Is Platform/Format Fit the Path to Creating Billion Dollar Video Content Businesses in Media?

Over the years, venture capitalists and entrepreneurs have adopted certain terms to convey a playbook for startups to identity opportunities, pursue them and build viable businesses around problems large and small. The Lean Startup. Minimum Viable Product (MVP), and  Product/Market (PMF) fit are just a few to name.

According to Wikipedia, the product/market fit concept was developed and named by Andy Rachleff, which was rooted in legendary venture capitalist and Sequoia founder Don Valentine’s approach to investing. The creator of the popular browser Mosaic (commercialized by Netscape under the Navigator brand) and current investor Marc Andreessen defined it as “being in a good market with a product that can satisfy that market.” Many people interpret product/market fit as creating a so called minimum viable product that addresses and solves a problem or need that exists. Sean Ellis “scaled” the term by arguing it was a precondition for growing a startup while Steve Blank referred to it as the stage between the second and third steps in The Four Steps to the Epiphany, nestled in between customer validation and customer creation.

What is Platform/Format Fit?

Judging by the lack of search results for the term at this moment, platform/format fit may seem like a novel term, but the concept is nothing new. While we’d all like to think of content as an unbridled, untethered, raw form of creative expression, the reality is that in fact, content in any form - be it music, a book, movie or indeed, a “web video” - is really one of two things (usually both):

1) Influenced/Inspired: a remix/new take on an existing thing,

2) Molecular: a combination of things that make up a formula.

When people try to compliment WatchMojo by saying we “invented” video top 10 lists, I point out that we did no such thing, rather we simply popularized a format in the new medium of web video by mastering a staple of pop culture dating back to Wayne’s World, Dave Letterman, and yes, Moses with his Ten Commandments (if you like that, you’ll love my “The Bible was the original native ad” spiel).

Indeed, we founded WatchMojo in 2006 with a vision to become the most admired media company in the world, and a mission to inform and entertain with a video on every topic.

We were part of the third wave of video producers - chronicled in depth in my third book: The 10-year Overnight Success - an Entrepreneur’s Manifesto: How WatchMojo Built the Most Successful Media Brand on YouTube. We didn't really take off like a rocket ship until 2012, once we focused on curating infotainment top 10 countdown lists with voice-over commentary of mashed-up video clips from the world of entertainment and pop culture. Oh, we also bet the farm on YouTube, not because the platform's underlying economics were amazing, but because (to paraphrase Warren Buffett), if the audience is authentic, the economics will eventually catch up.

When the Right Format Hits The Right Platform

In essence, we nailed “platform/format” fit on the only platform that would matter in web video for the ensuing decade. At a time when people chased near-term ad dollars by bundling video ads in a player and auto-running it alongside articles, YouTube was driving real engagement, at scale.

Today, despite a wave of carnage in new media (partly because many bet on the wrong platform, and partly because of the misconception that writers can produce videos and vice-versa), we have managed to boast our best year, remaining profitable since 2012 (coincidence?). Now granted this isn’t a boast, since we remain fundamentally exposed to one platform. Au contraire, this explains why we have yet to truly break through elsewhere.

It’s YouTube’s World; We Just Stream It

Last year, people compared Facebook with YouTube which never really made sense, since the former is essentially a communications platform while the latter is a native video platform. YouTube is arguably more powerful in video than its parent Google is in search. As Facebook takes time to figure out what video means to it and how it plays in its broader strategy, it has fallen further behind. What I’ve learned from Facebook is the need to differentiate between Facebook the company and Facebook the communications utility. For the former to grow, it recognized the need to acquire Instagram and Whatsapp.

We have ultimately punted on raising financing, partially to retain optionality to do as we choose. But where financing is alluring is to be able to rapidly invest or acquire producers who have captured platform/format fit on other platforms, especially those that trail YouTube in terms of monetization, which essentially includes every platform other than Netflix.

Incidentally, this year people are more focused on Netflix versus YouTube, which makes a bit more sense but remains a myopic comparison. In the context of Platform/Format fit, YouTube has emerged as a revolutionary platform while Netflix is, at present time, an evolutionary one. For all intents and purposes, Netflix remains elusive to most new media producers. That should not come as any surprise, as the content that fits best on Netflix is essentially the same content that fit well on television or theaters. But YouTube’s best performing content doesn’t really look at all like traditional media. Of course, as traditional media companies like Disney and AT&T’s Warner Media launch their own OTT competitors to Netflix and consider pulling their catalogs from Reed Hastings’ brainchild, then it’s not implausible for Netflix to court the new media producers in the years to come, which makes sense since younger generations’ definition of quality programming differs from older audiences who grew up on Friends and Terminator.

Why YouTube is Revolutionary and Proven Impossible for Media Companies to Conquer

Today, the only platform that matters in video is YouTube, yet most media companies have failed to catch up through inertia, mismanagement, wishful thinking and incompetence. Combined with the nature of channels that are dominant, there isn’t really a quick overnight fix (they can’t buy a Vevo channel or acquire a YouTuber/influencer).

YouTube is, to me, without a doubt the most revolutionary web platform ever. We already know the impact it’s had on print. We also all know the sheer size of the television and advertising market on a global basis. YouTube has through a series of bounces, luck, timing, cunning planning, cutthroat execution and serendipity altered the entire landscape and value-chain of both and will not stop until it rewrites the playbook altogether.

YouTube has changed everything when it comes to content development to production. Yes, today TV remains strong from an economic perspective, but between cord-cutting and shifting audiences, it’s the canary in the coal mine. And while today Netflix et al. are underwriting a boom in series, the reality is nothing debt-fueled has ended with a safe landing (this isn’t to say Netflix is in any way doomed, but the party train will stop and some will be hurled off of it).

YouTube has - partly due to traditional media sitting on the sidelines and fighting it - redefined the definition and context of programming quality and what/who is a celebrity. Inasmuch as cable pioneers ESPN and MTV changed everything from a cultural perspective, so has YouTube.

More fundamentally, YouTube’s skippable ad format - aka Truview - is in essence the biggest disruption of all. A scorched earth tactic in a strategic assault that drained resources from then-competitors when they needed cash most, over time it has conditioned audiences to expect to control marketing messages in a way unheard of. Today, skippable ads fuel the changes in consumer expectations around control, user experience, monetization and much more. YouTube ushered a revolution and viewers are leading the parade with more power than they know how to wield.

Traditional Media’s Self-Inflicted Wound

But, despite big media being the bell of the ball on YouTube, for a myriad of reasons  - mainly economic and legal - they sat out, leaving a gaping hole in which many filled with glee. With YouTube overtaking television as the leading consumption platform, it has done to cable what cable did to network television in the 1990s: fragmenting the market and siphoning audiences and ad dollars.

Platform/Format Fit Requires Time, Costs Money

Not too long ago, I punted on an exit to continue to build WatchMojo, thinking that if YouTube was replacing TV and we owned and operated one of the leading brands on the platform, then we were in MTV or ESPN’s perch circa 1985 and the world was our oyster. Over the ensuing two years, we invested vast fortunes diversifying and expanding in about ten areas, including building a “smart-scale” direct sales force, launching international editions, foraying into new genres and formats. Candidly, half of those ten bets paid off, a couple remain TBD, while the last few have more or less hit a wall. While we had our best year in 2019 - direct sales led revenue growth, trickling largely to the bottom line; international led to audience growth, we now reach 150 million unique viewers per month - it was also clear that nailing new genres and formats wasn’t going to be a slam dunk. But more on that below.

Course To Success

Our success on YouTube was certainly a function of luck and timing, which isn’t surprising since success for startups boils down to Ambition, Vision, Execution, Persistence, Luck, Timing, and Focus once you know what to focus on.

We missed out of the first wave of YouTube’s explosive growth. When it eventually doled out $100 million to content creators, we were left out. A good entrepreneur eventually looks in the mirror and accepts reality. I sent one of my many emails to the senior brass expressing disappointment, but also understanding their decision.

The Three Constituents

That night, I conceded that if YouTube was indeed the new TV, then WatchMojo couldn’t simply be a producer of content that licensing executives turned to to feed 1) marketer demand for video ads on 2) distribution platforms like MySpace, Hulu, and the Yahoo/AOL/MSN portals. Indeed, we needed to stand for something to 3) audiences.

In 2012, two things were clear: YouTube didn’t need another vlogger, and it didn’t need another MCN. What it did need, was more cowbell. Combined with the countless rejections from venture capitalists who liked content startups as much as you like root canals, we essentially pivoted from producing “a video on every topic,” to serving fans who were nostalgic for entertainment classics and passionate about current releases in the TV, movie, gaming and music industries. It worked.

At the time, few channels produced lists, practically no one did lists featuring the specific scene or musical clip. Parlaying our relationships with rights holders, my knowledge of copyright laws and common sense, we set precedent after precedent, pushing back copyright trolls and winning over rights holders, claim-by-claim.

The Evolution of YouTube: Many Examples of Platform/Format Fits

YouTube is by no means a monolith, nor are its most popular channels homogeneous. It actually consists of a series of sub-communities and fandoms at any given time. Over the course of its illustrious history, it has seen a series of genres and formats come, grow and go. Vlogs, DYI, let’s play gamers, unboxing, lists - which WatchMojo fell under. Even on YouTube we weren’t the first to count things down, but indeed, our “content formula” helped capture lightning in a bottle and our subsequent success brought out many competitors.

I like competition, as it forces us to constantly improve. After a recent panel at NATPE, a Boston-based professor of media studies shared a very nice compliment and amazing insight with me. She complimented us by saying that in her class, they compare our videos with our competitors to rank/judge/compare and find that WatchMojo is more polished, more refined, just better. I reminded her that I tell people I never shot or edited a frame, and we have a wonderful team back home. She also added something really insightful, in how a lot of her students say that if/when a show is really popular, many don't want to commit the time and energy to watch the actual shows, so they watch out lists to get a sense of the show. That was really insightful, and another reminder of how YouTube has changed all of the rules of engagement as it destroys and eats up everything in sight.

Competition also forces entrepreneurs to try to stay one step ahead. In publishing and production, one way is more content, another is other forms of content. When I had breakfast last summer with Jeffrey Katzenberg (#humblebrag), he took me through his rationale and vision for NewTV (as it was named then, since christened Quibi). When television emerged, the first shows were essentially plays captured on film. Over time, it spawned a whole new industry. That’s ultimately Quibi’s bet with mobile video. Indeed, with mobile devices taking off and adding hours of content consumption to our days, it’s tempting to want to simply publish more of the same. The winning formula requires vision and a new playbook.

Success is relative, fluid and subjective

Over the past two years, we have expanded in new formats and genres. Sometimes, we’ve tweaked the formula. Other times we’ve wiped the slate clean. Sometimes we misinterpreted the origins of our success: to go deeper and super serve our audience (who devour our gaming lists), we launched MojoPlays to venture deeper in gaming and go beyond gaming lists. Early on when it didn’t take off as we anticipated, we wondered: did we mistake our expertise in the list format by thinking we had domain expertise in gaming and “permission” to expand in other formats? Or, was this simply a case of new YouTube channels taking six months before they find their groove and take off. Today, a year later, the channel has found its voice and starting to take off. It was a matter of timing and tuning.

We’ve also gone wide, by diversifying into verticals like MojoTravels by leveraging our style and format, filling a void. If you think about the outlets that travel creates for us, even the biggest critics and doubters of the strategy - some on my own team! - start to connect the dots.

That said, to argue that we’ve had the success I envisioned would be disingenuous. We’ve held back in areas that were further away from our core, such as scripted (with reason).

When it comes to other platforms, it’s also been a learning curve.

Because Facebook is fickle and lacks Google/YouTube’s pedigree to share revenues with partners (think AdSense), we held back on unleashing our army of producers on Facebook, instead dipping our toes gently. While many have found platform/format fit on Facebook (Buzzfeed’s Tasty being one of many), few did so organically, so the jury’s out on which producers and formats will emerge winners over time.

We experimented on many platforms and have found success tweaking our recipe, namely Snap. Twitter remains attractive, and indeed the right Format for the Platform may be live. But live could be a head fake, and the real winning Format for the platform may lie in things like Sports and News, which have a live tendency but ultimately for Twitter's video offering don't need to be live per se. As mentioned, it's easy to mistake correlation for cause.

This Isn’t Rocket Science

Ultimately, as we look at other platforms such as Linkedin, Tiktok, Twitter, Netflix or Amazon, it’s clear that the course to success lies in a unique format that is native to each platform, instead of simply taking a successful format and adapting per platform. If we are to venture into eCommerce, it may make sense to focus on Amazon, for example.

This isn’t exactly new or rocket science, since those who simply took TV programming and adapted it for the web failed, over and over again. TikTok is on fire. Amazon could be the next great video platform, but its strategy seems disjointed, despite having bought Twitch who incidentally mastered Platform/Format fit by growing out of its Justin.tv origins and recognizing that its platform was perfect for gaming, culminating with a $1 billion exit.

Linkedin reminds me of YouTube in 2006: plenty of UGC, monetizing via display and text links, but representing an engaged audience. Being passionate about business and the quintessential entrepreneur, I’d be lying if I said I wasn’t intrigued by its promise. What’s holding its media potential is its Silicon Valley sensitivities. It may totally fail to fulfil its full potential, but like YouTube, it may eventually nail it.

History Repeats Itself

Business will always remain a paradox. You need more resources to execute, but when resources are scarce is when successes are born.

In 2008, Lehman had just crashed, nearly taking down the entire economy. In 2011, our peers amongst the third wave of producers (Next New Networks and Revision3) threw in the towel. Each time, there was an opening for the strong to gain momentum.

In 2019, audiences are moving online faster than ever, and mobile video is eating the media landscape. As many struggle to justify incurring the P&L hit to expand in web video, it’s tempting to take existing assets and videos that were created for a given platform and repurpose them for other platforms, but it’s unlikely that strategy will produce results. In the media universe and in storytelling world in particular, we have seen a wealth of change that has caused a tidal wave of disruption and opportunity. As traditional media companies in particular struggle to find their footing, expect a new slate of competitors to emerge and take the mantle.