Archive for Trade-Off
Does the Comcast/NBC Acquisition Really Mean All that Much?
Posted by: | CommentsThis is an extraordinarily complex post. There are two fundamental themes. The first is the notion of the changing means of how content is consumed. The second theme is that the notion of consolidation or “whole” really needs to give way to the notion of “fragmentation”.
HOW WE USED TO RELATE TO CONTENT
Once upon a time we had three major networks. We came home from work. We watched the evening news. We ate dinner. Then we watched our shows. I literally grew up with M*A*S*H. MASH ran for 11 seasons beginning in 1972. So from about age 5 to about age 13 I would sit with my mom and step-father and watch MASH every week. I honestly cried during the last show.
Other shows I grew up with were “Different Strokes” (8 seasons), “Facts of Life” (9 seasons), “Dukes of Hazzard” (7 seasons), “Fall Guy” (5 seasons), “Magnum PI” (8 seasons) and of course “The Cosby Show” (8 seasons).
Hopefully, you’re starting to see a pattern. We used to “live” with TV shows. They were constants in our lives from season to season. We had relationships with these shows. Whether it was “St. Elsewhere” or “Hill Street Blues” we had prolonged relationships with shows and networks.
For the longest time every network followed a prescribed schedule. Then along came cable where repeats found new life and new audiences (or the same old ones). Then came FOX that started airing new shows when nobody else was. Then the Internet gradually began to turn things on its ear. Yet for some reason in the world of media planning and buying we still have a TV upfront.
I’ve known for quite some time that that the nature of TV shows and the way we watch them has been changing. I believe this to be a geologic change though. One in which we don’t necessarily see it happening. We make minor adaptations but there has yet to be a seismic shift.
That however I believe is coming. I’m not sure what it looks like. I’m not sure exactly when it will happen. Five years? Ten years? That’s where perhaps you can all lend a voice to predict or pontificate.
I believe that we are on the cusp of something and we need a much deeper understanding of people’s relationship with content.
What do we watch on which screen and why? Where does each “screen” fall as it relates to the trade-off of fidelity versus convenience? What is content we share versus content we commiserate about versus content we talk about at the water cooler?
We used to watch shows on a specific night. Now we may DVR a show and watch it on a different night. We may wait altogether and watch a whole season in weeks courtesy of Netflix. We may watch a show one week with friends and the next week online and the third week via a smartphone waiting at an airport.
Nevertheless, networks continue to present shows the same way all the time.
HOW CONTENT IS CHANGING
About a year ago, I watched Ken Block’s second iteration of Gymkhana.
No this isn’t Kurt Thomas’ attempt to extend his 15 minutes of fame and woeful acting skills on the heels of his early ‘80s film Gymkata. I’m talking about the founder of DC Shoes and his foray into the world of rally racing, stunt driving and the next generation of drifting.
Ken Block is a phenomenally intuitive marketer. Certainly as evidenced by his savvy in building DC Shoes into arguably one of the strongest action sports brands ever. Perhaps second only to Burton. Maybe it’s that no one felt comfortable to tell him the rules. Or he wasn’t listening anyway. Whatever it is, he knows right when he sees it.
Gymkhana 1 was originally posted about three years ago and between various posters of the video, it garnered over nine million views. Not too shabby. No doubt it was professionally shot at every level and Ken Block has money to throw at these things. Although, I’m pretty sure he’s mastered the art of OPM.
But then he came out with Gymkhana 2 (22m views). And Gymkhana 3 (25m views).
Nevertheless, while most create :60 spots and hope they’ll find viral traction on Youtube, Ken Block did it on purpose! And I know lots of people will say, “come on, we did that.” Tampax, Dove, Cadillac. Blah Blah Blah. I don’t think anyone has done it as well AND on purpose as Ken Block.
In Gymkhana 2, the video is 7 minutes and 32 seconds. They even call it an infomercial. At the beginning of the video note the following:
Bloody Brilliant.
How many people are choosing to watch your spots?
Now let’s just take YouTube and content as a whole. Consider this from the ADWEEK article by Brian Morrissey about “YouTube’s Stars”.
“The dirty secret of cable TV is audience numbers are often pitifully small, with many programs drawing under 100,000 viewers. That’s not the case for a select group of YouTube creators… The numbers they draw can be staggering. Comic actor Shane Dawson averages nearly 1.5 million views per day, according to video analytics service TubeMogul, and has racked up 670 million views of his videos over two and a half years. The typical YouTube star will average 250,000 views per video. ‘On any given night or day or two, the top 10 YouTubers will have more views than any cable channel,’ says Walter Sabo, a former ABC radio executive who started an Internet talent agency three years ago called HitViews.”
iJustine pictured to the left has more than 1m subscribers. DC Shoes… 79k subscribers.
Take that Ken Block.
“Tremor Media, the largest independent network, reached a deal last week to acquire Scanscout, one of its smaller competitors, in a bold attempt to consolidate the market, and create a scaled competitor to Hulu and YouTube. Separately, Undertone Networks is expected to announce a deal Monday to buy Jambo Media, a video syndication and ad platform. Two weeks ago, Specific Media snapped up BBE, one of the first pure-play video networks in the market… TV advertisers are the ones moving most aggressively into web video, looking to achieve similar goals through it. ‘I think that has been one thing that has been missing for advertisers is the ability to deliver mass reach,’ said Chris Allen, VP-video innovations at Starcom USA. ‘A lot of our clients are married to the reach metric, and TV delivers reach as fast as possible. The only way to achieve that reach online is through a network.’”
Is the :60 spot going away? No.
Does broadcast deserve its dominance and to make all the money? Most definitely not. Arguably, they are the least removed from purchase behavior. Wouldn’t it make sense that I’d be more likely if I was online to then stay online to purchase something as opposed to going from one screen to another to do so?
Are “reach and frequency” dated analytics? Do they truly get at how we consume media and connect to purchase behavior?
Once upon a time people laughed at cable as a network contender. ESPN, 24 hour sports. It’ll never work. FOX could never take on the Big 3. 24 hour news? Don’t be silly. 24 hour weather? Please!
Is Comcast/NBC really that big of deal? Not really in my opinion.
Fragmentation is the world of today. Whole is the world of yesterday.
No matter how big Comcast/NBC make themselves, the reality is that when it comes to content, they are hardly the only game in town.
References:
McCracken, Grant “Chief Culture Officer: How to Curate a Living Breathing Corporation”, 2010
Maney, Kevin “Trade-Off: Why Some Things Catch On and Others Don’t” 2009
IMDB
Why Apple Shouldn’t Worry About Anyone Except Itself
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Several years ago I was with a good friend and mentor Paul McKinnon. He used to run human resources for Dell. A job which he now does for all of Citigroup. He’s a very smart and affable guy with grad degrees in behavioral science from MIT.
At the time we were talking about Mac vs PC and he said this… “You know the Apple market represents about 5% of market share for all personal computers. Always have and always will. We really don’t worry about them.” In other words, they kind of just let them have it.
Obviously Apple is a much different company from when I had this conversation but I think you’ll see the point.
Lately there’s been a lot of talk about Apple and Steve Jobs. Well there’s always a lot of talk about Apple and Steve Jobs. But in particular three things struck me.
- The first was a tweet I saw that “60% of Apple’s revenue was from products that didn’t exist three years ago”.
- The second was an article about whether iPhone’s “closed” or Android’s “open” would prevail.
- And the third was Steve Jobs comments about his “competition” and subsequent feedback from CEOs from RIM and Android.
Here’s the deal. Apple innovates. Period. The end. Everyone else essentially copies. Apple sets the standard and everyone else tries to reach an acceptable level to be adopted by the masses.
The question for Apple is if they’re content being that company. That’s where Steve Jobs’ comments perplex me a bit.
In my opinion, the best businesses in the world are the ones in which the CEO (and employees) know what business they’re really in. It’s not so much as knowing what to do but rather knowing what not to do.
In this case I think it’s for Apple to not even think about BlackBerry or Android or the other tablet devices and accept its position as a company of innovation. There will always be a market for those that just have to have it. The key is for shareholders to recognize this as well and not pressure Apple to be something it isn’t. Yes it’s a trade-off but in my mind a critical one. Author Kevin Maney does a great job talking about this in his book aptly titled just that… “Trade-Off: Why Some Things Catch On and Other’s Don’t”.
Because at the end of the day, as Harvard Business School Professor Yoffie said: “Apple will lose its overall leadership, but maintain a share of the market that could easily be in the 25 percent to 30 percent range… That’s enough to sustain a very large and very profitable business.”
Stop & Shop and Starbucks – A Not So Perfect Union
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Update – April 9, 2010: I posted this blog post in September 2009 not yet having read Kevin Maney’s book, Trade-Off: Why Some Things Catch On and Others Don’t. It ranks well up there in my personal critique of business books. Most of which I think you can “get-it” in the first chapter. Maney’s deserves the full-read. In it, Maney, does a superb job of taking a wonderfully simple concept which I think successful companies execute well intuitively. It has to do with the balance of “fidelity” versus “convenience”. In his book, Maney uses Starbucks as an example which to me was a rewarding validation of my blog post below. There is an adaptation of the chapter on Starbucks from Forbes, here. With that, feel free to read my post but without a doubt, pick-up a copy of Maney’s book. It’s well worth the read.
Our small suburban town boasts three Starbucks which might be an indication of the demographics. Our Stop & Shop Starbucks opened early in 2007 and would be our fourth.
A short two years later, Starbucks and our Stop & Shop would part ways. I can’t say I’m surprised.
Don’t get me wrong. The idea is nice in theory.
Starbucks is trying to steal market share from Dunkin’ Donuts (a New England institution and a master in convenience) and there are Dunkin’ Donuts in about 100 Stop & Shops.
Stop & Shop is trying to elevate its brand to compete with Whole Foods. By the way, right around the time of the Starbucks addition, a Whole Foods opened in our town. So in addition to Stop & Shop refreshing their image, cleaning up the store and offering an organic food aisle Starbucks should be a perfect fit.
Not so much.
I don’t know if either company did much research to decide if this was a good idea or if they did just didn’t ask the right questions.
My guess is that good research would have identified that while the demographics should indicate that a marriage between these two is a no-brainer, the reality is that the two consumer experiences are at odds with each other and the idea is actually inherently flawed.
My wife and I do our “basic” grocery shopping at Stop & Shop. We do specialty shopping at a local market or at Whole Foods. And we relax at Starbucks, with each other, a good friend or a book and ideally no kids.
Stop & Shop is inherently not relaxing. It’s functional. We don’t go wandering aimlessly through the store taking our time. We go with a list and a job to do and that’s complicated further if there are kids with us. There’s no time for a Non-fat White Chocolate Mocha. We don’t have time to place the order, let alone wait for it.
Stop & Shop is for one thing. Starbucks is for another. It seems like it should have been pretty simple to figure that out.
Funny thing is, Stop & Shop is headquartered a couple of towns away from mine. If they had only asked I might have been able to save them a bit of money.
