Media’s Big Bifurcation

My media consumption over the past week (beyond music and the written word) consisted of three things:

  1. Niche industry-focused podcasts on my commutes to and from work
  2. High-production-quality serial video content when I want to unwind in the evening
  3. Hours spent with a group of friends playing Fortnite

So, I made that third point up. But an increasing number of people are doing one or many these three things, and the media landscape is being rapidly altered as a result.

Specifically, the massive amount of money being spent by Amazon, Netflix, HBO, Hulu, and others are rapidly bisecting the media world along the axis of engagement and interactivity. Please note that I’m intentionally (and ignorantly) excluding all written content from my definition of media here and for the remainder of this post.

The world right now, and into the near future, looks something like the image below. Content distributors-cum-creators with massive warchests and seemingly endless appetites are making up an increasingly large portion of what I call ‘neutral’ content consumption. Neutral content is content that doesn’t require any interaction by the viewer during consumption – mainly video and music. The pile-up of creators in the neutral media space has pushed smaller shops to compete elsewhere. The amount of $$$ competing for the next big series has led to an explosion of creativity by innovative companies who are fighting for viewer’s time at the poles of entertainment interactivity.

Each of these segments below serve specific consumer wants. The long tail of content / interactivity permutations == the long tail of niche consumer jobs-to-be-done == the highly-specific and tailored desires of young urban populations.

Media World v5

As the major players fight for programming rights and distribution power in neutral entertainment, nimble start-ups and creative game houses alike are finding unique ways to capture viewers looking to fill different pockets of time and intention than simple television provides. Both segments of this newly bifurcated market will grow as the power and heft of the major media houses grow – the growth and heft of the dark blue mass in the graphic above possibly means that we are guaranteed to see faster growth in the orange and green segments.

At the high-end, unique media properties like HQ and Fortnite have exploded in popularity by satisfying consumers’ needs for highly interactive + communal. Consumers of this type of content want to have shared experiences. These products allow people of all skill levels, ages, and backgrounds to participate in mass phenomena in ways that simple unidirectional TV viewing never enabled.

Experiences with high interactivity are inherently low stakes and have rewards that provide outsized create enjoyment versus their nominal utility gained. Media at this level taps into humanity’s desire for unique, shared experiences built upon simple surprise and delight.

Technologies that thrive at this end of the spectrum are slightly less platform agnostic than those below them, and I think this will only increase as VR and AR technologies eventually move past infancy and vertical content platforms develop around specific devices.

Immersive entertainment is also increasingly aided by the ability to share experiences afterward on third-party video platforms. I won’t pretend to fully understand the drive behind watching other people play video games, but I know that there’s an enormous amount of money behind it.

At the low end (green boxes), lightweight media consumption has gathered around the burgeoning podcast multiverse. Content at this end of the spectrum can be vertical industry-focused, serially formatted, general news coverage, and just about everything else you could imagine.

Pure audio devices like Apple’s Airpods feel like they were designed for podcasts. To a certain degree, the rise and prevalence of wireless audio-only is the driving force that has moved sound to become a strictly passive mode of consumption. I think voice as an input probably best works when its use is completely integrated into our environment, and I’m excited to see this take shape. Traditional early tech adopters have helped Airpods go mainstream, and I don’t ever want to go back.

I think the need for passive entertainment is also increasingly driven by the ~1-2 hours a day that urban commuters spend taking public and alternative forms of transportation. I take a bus service called Chariot to work in the morning, and every single person on the bus has a pair of headphones in, and they are each listening to The Daily or the latest Serial knock-off.

Passive entertainment serves the job of filling time that would not easily be spent doing something that required significant concentration. Passive entertainment is platform agnostic and makes up for its lack of a communal experience with viral word-of-mouth feedback loops incubated in offices, apartments, and every in between.

We’re at a time of great experimentation in all media models. The massive pile-up in the middle of our media consumption patterns has driven both producers and consumers to find more innovative ways to compete and consume. Companies are creating never-before-seen content at the high end of interactivity, and pure-use modular devices like Apple Airpods are enabling effortless consumption of passive content at the low end. The future is so bright.

Notes:

 

The Containerization of Everything

One of the major forces in computing right now is the deployment of software via ‘containers.’ From Docker: “A container…is a lightweight, stand-alone, executable package of a piece of software that includes everything needed to run it: code, runtime, system tools, system libraries, settings.” Software is deployed through a container to make sure that it runs the same no matter what system it is on.

I think that this trend is exactly the same as what is happening in the consumer durable and certain sectors of the CPG markets. Before I unpack that statement, let’s discuss why software containerization has become so popular.

The idea behind containers is quite simple: software is running on a wide variety of devices, and the developer wants to ensure that the software runs the same everywhere. TechCrunch has a great 101-level piece on containers if you’d like to read more.

There are many forces at work behind the development and proliferation of containerization, but I’d like to call out two in particular.

Varied operating environments: Computing was first done by a large mainframe, then individual desktops via a client-server relationship, and now via mobile-cloud. Computing is done on a large number of differentiated devices connected to a central OS endpoint via the cloud.
Abstraction away from source code: Everything done on software ultimately goes back to the 0s and 1s communicating with the CPU. However, services are increasingly built multiple layers above the binary. Think CPU -> server -> AWS -> Intercom

Containers, and the software they enable, are empowering companies to deliver focused digital solutions to singular customer use cases. And networks like Instagram are enabling consumer brands to do the exact same thing!

I wrote last week that brands can use Instagram in a targeted manner to create feedback loops within their desired demographic. These brands capitalize on Instagram’s uniform consumer experience to sell a solution to a specific use case (#firstworldproblems). A few varied examples:

  • Bevel (started with a razor designed to protect the skin of black men, built into a cosmetics brand for people of all colors)
  • Bonobos (started with one product, a better men’s chino pant, recently sold to Wal Mart for $310 million)

Andy Dunn, the CEO of Bonobos, has a fantastic piece about the need for a brand to nail one product: “If you don’t start with a relentless focus on an amazing first product, odds are you won’t even get a seat at the table” + “the best way to get volume is to sell a lot of one thing, not a little of a lot of things.” + “Make one thing great. Get one thing right. That earns you the right to go from product one to product two.”

Containers -> software; Instagram -> consumer brands.

Life many software startups, modern consumer brands use web platforms to reach users trying to solve specific use cases – often these use cases are ones they didn’t know they need solving.

To Dunn’s point – most don’t earn the right to go from product one to product two. More on that soon.

– BPD

Notes:

Instagram is the Ultimate Consumer Accessory

Much has happened since I last wrote a piece here.

I started working at Intercom in a challenging Sales Ops role. It’s been a whirlwind, and I love working there. We have a world-class blog and podcast that you all should read and listen to if you don’t already.

But now I’m back to thinking and writing critically about the important things happening in the tech world.

I first mentioned Instagram in this post from January. At that time, Snap was two months away from their IPO and one month away from filing their S1. I wrote, in more or less certain terms, that Snap was in trouble because a) Instagram Stories were crushing it and b) brands weren’t getting effective results from their ads on Snap.

These two trends have continued seemingly unabated.

I also noted that Snap’s confusing design was going to be a hindrance to more people using it. Sure enough, Snap announced a redesign of their app to make more clear the separation of content from friends and content from publishers.

We’ve also since learned that it’s not actually Snap’s core messages business that is the issue. The Daily Beast published an article yesterday with leaked numbers from a five-month period in 2017. During the time in question, daily messages sent on Snapchat actually rose from 80 to 87 million, which is a >20% annualized growth rate. That’s not bad. However, Snap’s other products saw flat to declining usage over the same time period.

At this point, Snap is the owner of a very popular chat app with millions of young users who each send hundreds of image-data-rich messages every day. Without a separate source of concrete data about its users, I don’t see a clear path to monetization.

However, 2017, to me, was less about Snap failing to execute and more about Instagram executing at the absolute highest level. 2017 saw Instagram become the most relevant social network outside of China.

Instagram has become the best tool to build a brand, ever. People who are champions of a brand not only get targeted ads from that brand directly in their feed, they actively sculpt and tailor their accounts into the hyper-realized version of that brand’s vision. On top of that, Instagram feeds these images back to its users in a cycle of self-perfection and realization.

It’s as if a brand held a focus session for a new product, and each of the participants, regardless of whether she truly liked the product, changed her opinion to suit the product, and then went out of her way to purchase that product and modify her life to include more of it.

I speak in extremes not for gratuitous effect but to try and illustrate just how effective this platform is. We’ve never seen anything that links aspirations, products, and people so effectively.

A vibrant Instagram has become the ultimate consumer accessory.

I don’t think this is a good or healthy thing.

Two major shareholders of Apple recently pushed for the company to create greater controls for parents over their children’s device usage. They did this out of concern that these devices have created a rapidly worsening health crisis of addiction to electronic devices.

I think that 2018 will see more of this – the largest tech companies struggling to grapple with the adverse side effects that their products have on consumers. 2018 for me will see me writing shorter posts more frequently.

In the words of Scott Galloway –

Life is so rich –

-BPD

Notes:

  1. Intercom website: www.intercom.com
  2. Intercom Blog: blog.intercom.com
  3. Intercom Podcast: https://itunes.apple.com/us/podcast/inside-intercom-podcast/id996103731?mt=2
  4. Instagram and Snapchat: https://benpdavis.com/2017/01/30/instagram-vs-snapchat/
  5. The Verge – Instagram Stories is now more popular than the app it was designed to kill: https://www.theverge.com/2017/4/13/15279266/instagram-stories-facebook-200-million-users-snapchat-clone
  6. CNN – Snapchat redesign: http://money.cnn.com/2017/11/29/technology/snapchat-redesign/index.html
  7. Daily Beast – This is the Data Snapchat Doesn’t Want You to See: https://www.thedailybeast.com/this-is-the-data-snapchat-doesnt-want-you-to-see?via=twitter_page
  8. Jana/Calpers Push Apple to Study iPhone Addiction in Children: https://www.bloomberg.com/news/articles/2018-01-08/jana-calpers-push-apple-to-study-iphone-addiction-in-children

Spending in the Future

Americans have stagnating real incomes and seemingly endless rising housing prices. However, spending has decreased notably across a wide range of goods. Ther are a number of innovative tech companies tackling the underlying issues at work here, and the next 50 years will see a growing selection of higher quality goods and services at more affordable (or at least more equitable) price levels.  Continue reading “Spending in the Future”