try" and then later "buy" if they like what they see. 

I have always been bullish on those still-independent MCNs that had become market leaders and achieved significant scale.  These include (i) Whistle Sports (the leading sports-focused MCN and is also a client), (ii) Tastemade (the leading food and travel MCN), (iii) Mitu (the leading Latino-focused MCN), (iv) Machinima (the leading young male/gamer-focused MCN), (v) DanceOn (the leading dance-focused MCN, also a client), (vi) Frederator (another "under the radar" MCN with an animation focus and strong leadership pedigree), and (vii) Zoomin.tv (a Euro-based "under the radar" MCN that has deep video production roots).  All of these are "ripe" for M&A down the road -- a road that likely just got shorter today because one of their independent brethren (CDS) has just been taken off the table as of today.   

So, given all this activity, I think it's safe to conclude that the YouTube economy has "grown up" significantly in the past 6 months -- so much so that it has outgrown YouTube.  Now, for the first time, multiple powerful "off-YouTube" platforms exist, most notably Facebook (about which I just blogged in a detailed analysis) and Snapchat (which launched its highly strategic Discover video feature in January and later coyly announced its plans for global advertising domination).  That's why most MCNs have shed that moniker (which most never really liked anyway) in favor of MPN -- as in, "multi-platform network,"  And, in another trend worth watching, major media companies began to incubate their own MCN-like sites (e.g., Discovery Communications' women-focused TLCme).  

Here's a list of some of the most interesting related developments:

• Sports-focused Whistle Sports raised $28 million from strategics that included Euro-based media giants BSKYB and Liberty Global (Jan | Venturebeat)
• FremantleMedia increased its stake to become the majority owner of leading European MCN Divimove (Jan | Variety)
• Gamer-focused Machinima closed another $24 million financing led by Warner Bros. (Feb | The Wrap)
• Latino-focused MiTú Raised another $15 million from AMC Networks, among others (Feb | Recode)
• StarMaker Raised $6.5 million to grow its music/video app and talent network from Qualcomm Ventures and others (Mar | VideoInk)
• Otter Media's Fullscreen acquired social media studio McBeard (May | THR)
• Euro-based media giant RTL Group -- a true innovator amongst media companies in the digital-first new world order -- organized its overall MCN/MPN-related holdings (StyleHaul, BroadbandTV, SpotXchange and Clypd) into one central entity RTL Digital Hub (Jun | Broadband TV News)

And, certainly more general digital video-centric mega-M&A and mega-strategic investments multiplied, with some notable examples including:

• Live social streaming innovator Meerkat raised $12 million and Twitter launched competing Periscope to steal some (much?) of its thunder (Mar | TechCrunch)
• Verizon acquired once-giant digital media company AOL for $4.4 billion (May | Variety)
• Layer3 TV, the self-described “next-gen cable company,” raised $51 million from Participant Media and CAA among others (Jun | Multichannel)
• Video ad tech company TubeMogul raised $82.9 million in a secondary market offering (Jun | BI)

PREDICTION (1) Part 2 -- International also becomes a major new battleground for these borderless video opportunities.

THE REALITY FOR PART 2, 6 MONTHS LATER 

Not surprisingly, international has become a major battleground -- and even more intensely perhaps than anticipated only 6 months ago.  Here are some key data points (in addition to today's announced ProSieben/CDS deal -- which underscores this borderless global theme):

• Euro-based media powerhouses BSKYB and Liberty Global, as noted above, significantly invested in Whistle Sports' $28 million round
• Warner Bros., Sony Pictures Television and Asian telco giant SingTel created a new joint venture to launch their own "Netflix-Killer" for Asia (Jan | TechCrunch)
• MTV launched new international over-the-top apps, MTV Play (VOD) and MTV Trax (Music Streaming) in Germany, Switzerland and Romania (Feb | DigitalTVEurope)
• Culture Machine -- a new MCN/MPN focused on international content -- raised $18 million (Feb | VideoInk)
• 20th Century Fox partnered with leading Euro-based MCN Rightster to bolster its YouTube presence abroad -- with MCN Rightster's team managing Fox's YouTube marketing strategy for 35 channels across 17 international markets, including the U.K., Germany and France (Apr | THR)
• Canadian cable giants Rogers Communications and Shaw Communications entered into a joint venture to launch a new Canadian "Netflix Killer" called Shomi (May | THR)
• Chinese juggernaut Alibaba announced it too will soon launch its own "Netflix Killer" called TBO -- for China (Jun | Reuters)
• Netflix is now in 50 countries as of June 2015 (with close to 20 million international subs), with a major strategic push to China and plans to launch next in Italy and Portugal (Jun | THR)
• France media powerhouse Vivendi acquired DailyMotion, the YouTube of Europe, for approximately $240 million -- expect continued significant bold moves by this once-sleeping giant in the latter half of this year (Jun | Variety)

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.  Major investments are placed on ad-tech companies to maximize and measure those spends.  We see a number of significant ad-tech exits like Yahoo!’s recent acquisition of BrightRoll for $640 million.  Several brands go further and invest big to become digital-first lifestyle media companies themselves a la Red Bull, developing and aggregating content.  GoPro, Pepsi and Marriott have proudly announced such ambitions.

THE REALITY, 6 MONTHS LATER

Certainly, brand activity has likewise accelerated, as brands begin to fully internalize the digital-focused transformation -- and opportunities -- of the media and entertainment business.  Fewer examples of new Red Bull "wannabes" in the first half of this year, but certainly a proliferation of "branded content studios."  And MCNs/MPNs are increasingly cutting out the middleman and playing the role of ad/creative agencies in the digital video eco-system.  Here are some representative examples:

• Conde Nast unveiled its branded content shop powered by editors (Jan | WSJ)
• Relativity agreed to program and develop digital content for Lexus' L/Studio (Feb | THR)
•  iHeartMedia Launched its own branded content studio (Feb | WSJ)
• Fullscreen launched a new strategic content group with former Chernin Group and Hulu execs  (Feb | Variety)
• Kia partnered with Yahoo! to create new branded series (Apr | Digiday)
• CNN unveiled its new studio to produce content for advertisers (Jun | WSJ)

III.  PREDICTION (3)  -- Seeing all this activity, Silicon Valley investors increasingly make pilgrimages down South to the epicenter of media content – LA.  

THE REALITY, 6 MONTHS LATER -- Few doubt this one.  LA is a serious new VC battleground.  Hale Boggs, Chairman of law and consulting firm Manatt Digital Media and the Manatt Venture Fund (which actively invests in digital media companies), confirmed this trend.  "Many principals from major NoCal VCs are spending more time visiting with companies here, and a lot of the larger funding rounds for LA companies are now being led by those VCs," Boggs said.  Some, like Rothenberg Ventures (a highly connected NoCal-based VC which also opened the first virtual reality accelerator, River), have opened new offices in LA.



IV.  PREDICTION (4) -- YouTube is increasingly under siege by new competing video platforms like Facebook and former Hulu chief Jason Kilar’s Vessel.  These “off YouTube” platforms lure content creators away with promises of more compelling care, feeding and economics (including the tantalizing prospect of real subscription revenues).

THE REALITY, 6 MONTHS LATER -- Vessel started the year off with a bang.  But, that bang now feels more like a whimper when compared with Facebook's massive growth (and strategic prioritization) of video -- and Snapchat's own accelerating video focus (including its strategically significant Discover feature).  "Off-YouTube" is a mantra chanted increasingly -- and with increasing volume -- across the globe right now.  The threat is real.  I addressed these developments in detail in two separate blog posts: (1) Facebook v. YouTube - Who Wins? 5 Part Test; and (2) YouTube v. Facebook, Amazon & Apple - Clash of the Video Titans (& the Role of DNA).  But, let's also keep in mind that this is not a zero-sum game.  All of this accelerating activity expands the overall video eco-system pie.  So, yes, YouTube ultimately may hold less overall market share.  But, there also will be much more to share.



V.  PREDICTION (5) -- Traditional pay TV packages likewise increasingly are under fire in the “Great Unbundling” that began in 2014.  What was unthinkable just one year ago (even 6 months ago!) became reality as HBO, CBS, Starz and others announced stand-alone over-the-top (OTT) services.  A parade of others follow suit in 2015.

THE REALITY, 6 MONTHS LATER -- No traditional PayTV bundle is safe anymore.  The "Great Unbundling" is real and comes in two flavors: (1) so-called "Skinny Bundles" --including DISH's Sling TV (which revolutionized the OTT space by giving "must have" ESPN as an add-on option); and Verizon's Custom TV); and (2) stand-alone OTT services (too numerous now to mention, but some of which are identified below).  And, even the kids aren't safe!  Nickelodeon anyone?  Oh yeah, it too launched its own stand-alone OTT subscription service.  In a truly remarkable sign of the times, Cablevision's CEO Kristin Dolan went so far as to speak the previously unspeakable amongst big traditional Pay TV providers -- announcing new "cord cutter" and "cord never" OTT packages.  Well, if you can't beat 'em, join 'em.  That's why Pay TV operators are increasingly willing to partner with SVODs (e.g., Cablevision offering Hulu and HBO Now).  Here are some more important developments and deals:

• MTV launched its new international over-the-top apps, MTV Play and MTV Trax (Feb | DigitalTVEurope)
• Sony launched its $50/month Vue OTT service (Mar | CNN)
• In Canada, government regulators mandated sweeping changes to Pay TV packages, requiring providers to allow customers to "pick and pay" individual TV channels (Mar | Reuters)
• Discovery Digital launched new adventure-focused vertical OTT service, Seeker (Mar | Tubefilter)
• Traditional media grand-daddy NBC jumps on the Netflix-ian "binge viewing" band-wagon for its new show Aquarius (Apr | Variety)
• Levity Entertainment Group, backed by Irving Azoff and Madison Square Garden Entertainment, launched new comedy-focused YouTube channel Wait For It (May | Variety)
• Verizon announced its initial content partners for its upcoming mobile-first OTT service, including media giant Scripps (home to Food Network, Travel Channel, HGTV and more) (Jun | Variety)
• AMC Networks began its invite-only beta test of its new horror-focused OTT video service, Shudder (Jun | Variety)
• Discovery Communications announced it plans to launch its all-access OTT service, Dplay (which includes live sports content) later this year first in Denmark, Sweden and Italy (Jun | Variety)
• Showtime just launched its $10.99/month stand-alone OTT video service with initial distribution partners including Apple TV and Roku (July | TechCrunch)

 
VI.  PREDICTION (6) -- Traditional media companies facing these tectonic shift in long-established business models – and major tech companies (Apple, Google, Amazon, Samsung) for which content is increasingly critical to fuel their own – take M&A seriously and one pulls the trigger as media and tech converges … literally. 

THE REALITY, 6 MONTHS LATER -- No mega-M&A deal has materialized quite yet, but major media moves by the major "tech" players continue unabated.  Some examples include (i) Amazon's ever-increasing investment in original programming (it just recently announced that it is "doubling down" on 2014's $1.3 billion original programming budget), and (ii) Apple's inevitable "coming soon" OTT video service (on top of its recently launched Apple Music).  It may be only a matter of time before one of these tech behemoths -- each of which already cloaks itself with media trappings -- tries to make that full transformation real.  At a minimum, Netflix -- the poster child for new, non-traditional media companies -- is directly in the line of sight.  

And, in a significant related trend, telcos have placed themselves directly into the center of this video vortex.  Cases in point: (i) AT&T and The Chernin Group's $500-$600 million Otter Media joint venture; (ii) Verizon's acquisition $4.4 billion acquisition of AOL; (iii) Dish Network's rumored merger talks with T-Mobile; and (iv) whispers to me from an industry insider that Vodafone may be eyeing Liberty Global. 



VII.  PREDICTION (7) -- On the music side, massive moves are made away from business model-challenged stand-alone services (Spotify and Pandora both still operate at a loss).  Like Apple buying Beats (which was never about the economics of Beats Music), numerous potential behemoth buyers exist.

THE REALITY, 6 MONTHS LATER --  No M&A yet.  And, while the M&A market waits, Spotify keeps raising boatloads of money -- the latest being a massive $526 million round announced in June at an $8.53 billion valuation.  For its part, Pandora is also continuing its stand alone ways and has been rumored to be looking to acquire a true on-demand streaming service to weather the increasingly turbulent digital music storm.  And while both Spotify and Pandora still operate at a significant loss, Apple finally launched its long-awaited Apple Music Spotify "Killer."  This puts even greater pressure on those two services.  As I recently wrote in a separate detailed analysis ("Spotify's Hangover From Apple's Hard Cider - 5 Daunting Dilemmas"), Apple can do what the stand-alone behemoths can't -- i.e., lose money in order to drive its over-arching multi-faceted business model.  Putting a further exclamation on this point, just today, reports surfaced that Facebook is developing its own streaming music service to rival both Apple Music and Spotify.  Hell, even Microsoft just joined the party more loudly by re-branding Xbox Music, Groove.  

With all this action (particularly Apple Music), other behemoths (like Amazon, Google, Samsung ... perhaps even Facebook before it launches its own) continue to eye Spotify and Pandora ... from the side-lines ... for now.



VIII.  PREDICTION (8) -- Gamers see real action too, as app developers increasingly focus on story-telling and compelling characters to build multi-platform media companies a la Rovio with Angry Birds.  Rather than take traditional media properties and “gamify” them, these companies flip the model with an Apps-first approach.  Finnish-based Silvermile and Seriously are two companies with Rovio roots to take … well … seriously.  VR also enters the ring with gamers at mass in 2015.

THE REALITY, 6 MONTHS LATER -- Virtual Reality (VR) is the big story of the first 6 months in the digital media world.  VR is absolutely top of mind of virtually everyone in the "industry" now on all sides of the house -- yes, games -- but also movies, education, travel, impact.  On the games front, story-telling in a more strategic, holistic sense, is increasingly the norm with large-scale game developers.  As a result of this frenetic activity, which includes continued massive VR-related investment (that noted futurist and VR thought leader Peter Diamandis already pegs at $5 billion of total invested capital), I have increased my VR-focused writing.  Here are some recent blog posts about the media world's well-placed VR obsession : (i) Virtual Reality Update - Latest Developments; (ii) VR - Power, Potential, Risks ... Thoughts of Leading Innovators In This Immersive Space; (iii) VR - The Engine of Empathy ... And Real Social Change; and (iv) Jaunt, VR & The Future of Media & Entertainment.



IX.  PREDICTION (9)  -- Which leads to wearables, where we see an Oculus under every hard core gamer’s tree next year, alongside their parents’ new digital health/fitness watch.

THE REALITY, 6 MONTHS LATER -- Okay, we now won't see an Oculus under every gamer's tree this XMAS season.  But, I didn't miss it by much.  Oculus just recently announced that it will start selling its first mass consumer headset in early 2016.  That's when things should really take off -- and early stage market leaders like Jaunt and Vantage.TV (a Rothenberg Ventures/River portfolio company) are accelerating content initiatives to meet that capacity -- as are juggernauts like GoPro (which is also harnessing the power of drones -- another major trend to watch -- literally) and Discovery Communications (which recently unveiled Discovery Virtual).  After all, technology isn't holding up mass adoption of VR right now.  Content is.  And, that's changing fast.



X.  PREDICTION (10)  -- All of this leads to the big one – a concept I floated 2 years ago.  Apple buys Tesla and installs Elon Musk as CEO.  Now THAT would be a headline for 2015 … and for the ages!

THE REALITY, 6 MONTHS LATER -- "Hey Elon, it's Tim Cook calling.  Wanna talk?"    



[Special thanks to Manatt Digital Media's Mary Ermitanio for her help assembling much of the data in this article.]

Facebook v. YouTube - Who Wins? 5 Part Test

At long last, just last week in time for the 4th of July holiday -- and in YouTube's own backyard -- Facebook shot off its video monetization fireworks, revealing for the first time how it planned to monetize its massively growing video business (and how video creators would share in it).  We already knew that Facebook video had become the first real threat to YouTube's dominance (a topic that I have previously explored) -- already crossing the "4 billion video views per day" threshold.  But, the rest was a mystery.

Well, mystery no longer (at least for the initial incarnation of Facebook video monetization efforts).  For a certain sub-set of its base (since these initial efforts are smartly an "experiment" in these early days), Facebook will now run auto-play ad interstitials in "suggested videos."  And, in what I find to be a bit of a surprise, it will split ad revenues 55/45 with creators a la YouTube (rather than give creators a higher split for, if nothing else, goodwill and PR -- remember, YouTube has been pilloried in the press about its 55/45 split).

So, what do I think about Facebook v. YouTube in this epic battle between the new mega-Challenger and the long-time Champ?  Which company has what advantage (and disadvantage) in the quest to be the most compelling home for video?  And, is it a "zero sum game" with one winner and one loser -- or does the entire industry "win"?

5 Part Test -- Advantage Who?:

(1) YouTube video is still the #1 "must publish" video platform and destination.

YouTube remains dominant, having crossed Facebook's "4 billion videos per day" threshold back in 2012.  Most creators still think, "you just gotta be there."  But, Facebook video is young (very young) and its growth has been explosive -- as has been overall creator and marketer excitement about the Challenger.  As one example, TV networks like HBO have now begun to sample their shows on Facebook "to leverage the massive reach of of their platform" (in the words of Jim Marsh, vice president of digital and social media) -- something that previously was virtually unthinkable in the YouTube-dominated world of not so long ago.  Cameron Saless, chief growth officer for "must know" digital-first video company Jukin' Media (a company I previously profiled), was just recently quoted saying "we're doing almost double the views on Facebook that we're doing on YouTube today, which a lot of people don't know."  When publishers start talking openly about those kinds of metrics (as is Jukin') and publicly pitting one behemoth against another, you know there is something really going on here.

So, Sheer Scale -- Advantage YouTube.

Growth and Overall Momentum -- Advantage Facebook.

(2) Facebook's video engagement rates surpass YouTube's.

That is the chatter everywhere (note Jukin' again) -- and that's massively important to both creators and marketers of course.  As I recently pointed out in VideoInk (welcome reporter Todd Longwell to VideoInk, by the way), Facebook has two seeming inherent strategic advantages over YouTube in this regard.  First, Facebook as much deeper and more precise information about its base than YouTube which, in turn, has the potential to lead to better targeting and higher CPMs.  And second, Facebook's DNA is also fundamentally different than YouTube's.  Yes, YouTube videos are share-able (and shared) of course.  But, YouTube is still primarily about personal and passive entertainment and engagement.  Facebook, on the other hand, is (and always has been) active -- it is all about sharing.  That is its raison d'être.  That's why Facebookers seek out their feeds multiple times throughout the day.  And, that bodes extremely well for Facebook's potential to build massive scale.

But note of caution -- as Todd Longwell pointed out to me in a direct exchange, is it really fair to equate Facebook video "engagement" with that of YouTube?  After all, Facebook counts auto-inserted, "auto-play" videos equally.  And, as Longwell also pointed out, video sound is likely frequently turned off in auto-play mode.  Further, paradoxically, YouTube's more passive "personal entertainment" DNA leads to more active user searching for precise videos that appeal to them (i.e., high relevance), whereas Facebook's more "active sharing" DNA and service-generated video auto-insertion likely lead to more video "noise" (i.e., low relevance), at least initially.

Viewer Engagement -- Advantage Facebook.

Relevance & Impact -- Advantage YouTube.

(3) YouTube still has the younger millennial audience that marketers most want to reach.

YouTube is still a (if not, "the") "must use" entertainment and communication platform for millennials.  It is part of who they are and what they do.  And, those millennials are whom marketers most want to reach.  Facebook reaches an older demographic (anecdotally, neither my 15 year old daughter or 13 year old son use Facebook -- nor do any of their friends; in fact, Facebook never enters into their Instagram, Snapchat, YouTube-dominating conversations).  To a certain extent, this is a double-edged sword, however, because it is the older Facebook demographic that has more immediate buying power.

Demographics of Base -- Advantage YouTube.

Buying Power -- Facebook.

(4) Both YouTube and Facebook give creators 55% of ad revenues.

Strange.  Facebook had the chance to score a big PR win by upping that percentage even just to 60%.  But, it didn't.  Opportunity lost ... at least for now.  (And note, Facebook's 55% creator revenue share will be apportioned by time amongst all creators in a particular stream, meaning that each individual creator's share apparently will be less than 55%).

Creator Economics -- Advantage Neither.

(5) Facebook is treading carefully with its new video monetization efforts -- while YouTube carries the baggage of a certain industry narrative.

Facebook, the Challenger and newcomer, is smartly treading lightly in its initial monetization efforts -- experimenting only with a subset of its overall base.  Facebook can, accordingly, gather data (including creator and customer sentiment) and adjust from there.  It can bob and weave, fine-tuning and dialing in the "right" compromise between monetization and customer experience.  It has no baggage in that regard.  YouTube, on the other hand, carries a full load of baggage (rightly or wrongly) in the form of negative creator sentiment.  Let's face it, the Champ (in any industry) always faces the heat -- and YouTube is no exception.  Creators -- and virtually all competing services -- have gone out of their way to deride YouTube's 55/45 revenue split.  This theme of "fundamental unfairness" (some have called it greed) has become a widely-held industry narrative.  And, once that kind of narrative is developed, it is difficult to shake.

Industry Sentiment & The "Baggage" Factor -- Advantage Facebook.

BOTTOM LINE

Each mega-platform has its own inherent advantages.  And, gloves are off ... as are more and more creator videos from YouTube.  It's no longer a YouTube only multi-channel network (MCN) world (which it essentially was less than one year ago).  It is now absolutely a multi-platform network (MPN) world.

But, this is NOT a zero-sum game between the giants.  The pie expands -- and the winner here is the overall video industry and eco-system -- including content creators and consumers.  Never before have there been so many opportunities to create content -- to find distribution for content -- to find an audience for that content -- and for us, the consumers, to find content that specifically speaks to us ... as individuals.  THAT is power my friends.

And this brave new digital-first video world is still very much in its infancy ....

Spotify, YouTube Killer? Why? And Does It Have a Chance?

Rumors in the digital media world are almost always true.  And, this one is no exception -- Spotify has officially announced that it too is joining the OTT video game -- focusing on short form videos with partners who include ESPN, Vice, NBC and Comedy Central.

Why is Spotify doing this?  And, does it have a chance?

Here are my "quick takes" on those questions:

(1) THE WHY?

Spotify needs to diversify its one-dimensional and thus far unprofitable business model -- pure and simple.  Yes, everyone uses Spotify around the world -- but that doesn't mean that a stand-alone music streaming business is long-term sustainable (at a minimum, the jury is still out -- with Pandora being another prime data point) (I recently wrote about this "Achilles Heel" in my separate post about Apple v. Netflix).  So, the "great hope" is that Spotify can take a significant portion of its reported 15 million paying subs (at $10/month) into the wonderful world of video and monetize that subset effectively and incrementally -- which is the "great hope" for an increasing array of behemoths who look to unseat the reigning champ, YouTube.  These include Netflix and Facebook (most significantly), Snapchat (increasingly interesting), Twitter/Vine, Amazon, Hulu, and Vessel (all of whom ultimately seek to get to the same place -- offering the widest breadth of compelling video content -- both short and long form).

(2) DOES SPOTIFY HAVE A CHANCE?

Interesting question.  Spotify's DNA is music (although it claims to be a tech company first and foremost).  And, Spotify's identity in our minds is music.  It is somewhat unnatural for us to shift that perception into Spotify becoming a broader full-fledged media company.  But, that certainly is not impossible -- and I personally applaud the effort -- because, as discussed above, Spotify must expand its business model to be long-term stand-alone viable.

So far, it isn't exactly clear how Spotify intends to monetize its move into video.  Odds are that it will ultimately offer a "freemium" model akin to its current music service -- with ad-supported video upselling to a paid subscription model for ad-free (and potentially more extensive video offerings only available to paid subs).  And, you can also bet that Spotify will offer both a la carte and bundled subscription packages -- i.e., one higher monthly price for both Spotify music and video, and separate lower-priced monthly fees for music or video only.

Then there is the issue of video monetization that all OTT services struggle with.  Thus far, stand-alone video services (both on the OTT and MCN side of the house) -- with the exception of YouTube and Netflix perhaps -- have been profit-challenged (just like their stand-alone music brethren).  BUT, we are still in the early innings of this overall fundamental media/video transformation fueled by millennial-driven mobile consumption, so we are in business model experimentation mode.  And, you gotta try.  Otherwise, you may be just plain "out" of the game in the long-run.

That's what Spotify is doing.  And, it certainly has a massive global audience that has demonstrated that it is willing to pay.  So, I applaud the effort.

(NOTE -- video creators, rejoice! -- more significant competition for your compelling work in this New Golden Age of Content).

Yahoo! Kills Its YouTube "Killer" - So, What's Still Alive?

Last week VideoInk broke a story that floored me -- "Yahoo Shutters Video Platform for Creators One Year After Anticipated Launch."  Yet, seems like I was the only one who was floored.  I searched all over for others reporting the news, but couldn't find it anywhere.  I reached out to two key reporters at top media/digital media publications and, shockingly, one hadn't even heard the news (nor seemed to think it was a big deal) while the other had heard, but was still sniffing around.  Out of an abundance of caution, I asked VideoInk to verify the story again -- which they did -- pointing to the leaked Yahoo! email that started the whole thing in the first place and verifying its authenticity.

So, people -- hear me out here -- and make no mistake.  This IS big news in the OTT video world.  Very big news.  If true -- if, in fact, Yahoo! is closing its self-publishing platform for video creators -- this development deeply demonstrates 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).

Here's the relevant timeline leading to this apparent "leak."

Almost exactly one year ago, reports everywhere indicated that Yahoo! was only months away from launching its own video creator platform -- its own YouTube "Killer."  This was very big news at the time -- everyone covered it.  So, we all waited in anticipation.  After all, Yahoo! managed unique and 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.  But months ticked on and, alas, it never came.  Instead, silence.

That report, of course, followed Yahoo!'s attempt -- almost exactly 2 years ago -- to buy a 75% controlling interest in Dailymotion, the European YouTube (certainly not of the scale of YouTube, but still a force in its own right).  Alas, that never came either -- but this time, not for lack of trying.  Rather, French regulators killed it.  Movie over.  Fin.

Meanwhile, throughout this entire time-line -- these past two years covered by these major non-developments at Yahoo! -- the OTT video world changed radically.  What once was, in essence, a YouTube-only video world for creators ... is now a world of multiple competing video platforms.  And a rapidly growing "multiple" it is -- in which YouTube is no longer the only game in town for creators (case in point, Facebook once again).

And, what was happening at Yahoo!?  Senior video executives came and went and apparently took their individual video strategies with them out that revolving door.  Those that remained found themselves in an environment apparently emitting, shall we say, not the highest level of morale.  I have spoken with several of these video execs who have come and gone (I will keep their names confidential) and have heard one theme that is focused -- i.e., Yahoo!'s video "strategy" has been overtaken by confusing multiple layers of decision-making, internal conflict, and what some even called "chaos."  Not trying to be a muckraker here -- it gives me no joy reporting this (because I believe Yahoo! could succeed in some very meaningful) -- but am just reporting the current state of affairs as I have come to understand them from multiple sources.  And, Yahoo! is running out of time amidst the current great OTT video land grab of 2015.

So, what do we have now at Yahoo!?  We have a media regime headed by Kathy Savitt, an accomplished marketing executive, but whose official title itself is split -- "CMO and Head of Media" -- which alone connotes a certain lack of corporate focus and commitment.  We have had some major exclusive and very expensive video content announcements -- including Yahoo!'s exclusive rights to cult television favorite Community -- but Yahoo! does not actively promote that programming (it is mentioned nowhere on Yahoo!'s home page).  We have "Yahoo TV" and "Yahoo Screen" -- Yahoo!'s two primary video initiatives.  But have you even heard of them?  I hadn't ... at least not really.  Those two also are essentially invisible on Yahoo!'s home page, which is a major head-scratcher (to say the least) in this "new golden age of video" (and, again, with all the reach and resources Yahoo! continues to have).  Once I did find them, I can't really tell how "Yahoo TV" and "Yahoo Screen" are the same ... different ... complementary?

One thing we apparently do know now, however, is this.  Yahoo! is giving up on the mega YouTube-esque "killer" opportunity.  Throwing up the white flag ...

... at least, and unless, Yahoo! has a major Dailymotion-like acquisition trick up its sleep 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).

But, sadly, I don't see that coming.

Hope I'm wrong -- and will be the first to fall on my sword if Yahoo! works some mystical sleight of hand.

MCNs No More, "MPN" Please"! (or, What's In A "P"?)

As you readers know, I write continuously about MCNs (multi-channel networks).  And, recently, I have been writing about escalating challenges to YouTube.  So, where do the "'twain" meet?  At the nexus of the overall OTT video lexicon, that's where.

You see, several of the leading digital-first video networks formerly known as "MCNs" no longer answer to that name/acronym.  They prefer (justifiably) the new significantly expanded label "MPN" -- as in, multi-platform network.

What's in a name?

In this case, a lot!  "MPN" connotes mass distribution of videos across multiple distribution platforms -- not just YouTube.  While these mobile/millennial-focused new media companies initially birthed and aggregated their videos as channels on YouTube only (hence, the moniker "multi-channel" networks), now YouTube is only one of many (to be sure, still the most critical "one").  The new MPN game for most is to now initially build mass audiences on YouTube, but then take those audiences -- and monetize them -- off YouTube.  That's why these MPNs seek the widest spray of their video programming across the widest array of distribution platforms (including the likes of Facebook, Snapchat, Twitter, Vessel, Xbox -- just to name a few) to create a non-55/45 revenue story.  They just can't drive 55! (a musical reference that is likely lost on several of you ...).

Call it simple evolution in the OTT video world.  Just like Webster's continuously expands to meet the changing language of the times, the OTT video and digital media/tech dictionary expands to more accurately reflect movement in the overall space.

And, significant meaning in that movement there is ....