Happy Boxing Day War & Peaceniks! Ready for New Year’s Resolutions‽
During WWII, Winston Churchill famously said: “Never let a good crisis go to waste.” The result of this inspiration was the United Nations.
While one can definitely argue the consistent historic efficacy of the UN, one can hardly dismiss its need or importance over the last 75 years. Solving the twin crises of the Great Depression and the Second World War gave the World the impetus, the intelligence, and the collective vision to build the modern 20th Century world, create a global economy, birth the Middle Class, even land on the moon. That same ingenious collectivism also eventually led us to create the Internet. It’s important to note that most, if not all, of these would have happened anyway. Those two shared worldwide calamities, and the stuff we invented to fix them, accelerated these generational paradigm shifts and our culture’s evolution around them.
The Pandemic crisis and Lockdown had similar effects. Our shared cultural reckoning around Race and Populist Fascism has been put on fast-forward. The Great Resignation and the global shift towards Work From Home are case studies in accelerated Global Workforce Evolution. Gens Y & Z were always going to change how we worked; but the global crisis has put wind at Change’s back.
The Media not only reflects the accelerated change of our culture; it personifies it. Every single major media model has been forever changed by the phenomena of Lockdown. The accelerated use of CTV changed the way we watch video at home. The expedition of our various media subscriptions, put on speed by unrealistic content consumption, brought on an early epidemic of subscription fatigue, and broke the ad-free media model years ahead of its expiration date. The cascading effects of accelerated change in Media appear daily: Social Media’s model failure; Gaming’s midlife crisis; Disney overtaking Netflix in less than 3 years; and Disney’s immediate firing their CEO because “catching Netflix” suddenly no longer matters.
Churchill saw crisis as opportunity. But his quote is as much a warning as a prompt. Solving a problem at hand rarely fixes the problem’s cause. When your upstairs sink leaks through the floor, you don’t just turn off the water, you replace the pipe. While you’re at it, maybe also redo that bathroom, since it’s needed for a decade anyways. The UN has its problems; yet, thus far, as Churchill imagined, it has helped prevent World War III.
Our last crisis has taught us all so much about how our world actually works, and how much of our world actually doesn’t. For Media and Tech, the aftermath of Lockdown has laid bare just how epically unprepared most of Media and Tech still is for Next Gen consumption. Moguls fooled themselves into thinking Lockdown Media usage was the new norm. They failed to prepare for the aftermath. The issues they face NOW, are all issues they needed to face BEFORE, just greatly accelerated.
Let’s take a look three charts at the state of things, as they stand now:
Streaming is now 40% of all TV usage in the US. The main, if not sole, reason Broadcast and Cable are surviving at all is sports. With NFL football moving downfield to streaming, the final whistle for OG TV is not just inevitable, it’s rushing at us fast. The BBC just declared a death notice of all their Broadcasts by the end of this decade. Te only thing stopping the rest of us from doing the same exact thing, is the rest of us. All TV is now streaming, we simply refuse to say it aloud for some reason.
MVPDs are dying, just as vMVPDs ascend. In 2009, the government forced the TV industry to migrate all of TV from analog to digital, and drag consumers along with us. The only reason for not doing something similar with virtual Pay TV bundles today? “Cable People” want to milk their dying cow for more wheels of cheese before it finally kicks. Meanwhile consumers are only moving in one direction: away from dumb cable boxes and towards virtual TV packages. YouTube TV just picked up NFL Sunday Ticket will push all MVPDs virtual, far sooner than OG Cable thinks.
You may be tired of me saying it, but we are in an Impression Recession. Many of us are trying to rationalize it away, saying it’s a factor of comparing ourselves to an explosive year of growth in 2021. This is the very kind of thinking that blinds industries into driving off cliffs. In November, overall digital advertising spend fell for just the second time - the first was at the start of the pandemic - while the overall ad economy shrank for the sixth consecutive month. There are macroeconomic headwinds pushing ad spending down. But the ad industry is at great risk of seeing this as a recessionary correction, rather than the massive paradigm shift it is. In 2023, players such as Netflix, Disney, Apple, Google, Amazon and Microsoft are going to work incredibly hard to change the we all advertise, and by the time recessionary winds die down, the ad ecosystem will be dominated by new players, and run by new rules.
In 2021, Gaming became Media’s biggest sector. In 2022, the world reopened. Gaming is likely the least vulnerable of Media to the disruption that is now our operating system, since they cater to the bleeding-edge use-cases of all Media. However, 2022 has shown Gaming’s weak spot: individual Hit games and devices will not sustain growth forever. Whether or not Microsoft gets to acquire Activision, Gaming must evolve the Live Service model and expand its revenue sources, especially around subscriptions and ads.
We have hit Peak Subscription. SVOD is the perfect case study, as the rising waters of Churn now swirl around every premium video platform. However, every Media model that relies on recurring sub fees (See: Music, News, Gaming) will feel the pinch of tightening wallets in 2023. And on the other side of tough times, consumer subscription behavior will evolve, again. Platforms that do not address the new, constant challenge of Serial Churn will not survive long enough to regret it.
So, now what?
How do we take advantage of the clarity that crisis has given us? What does a company or industry do, now, to speed up their change and meet the momentum of the moment? It’s a great question - one that nearly every major player in Media and Tech will face in 2023. While change has been a constant in Media for years, this is the first time I can recall when SO much about our Media is SO up in the air. One big root cause: We can’t see what’s ahead, because we are still so addicted to our past.
At times like these, I turn a paraphrase of Jim Collins: To know what’s most important to do next, it’s vital to STOP DOING the things that hold you back; even if those things were CENTRAL to what you did before.
If you read this newsletter even semi-regularly, you know I think a LOT about the Media Universe. Everything I see now points to one, huge issue facing most companies in the space: We are, collectively, trying to build a new plane around one that’s in the air; when what we really need, is to land the plane, decommission it, and build a space-time barometer that helps us find worm-hole pathways to new business dimensions. Yes, IMHO, it is precisely that dramatic.
Our business leaders are arguing over cloud cover and cutting control costs in the Admiral’s Club, when they NEED to be investing quantum physicists and particle colliders. We will never find our way to what’s next, until we STOP looking in the entirely wrong direction (over our shoulders) first.
So, today I pose as your Media Maria Kondo, and offer you THREE BIG THINGS the Media needs to STOP doing, as of January 1, 2023.
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