Activate Media Growth

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Activate Media Growth

  1. 1. Redefiners: www.activate.com Capturing Media GrowtH Dollars
  2. 2. IN THE NEXT 3 YEARS 325 BILLION GROWTH DOLLARS WILL GO TO THOSE WHO REDEFINE Source: Activate analysis and estimates; Veronis Suhler, 9/10; PWC, 6/10; eMarketer, 2011; Yankee, 2011; Analyst Reports & Company Data, 2010/2011 THE MEDIA BUSINESS 2
  3. 3. MEDIA COMPANIES HAVE a chance TO BE the REDEFINERS 3
  4. 4. growth from existing media businesses growth from NEW media businesses media growth dollars 4
  5. 5. New Business Growth Matters Most $325 billion media growth doLlars $212 billion $1.4 trillion new business growth [15% p.a.] $113 billion $1.1 trillion 2010 existing business growth [3% p.a.] Source: Activate analysis and estimates; Veronis Suhler, 9/10; PWC, 6/10; eMarketer, 2011; Yankee, 2011; Analyst Reports & Company Data, 2010/2011 2014 5
  6. 6. WHO WILL win? 6
  7. 7. THIS PRESENTATION: HOW MEDIA COMPANIES CAN BUILD NEW GROWTH BUSINESSES THE REDEFINERS A new generation of upstarts has an advantage in winning media growth dollars, scaling quickly with new cheap technologies. To compete, media companies need to become redefiners themselves. HACK THE ORGANIZATION Media companies will create more value from building, rather than acquiring, emerging digital businesses. ‘Hacking’ – creating a virtual startup outside the organization – enables a build-first strategy. AN UNFAIR ADVANTAGE Companies that want to gain an advantage in creating the next wave of media businesses must face the challenge of combining content and technology to build new user experiences. REDEFINING STRATEGY Strategies must address the fact that there will be multiple business models, audiences, devices and platforms. Companies need to determine how to win as their businesses are being redefined. 7
  8. 8. the redefiners hack the organization AN UNFAIR ADVANTAGE REDEFINING STRATEGY 8
  9. 9. who are the redefiners? Businesses born at the intersection of tech and media Driven by human experience first, business model follows Will be the ones to win the battle for growth dollars 9
  10. 10. redefiners are free from the liability of legacy Unburdened by legacy constraints THEY Can thrive even with lower margins Traditional rights Distribution deals Contracts Production and editorial models 10
  11. 11. Today redefiner 11
  12. 12. Redefiners: Successors to Disruptors DISRUPTORS REDEFINERS Driven by technology Native to the web and apps era Focus on targeting the periphery of incumbent companies’ business Focus on better serving incumbents’ core customers Removes the value or revenues from an established market Driven by A better experience Result is Chaos Result is A New Business 12
  13. 13. who will Redefine your business? if it’s not you 13
  14. 14. expect hits from nowhere 14
  15. 15. expect hits from nowhere ONE GAME PROGRAMMER WORKING ALONE GENERATES 2 MILLION PAYING DOWNLOADS AND OVER $30 MILLION IN REVENUES IN LESS THAN TWO YEARS. Source: Company data, 4/11 15
  16. 16. expect hits from nowhere 140 million downloads of the game in 18 months, creating characters that spawn merchandise & films. Note: Paid & free; includes iOS and other platforms Source: Company data, 3/11 16
  17. 17. expect hits from nowhere Pioneered location-based apps, reaching 500 mm check-ins from 8 mm users in just over two years. Source: Company data, 3/11 17
  18. 18. expect hits from nowhere Instagram iPhone App showing potential for hyper-growth by reaching 1MM users in 8 weeks and 3MM in 9 Months. Source: Company data, 4/11 18
  19. 19. expect hits from nowhere Most popular music subscription service, with over 10% of 10 Mm users choosing to pay fREEmium subscription. Note: Based off total number of free users Source: Activate analysis of company and industry data, 2010/2011 19
  20. 20. expect hits from nowhere 25MM USERS, STANDING OFF COMPETITION FROM AMAZON, GOOGLE AND MICROSOFT. Note: Grew from 4MM users in 2010 Source: Company data, 4/11 20
  21. 21. expect hits from nowhere hits yet to come 21
  22. 22. Redefiners don’t want all the customers, they want the Most Valuable Ones. 22
  23. 23. Technology Doesn’t Stop When SOMEONE GetS Rich 23
  24. 24. Technology Doesn’t Stop When SOMEONE GetS Rich 24
  25. 25. the redefiners hack the organization AN UNFAIR ADVANTAGE REDEFINING STRATEGY 25
  26. 26. everyone’s innovation question buy or build? 26
  27. 27. You CAN But You can’t BUY TALENT, BUY INNOVATION. (And media companies NEED TO AVOID suckING the life out of acquired startups) 27
  28. 28. The Rare Acquisitions That Have Thrived Were Given Space to Innovate ™ 28
  29. 29. everyone’s innovation question buy or build? 29
  30. 30. building yields growth dollars 30
  31. 31. building a new business means hacking your organization 31
  32. 32. how to hack your organization Work outside of the media company org chart Liberate team from the legacy business compliance and constraints Allow the team to work independently Focus on building new (vs protecting the old) 32
  33. 33. hacking means building a virtual startup 33
  34. 34. build a Virtual StartUp: USE TODAY’S ASSETS AS THE SEED FOR TOMORROW’S NEW BUSINESS THINK ABOUT YOUR GOALS FIRST, AND RISKS SECOND PUT A STRONG LEADER IN CHARGE, NOT A COMMITTEE OPTIMIZE FOR GROWTH, NOT SHORT TERM MARGINS DRAW THE BEST TALENTs FROM WHEREVER YOU CAN FIND THEM 34
  35. 35. THE HEIST FILM STARTUP MODEL ASSEMBLE THE BEST TEAM FOR THE JOB 35
  36. 36. HACKING THE ORGANIZATION ENABLES a BUILD-FIRST STRATEGY 36
  37. 37. hacking works 37
  38. 38. & ACTING AS AN INDEPENDENT NIMBLE VIDEO STARTUP HELPED HULU ATTRACT A WEB SCALE AUDIENCE INCLUDING 1 mM paying users. Source: Company data, 4/11 38
  39. 39. Conde Nast worked with Activate to assemble a virtual startup to build the first-ever massively multiplayer magazine. 39
  40. 40. & Unique multi-media celebrity-news business: television show, app and website; watched by 2.1M TV households nightly and 16M unique visitors per month. Note: TV show ratings and website traffic Source: The Nielsen Company, 2010/2011 40
  41. 41. THE ANDROID TEAM LAUNCHED LIKE A STARTUP WITHIN GOOGLE, GROWING FROM NO MARKET PRESENCE INTO THE MOST POPULAR SMARTPHONE PLATFORM IN A FIERCELY COMPETITIVE MARKET. Note: Based on share of U.S. smartphone subscribers as of January 2011 Source: Comscore, 3/11; The Nielsen Company, 3/11 41
  42. 42. you’re a not a media company data center 42
  43. 43. DON’T Invent TechNOLOGY CMS database real-time messaging search ONCE-costly technology capabilities are now available as free or open source Invest in the parts that are unique to your business You can make a great experience by connecting these PIECES Technology evolution is only going to get faster 43
  44. 44. hacked organizations thrive as technology evolves 44
  45. 45. Learning From Redefiners UX FIRST LOW COST LAUNCH + LEARN TAKE FROM THE BEST IDEAS FAST IS BETTER THAN PERFECT 45
  46. 46. the redefiners hack the organization AN UNFAIR ADVANTAGE REDEFINING STRATEGY 46
  47. 47. every Startup wishes they had great content 47
  48. 48. quality content is an unfair advantage 48
  49. 49. CONTENT COMBINED WITH TECH DELIVERS NEW EXPERIENCES 49
  50. 50. over time tech becomes a COMMODITY, content DOES NOT. 50
  51. 51. QUALITY CONTENT can make it cheaper to BUILD BUy an Audience than to one. 51
  52. 52. quality matters: content farm subsidies are dead Factory farms are as unhealthy for content as they are for food Businesses which treat users like cattle are vulnerable to being redefined by those creating for actual humans, instead of search engine robots 52
  53. 53. Quality Demands A Native Experience On Every Device Fully exploit the features, formats and experiences of each platform Don’t create shovelware 53
  54. 54. And More Devices Matter No platform winner takes all: There will never be another Windows It’s not just one person, one device Plan for dozens of platforms and billions of devices today, and a new successful device every month Platform promiscuity is a virtue 54
  55. 55. Redefined Media Companies Don’t Just Make Media, They help people Create Media 55
  56. 56. YOUR FINISHED PRODUCT IS THEIR RAW MATERIAL The moment quality media is released to the world isn’t the end of the process, it’s the beginning. 56
  57. 57. LET THE WON’T JUST SHARE YOUR CONTENT, THEY WILL MASSES MANUFACTURE THE AUDIENCE REMIX IT AND TURN IT INTO PHYSICAL GOODS. 57
  58. 58. the redefiners hack the organization AN UNFAIR ADVANTAGE REDEFINING STRATEGY 58
  59. 59. it’s not a digital strategy it’s a strategy 59
  60. 60. STARTUPS OVERUSE THE WORD pivot BUT IT’S STILL AN IMPORTANT IDEA FOR MEDIA COMPANIES 60
  61. 61. WHY IS EVERYONE TALKING ABOUT “PIVOT”? Redefiners know they need to change direction when new opportunities demand it Media growth requires continually aligning the business to the customer TO GROW, A MEDIA BUSINESS CAN PIVOT BY CHANGING AUDIENCES, PRODUCTS, CONTENT, FUNCTIONALITY, INTERNATIONAL MARKETS OR FORMATS 61
  62. 62. Bringing The Pivot To Big Businesses from magazine publisher to continuity marketer for books, video, events in health and wellness from giant screen documentaries at museum theaters to mainstream blockbuster 2D/3D films in multiplexes from mailing DVDs to streaming from “The Point” group organizing to group buying 62
  63. 63. Grow a 100 million web: success Web-Scale Audience The Apps business is fundamentally different from the Web business Apps don’t (yet!) go viral the way websites do 1 million App Audiences are a different scale, requiring a different kind of advertising business apps: success 63
  64. 64. Use APIs As MEDIA Biz Dev 2.0 Facebook is not Always your friend Google’s neither good nor evil Twitter followers are not a digital strategy AMAZON NEEDS TO BE NAVIGATED CAREFULLY Partnerships should start from what people want, not what companies want Use social networks as a platform Don’t just send your biz devs to the meeting, also send your developers 64
  65. 65. Give People A REASON TO PAY Most new successes will be in the freemium model Customers care what the price is, not what your costs are $$$$$$ assume that pricing will evolve as an iterative conversation with customers 65
  66. 66. Make Advertising Accountability AN OPPORTUNITY Focus on measurability, not CPC response rates Don’t confuse social media metrics with real advertising metrics Strategy must anticipate a future where every impression can be connected to real consumer behavior 66
  67. 67. redefiners WILL win. 67
  68. 68. to capture media growth dollars, BECOME A REDEFINER HACK THE ORGANIZATION BUILD NEW GROWTH BUSINESSES AS VIRTUAL STARTUPS ANTICIPATE HITS FROM NOWHERE PIVOT THE STRATEGY TO EXPLOIT NEW OPPORTUNITIES USE CONTENT AS AN UNFAIR ADVANTAGE CREATE ENGAGING NATIVE EXPERIENCES FOR EVERY AUDIENCE 68
  69. 69. CREATED BY Michael J. Wolf michael@activate.com TWITTER: @mjw Anil Dash anil@activate.com TWITTER: @anildash Michele Anderson michele@activate.com TWITTER: @micheleactivate Himesh Bhise himesh@activate.com TWITTER: @himeshbhise Christopher Morf chris@activate.com TWITTER: @chrismorf © 2011 Activate Text CC BY - SA Please remix and reuse this presentation by attributing and linking it to: http://activate.com/redefiners 69

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