The Reinvention of Media

We have been hearing it for years: Old Media is, well, old. Worse, like a relationship gone bad, it no longer understands us. These days, it is hard to reach any other conclusion when we see consumers’ increasing lack of interest in traditional television. Or when we lament all the expensive programming bundles with hundreds of channels that few of us want--or watch. (Typical base bundles have over 185 channels vs.17-18 typically watched.) Then again, it could simply be the constant stream of ads that interrupt our viewing pleasure, especially in a world that now allows us to skip right over them. Is it too much to ask for high-quality, reasonably priced entertainment experiences that can consumed whenever, wherever, however.

The answer, finally, is no it is not. The media company for the digital age is at hand and it’s going to be a mashup of what we most desire. The best of them will create content like Hollywood, think and package like Madison Avenue, and distribute and promote like Silicon Valley. These innovators will offer an array of self-selecting options, from skinny bundles made up of a few traditional broadcasters as well as leading streaming services like Netflix or Hulu to fat bundles that will also include over-the-top (OTT) digital options that can be individually tailored to appeal to lovers of such topics as gaming, food, and extreme sports.

This brave new media world is still evolving, of course, with no clear winners declared just yet. But a herd of companies large and small, including Amazon, Netflix, Hulu, Verizon, and AT&T is scrambling to cobble together the right pieces. The expected players will likely encompass traditional and digital media as well as cable providers and mobile carriers. They may choose to do it all under one roof or through strategic partnerships. But it is going to happen--and it’s going to start with great programming.

Classic Hollywood will still put out the high-budget studio and live sports content that has been broadcast for decades. But these shows will be in the minority. The majority of offerings will come from more entrepreneurial studios or emerging creators that can produce quickly and cost effectively. Everyone from professionals to enterprising citizens will use hand-held, high-definition cameras to capture their content, which will mostly be skewed for audiences made up of Millennials and Gen Z.  Look no further than what’s happening at YouTube for a preview. Original shows featuring fresh faces are popping up regularly, some of which rake in millions of dollars and reach millions of viewers.

YouTube’s ad-free subscription option signals another coming transformation: How advertisers will reach audiences in the future? The traditional model of appointment-based viewing, meaning the airing of commercials during regular breaks of your favorite Thursday night show, is in big trouble. Most consumers are opting to either skip or block ads, especially in the digital world. And they are frustrated when they don’t have that option. This means that brands will have to find more creative and engaging ways to connect with viewers. The best ads will be native and seamlessly integrated into the content or stories being watched, read, or listened to. Branded content or sponsorship will be highly innovative and completely outside of the conventional relationship between Madison Avenue and Hollywood. The Red Bull Stratos Project, which aimed to “transcend human limits” with one man’s free jump from the edge of space, is a great example of what we are likely to see more going forward. The idea is to get people to consume brands and their messages without even realizing that they are doing it.

Finally, the distribution and promotion of all this new content will rely heavily on technology. Distribution will be multichannel, offering options such as mobile, web, and TV, potentially all at once. This is essential due to the explosive growth of digital content consumption, which increased by 43% just in the last year.  And content will be customized and formatted for specific mediums. For example, Snapchat needs vertical, very short form. Facebook needs HD short form. YouTube is all about HD, medium-length offerings. Cable channels require longer form. 

Beyond that, big data will be a driving force behind almost every programming decision. Engagement, popularity, promotion, and monetization will be informed by data and that will in turn affect the strategic direction taken by content creators, advertisers, and distributors. This shift will enable sophisticated, even personalized targeting of content and also help producers understand when, how, and where to release channels and specific shows. Media companies of the future can no longer rely on just producing great entertainment experiences. They must also understand technology and be technology platforms themselves.

This emerging upheaval will yield a lot of winners and even more losers. For starters, niche networks that will soon be cut loose by cable providers. Their model will no longer work and many will be driven out of business. From their ashes, however, will rise a new breed of content networks with improved offerings, more customized programming, greater choice, and better value. That’s all a boon for consumers anxious to strike up a relationship with a new media establishment that actually gets them.

Geoff Yang is a founding partner at Redpoint Ventures in Silicon Valley, and is an investor in next generation content networks like TasteMade and Machinima.