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RedefineRs:

www.activate.com

CaptuRing Media gRowtH dollaRs

325 BILLION
WILL GO TO THOSE WHO
Source: Activate analysis and estimates; Veronis Suhler, 9/10; PWC, 6/10; eMarketer, 2011; Yankee, 2011; Analyst Reports & Company Data, 2010/2011

IN THE NEXT 3 YEARS

GROWTH DOLLARS
REDEFINE

THE MEDIA BUSINESS

MEDIA COMPANIES HAVE A CHANCE TO BE THE

REDEFINERS
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growth from

ExISTING media businesses NEW media businesses

growth from

MEDIA GROWTH DOLLARS


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NEW BuSINESS GROWTH MATTERS MOST


$325 BILLION MEDIA GROWTH DOLLARS
$212 billion
new business growth [15% p.a.]

$1.4 trillion

$113 billion
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

$1.1 trillion

2010

2014
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WHO WILL

WIN?

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.

THIS PRESENTATION:

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 REDEFINING STRATEGY

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.

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.

THE REDEFINERS

hack the organization

AN UNFAIR ADVANTAGE

REDEFINING STRATEGY

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
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REDEFINERS ARE FREE FROM THE LIABILITy OF LEGACy


UnbUrdened by legacy constraints tHey can tHrive even witH lower margins
Distribution Deals ContraCts

TradiTional righTs

Production and editorial models

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Today

redefiner

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REDEFINERS: SuCCESSORS TO DISRuPTORS


DISRUPTORS
Driven by technology Focus on targeting the periphery oF incumbent companies business removes the value or revenues From an establisheD market result is chaos

REDEFINERS
NATIVE TO THE WEB AND APPS ERA FOCuS ON BETTER SERVING INCuMBENTS CORE CuSTOMERS DRIVEN By A BETTER ExPERIENCE RESuLT IS A NEW BuSINESS

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WHO WILL REDEFINE yOuR BuSINESS?


IF ITS NOT yOu
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ExPECT HITS FROM NOWHERE

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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

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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

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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

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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

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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

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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

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HITS yET TO COME


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expect hits from nowhere

REDEFINERS DONT WANT ALL THE CuSTOMERS,

MOST VALuABLE

they want the

Ones.

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Technology DoesnT sTop

WHEN SOMEONE GETS

RICH
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TECHNOLOGy DOESNT STOP WHEN SOMEONE GETS RICH

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the redefiners

HACk THE ORGANIzATION

AN UNFAIR ADVANTAGE

REDEFINING STRATEGY

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Buy OR BuILD?

EVERyONES INNOVATION quESTION

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yOu CAN
But You cant

Buy TALENT, Buy INNOVATION.

(And mediA compAnies need To AVoid suckinG The life ouT of Acquired sTArTups)
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THE RARE ACquISITIONS THAT HAVE THRIVED WERE

GIVEN SPACE TO INNOVATE

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Buy OR BuILD?

EVERyONES INNOVATION quESTION

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BuILDING yIELDS
GROWTH DOLLARS
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HACkING yOuR ORGANIzATION

BuILDING A NEW BuSINESS MEANS

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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)
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HACkING MEANS BuILDING A

VIRTuAL STARTuP
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BuILD A VIRTuAL STARTuP:


USE TODAYS ASSETS AS THE SEED FOR TOMORROWS 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

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THE HEIST FILM STARTuP MODEL


ASSEMBLE THE BEST TEAM FOR THE JOB
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BuILD-FIRST
STRATEGy
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HACKING THE ORGANIZATION ENABLES A

HACkING

WORkS
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&

ACTING AS AN INDEPENDENT NIMBLE VIDEO STARTUP HELPED HULU ATTRACT A WEB SCALE AUDIENCE INCLUDING 1 MM PAyING USERS.
Source: Company data, 4/11

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Conde nast worked with aCtivate to assemble a virtual startup to build the first-ever massively multiplayer magazine.
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&

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

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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

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yOuRE A NOT A

MEDIA COMPANy DATA CENTER


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DONT 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

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hacked organizations

THRIVE

AS TECHNOLOGy EVOLVES
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LEARNING FROM
UX FIRST

REDEFINERS
LOW COST LAUNCH + LEARN TAKE FROM THE BEST IDEAS FAST IS BETTER THAN PERFECT
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the redefiners

hack the organization

AN uNFAIR ADVANTAGE

REDEFINING STRATEGY

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EVERy STARTuP WISHES THEy HAD GREAT CONTENT


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is an

quALITy CONTENT

uNFAIR ADVANTAGE

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CONTENT COMBINED WITH TECH DELIVERS NEW ExPERIENCES


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over time

CONTENT DOES NOT.


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TECH BECOMES A COMMODITy,

quALITy CONTENT

can make it cheaper to

BuILD Buy
an audience than to

one.

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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

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quALITy DEMANDS
dont create shovelware

A NATIVE ExPERIENCE ON EVERy DEVICE

Fully exploit the Features, Formats and experiences oF each platForm

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AND MORE DEVICES MATTER


No platform wiNNer takes all: there will Never be aNother wiNdows its 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

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REDEFINED MEDIA COMPANIES THEy HELP PEOPLE

DONT JuST MAkE MEDIA, CREATE MEDIA


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yOuR FINISHED PRODuCT IS THEIR

RAW MATERIAL

The momenT qualiTy media is released To The world isnT The end of The process, iTs The beginning.

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LET THE WONT JUST SHARE YOUR CONTENT, THEY WILL MASSES MANuFACTuRE THE AUDIENCE
REMIX IT AND TURN IT INTO PHYSICAL GOODS.
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the redefiners

hack the organization

AN UNFAIR ADVANTAGE

REDEFINING STRATEGy

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its not a

DIGITAL STRATEGy
its a

STRATEGy
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PIVOT
BUT ITS STILL AN IMPORTANT IDEA FOR MEDIA COMPANIES

STARTuPS OVERuSE THE WORD

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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

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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

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GROW A 100 million web: success


1 million

WEB-SCALE AuDIENCE
The Apps business is fundAmenTAlly differenT from The Web business Apps donT (yeT!) go virAl The WAy WebsiTes do App Audiences Are A differenT scAle, requiring A differenT kind of AdverTising business

apps: success

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uSE APIs AS MEDIA BIz DEV 2.0


Facebook is not always your Friend GooGles 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 dont just send your biz devs to the meeting, also send your develoPers

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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

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MAkE ADVERTISING ACCOuNTABILITy AN OPPORTuNITy


Focus on measurability, not cPc resPonse rates Dont conFuse social meDia metrics with real aDvertising metrics strategy must anticiPate a Future where every imPression can be connecteD to real consumer behavior
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REDEFINERS WILL

WIN.
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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

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CREATED By
Michael J. Wolf anil Dash
Michael@activate.coM tWitteR: @MJW anil@activate.coM tWitteR: @anilDash

Michele anDeRson hiMesh Bhise

Michele@activate.coM tWitteR: @Micheleactivate 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

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