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TV Reality Check

Posted on by Steve Sammartino

Who’s the biggest TV star in the world? Anyone older than 25 will probably nominate a TV star from the free-to-air (FTA) TV era. Anyone under the age of 25, that is, born after the modern internet burst onto the scene, will tell you it’s MrBeast – aka Jimmy Donaldson.

MrBeast recently passed a milestone 100 million subscribers on YouTube (now 104m) . In total, his posts have attracted more than 26 billion views and his videos are seen on average anywhere between 50 to 110 million times. To put that in context, the two most-watched shows in TV history (outside of global live events) are:

  • Mash – the final episode, 105 million viewers and;
  • Seinfeld – the final episode 76 million viewers

Clearly, it has been a long time since traditional linear TV set any viewership records.

Mr Beast Strategy

MrBeast is now more than an on-screen persona – it’s graduated to a sizeable business. According to Forbes magazine, Donaldson earned $US54 million in revenue last year and now runs a production company with over 50 employees. He has also given away more than $50 million to charity and claims to be YouTube’s biggest philanthropist. To celebrate his 100 millionth subscriber, Donaldson created a video with a hundred of his fans running a modern-day game show, competing to win an island. The production cost alone for this celebration was over $US500,000.

The story of Donaldson’s origin is as surprising as how big he’s become. Ten years ago, Donaldson set himself a clear goal to become famous by earning as many views on YouTube as possible. The ‘how’ of gaining views was less important. Naturally, Donaldson gravitated towards silly stunts and challenges to maximise reach. Some of his early videos included counting to 100,000 (a lengthy 40 hours) and tried spinning a fidget spinner for 24 hours straight. Although his videos have evolved in sophistication of production and concept, this ‘game show’ method has served him well. His key ingredients have become:

  • Challenges and stunts 
  • Giveaways with often very generous prizes
  • Celebrity appearances

Consistent with other popular game shows like The New Price is Right, audience participation is a priority. Donaldson creates incentives for viewers to be involved – to appear in videos and compete for exciting prizes, creating a brilliant viral loop growing both views and audience. Donaldson claims to have cracked the code for making viral posts and that once you’ve mastered the art, “you can make unlimited money”. There are many lessons our local media channels could learn from him about generating views, revenue and profit.

Bonus: Follow my TikTok here for biz & life rad advice (almost 1 million views just this month!)

TV Reality Check

The financial struggles of free to air TV channels are well-documented. Network 10 ended up in receivership and was eventually bought out by CBS. Neither Seven West Media nor Nine Entertainment have done much to solidify their long-term future and may struggle.

Basically, all media sells attention. In media circles, this is known as CPM which is ‘cost per thousand’ viewers. Enter, a reality check. FTA TV currently commands an average premium per set of eyeballs of 700 per cent. No, that’s not a typo.

Nestled in the TV that fits in the palm of your hand, social media platforms including Instagram, Facebook and YouTube charge around $A7 for every 1,000 views. In comparison, FTA TV charges $A50 per 1,000 views a mid-rating show, while ratings winners like The Block costs as much as $175 per 1,000 viewers for a 30 second commercial.

The irony is that while most people are peering into their tiny phone screens, that is when these ‘premium-priced’ commercials run on the big TV mounted on the wall. TV commercials are not nearly as targeted as digital advertising is, neither psycho-graphically nor geographically.

Additionally, FTA TV commercials don’t have click-through potential, and disappear into the ether after they run. In contrast, the online variant, while it can be skipped, can continue to live on in the same social channel as a standalone video, receiving organic views and feed a content play for the brands pushing them.

These FTA numbers for reaching people simply can’t and won’t be sustained. If I were to point out a reason why the market still tolerates such an imbalance in CPM on FTV versus digital channels, I’d narrow it down to the senior executives buying the ad spaces. People buying the advertising space for large brands mostly grew up before the internet and bear a legacy mindset that TV is in some way superior.

That said, it won’t be long before a new cohort of CEOs and CMOs arrive and start challenging why they are paying such an exorbitant premium to reach the same people. When that happens, we ought expect FTA TV’s revenue to decline by 80 per cent.

What Free to Air TV Should Do

Like all disrupted businesses, traditional TV is filled with growth opportunities if they’d only embrace them. The first of these should be realising that the world is no longer segmented in 30-minute slots.

The simplicity of online videos running for as long as a few seconds to a few hours is telling. It seems as though the TV stations would rather things be neat, instead of relevant.

They need to lower the barriers to entry on their digital catchup TV. Tuning into catchup TV is not nearly as easy as it should be. It requires registrations and most shows are removed after a few weeks. In what should be a competitive play against YouTube, the on-demand digital platform is treated as a departures lounge for the TV you missed.

In fact, all channels would do well to leave their entire corporate back catalogue of TV shows online forever, share the revenue with existing content owners and even allow it to be mashed up by new content creators. Then they could create new layered versions of what has already been made. This is already happening, but just TikTok and YouTube. It’s not even a secret…. they only need to copy what is happening!

Search for your favourite TV show from the 1980s and you’ll see it published on YouTube with Google collecting the revenue for advertising running before and beside it. Simply embracing long tail content, asynchronous viewing and allowing the audience to upload and re-interpret their content could change Free to Air’s business model dramatically. But it seems they love the business model they had yesterday more than the reality of today.

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Keep Thinking,

Steve.

The Attention Scoreboard

Posted on by Steve Sammartino

Scoreboards change everything. Once we have a metric in place, whatever improves that metric becomes the focus of what we do. We do it with sport, we do it with money, and now we do it with content. A metric you all know is how many views on average your social posts attract. We all do.

Attention wins

Once upon a time, great content was the focus. Content is king, we’d all chant ad nauseam. The inference was that the best stuff would naturally bubble up to the top. However, humans are weird and emotional creatures. We have certain neuroses we can’t help but serve. As a social species, we are infused with the need to be part of a group to survive. When others are engrossed in something new, of course our curiosity is piqued. In this era, we can see exactly how many people are paying attention to something. This scoreboard sits under every photo and video. It almost doesn’t matter what it is, so long as people are watching. Algorithms perpetuate that further. Something that is popular becomes more popular, because it is popular.

This presents a real challenge for people who want to produce content that is important, but perhaps not quite as entertaining. While a business may insist their primary goal is quality for their content, it’s hard not to be swayed even more by the number of views it receives. When Tommy and I launched our TV show, The Rebound, every sponsor told us their focus was delivering great insights and hacks to the audience, yet what they couldn’t resist asking first in every review would be, “How many viewers did each episode get”?

Know your metric

All this comes back to your ‘why?’ Why are you creating content? The truth is it isn’t that hard to go viral. I have a handful of YouTube videos that have clocked up well over a million views. We just need to appeal to the market of emotions and be as extreme as possible. If attention is the key metric, then we just follow where the attention economy takes us. Get on a bandwagon, roll the dice enough times and eventually you’ll score. But for what purpose? If entertainment and attention are your key metrics, then that’s exactly where your focus should be.

One the other hand, if you’re not aiming for the mass market, then deeper consideration must be taken.

I’m after an audience who want knowledge and seek consulting services and keynote speeches from me. We need to decide what we are chasing before we start creating. We need to resist the temptation to chase numbers, otherwise the attention scoreboard redefines what we do and who we are, with unintended consequences,.

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Keep Thinking,

Steve.

From Big Tech to ‘Big Voice’

Posted on by Steve Sammartino

Language is humanity’s killer app. We are the only species that can communicate complex ideas and also pass them through generations. It’s often said that our ability to communicate in a such a manner has put us atop of the food chain. Big technology firms have become so powerful because they’ve put a metaphorical fence around all that we say, and therefore, control all that we know. Big tech as we’ve come to know them are basically, in the language business. 

While it’s clear that our voices all all unique. What is less known is what can be gleaned from them

The Verbal Reveal

Despite our hearing abilities being inferior to many other animals, we humans can deduce a surprising amount of information from listening to each other speak. We can make pretty good guesses at someone’s gender, age and perhaps even levels of education.

However, machines can infer far more than a human ever could from a voice. In the developing branch of Artificial Intelligence which focuses on speech, much has been achieved, even in the early days of understanding sentences and how to respond. Known as Natural Language Processing (NLP), this field of A.I. can discern with significant accuracy someone’s age, gender, ethnicity, education levels, socioeconomic status, and even uncover health conditions.

What we tend to forget is that the voice recognition system is doing more than just listening to words. It is also cross-referencing what has been said with other information that can be extracted from the device (smartphone / internet browser) delivering the voice data.

In essence, NLP does what humans do. When we meet with someone, we look at our surrounds to provide clues on how to navigate the conversation. We look at what people are wearing and the venue we are in – everything visual and contextual that might support the verbal interaction. Conversation that comes with context nearly always has better outcomes.

This is part of the reason telephone customer service lines are so often a poor end-user experience. When an NLP engine interacts with enough voices for long enough, it can create new forms of pattern recognition. Sourced from vast data sets incorporating 65 per cent of the world’s population, NLP can match data points to voice prints far beyond what any human ever could. What NLP may uncover is almost limitless.

The Mirror of the Brain

Using our voices is not as simple as it seems. When we speak, a complex process is launched, activating both physical and mental faculties. Involving the lungs, voice box, throat, nose, mouth, lips, sinus and jaw shape. Using your voice activates more than 100 muscles every time it is used. Additionally, your voice is the reflector of the brain – what it knows, believes and how it responds to audio stimuli. As the MIT Media Lab voice researcher Rébecca Kleinberger says: “The voice is very much the brain.”

Voice to Face

A single voice can now reveal unfathomable volumes of information to an A.I. engine. Researchers have even been able to generate images of faces based on information ascertained from individuals’ voice data. I know – this blew my mind too.

A 2019 Cornell University research study was able to reconstruct facial images of people using short audio recordings of their speech. The facial image reconstruction was produced through training a deep neural network, utilising millions of YouTube videos of people conversing naturally and without a script.

The network training methodology looked for correlations and co-occurrences of faces and voices. It matched the probability of voice patterns with pixel patterns to guess what an unknown person’s face might look like. The results below are quite astounding, given how nascent this technology is.

BONUS – Follow me on TikTok for daily motivational sound bites of goodness. No dancing from me – I promise.

Everlasting Conversations

At Amazon’s recent re:MARS conference for Machine Learning, Automation, Robotics and Space, a new Alexa feature was thrillingly unveiled. Amazon’s AI assistant can now impersonate voices of users’ dead relatives. The demonstration featured a child asking his deceased grandmother to read out a bedtime story, whereupon her voice obligingly pours out of a nearby speaker. As you can imagine, this feature was met with both admiration and outrage. Many called it plain creepy.

While we might think that it would take a deep longitudinal data set for Alexa to learn how to mimic a real human voice, Amazon claims that its AI system can learn to imitate a voice from less than a minute of recorded audio. Given how prevalent recordings of people are now on both video and audio, it wouldn’t be difficult to create a voice clone of a loved one. Or pretty much anyone who has ever been on the internet.

While Amazon hasn’t given an indication whether this feature will be rolled out, the technology will surely leak across the web, as it always does. The website Fakeyou.com is a veritable “Choose Your Own Adventure” of actors, celebrities, singers, cartoon characters and public figures whose voices can be manipulated to say whatever you desire. It’s possible to upload your own voice and even clone that.

The opportunities bubbling out of this are intriguing. When we have to make that dreaded phone call to the bank or tax department, we may be able to choose from Scarlett Johansen or Ryan Gosling as our customer services operator to make solving the issue a little more pleasant. If we combine already existing music AI systems with voice cloning we may be able to create new Beatles tunes – John Lennon may sing again. Animated voice actors for long-running animations like The Simpsons may well be delivered a pink slip. Radio hosts from years gone by could join the podcast bandwagon to cater to more senior audiences.

The Voice Cloning Industry

Voice is the latest in a long line of emergent cloning marketplaces. This creates new value, revenue sources, investment and of course, potential legal conflict. The voice and speech recognition industry (I’m calling it ‘Big Voice’ — you heard it here first) is estimated to exceed $US20 billion by 2026.

If we thought it was already difficult to distinguish between what is real and what is fake on the internet, it’s only going to get a lot more challenging.

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Keep Thinking,

Steve.

The Social Media Game Show

Posted on by Steve Sammartino

While undertaking my TikTok experiment, I’ve noticed my feed being filled with ‘Random acts of Kindness’ – and I’m wondering, How random can it be when it is clearly a content play?

Contrived Acts of Kindness

For the uninitiated, these ‘random acts of kindness’ are a bit like a new genre of game show. The acts often include;

  • Handing bunches of flowers to people then walking off
  • Giving people money on the street, sometimes thousands of dollars
  • Paying strangers’ bills in supermarkets, gas stations or shopping centres
  • Asking people what makes you happy – and then going to buy it for them.
  • Arriving at homeless encampments and giving goods to the residents
  • Driving round town looking for people to help …. always with gifts or money

Of course, the camera is never off. The video is often made with someone hiding around the corner, and it’s mostly uploaded without permission. The whole thing is an act, and in my view, a distasteful one. They are turning people’s lives into content. This is what the Attention Economy has created, a world where the only goal is to get views. A world where it matters not what people are watching, just that they are watching.

The ugly reality is that these so called acts of kindness are just a cost of doing business. A small financial outlay that is later offset by monetary gains the channel makes for the creator. In today’s digital age, attention equals money.

If you manage to garner enough eyeballs around what you do – people will pay for access to your audience. It’s old school media, in a micro way.

Fee for Audience

On TikTok the going rates for an audience are quite significant. People’s reach can be accessed for fees based on their level of ‘influence’. Cost per single post below:

  • Nano: $50–$300 (1-10k followers)
  • Micro: $300–$1,250 (10-75k followers)
  • Mid: $1,250–$3,500 (75-250k followers)
  • Macro: $3,500–$12,000 (250k – 1m followers)
  • Celebrity: $12,000+ (1m+ celeb status) 

Just last week – a famous TikTok-er known as @LifeofHarrison gave what he described as an old lady some flowers by asking her to hold them – and then says have a lovely day and walks off.

This garnered 65 million views with the comments fawning over the act. The lady however, Maree, said she felt dehumanised and said she didn’t like being described by others as an old lady. In an interview on TV @LifOfHarrsion, aka Harrison Pawluk said, “I want my content to make people feel happy….” Interesting that the word ‘content’ was featured in that sentence. Rather than him just wanting to make people feel happy.


A Legal & Ethical Minefield

While it is legal to film someone in a public space, it’s illegal to use people for commercial purposes without their explicit consent. When we record my TV show The Rebound, every person who appears needs to sign a release form. The only exception, is if you’re part of a larger public audience at a place like a football match. It’s another example of technology companies having a different set of rules to traditional media. But we all know, they’re a really just media companies in disguise.

Of course we shouldn’t blame viewers for watching these acts – they just want to see something positive. But we ought also remember that the creators have been influenced by the media landscape they now live in. First we shape our tools, thereafter, they shape us. While I don’t question that most people would be happy to receive something valuable for free, it does seem a little opportunistic and avoids all of that difficult stuff like working on the structural issues to alleviate hardship. I guess real solutions don’t really suit the short video format.

But if we want to teach our kids anything in a surveilled society, it should be that what we do when no one is watching is what really matters.

The only problem, is that the spaces where we are able to do something without anyone watching, are in rapid decline.

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Keep Thinking,

Steve.


The Most Important Skill of The Future

Posted on by Steve Sammartino

Our world is changing rapidly. Everything is in a state of flux. What works well today may be ineffective tomorrow. The skill we need to survive an uncertain future is the ability to change gears.

  • Just think through the daily challenges we face in an omni-connected digital society. We must juggle between our online persona and our real world meat space personality and values
  • Navigate the impact of technology in the field we work and how this influences our future income streams
  • Adapt to new interpretations of language to more closely reflect a fluid society
  • Guess at how to interact with social media’s opaque algorithms for desired outcomes on digital tools
  • Relearn how to use constantly updating software
  • Continually re-establish ourselves on digital platforms to protect our brand reputation and connection to followers
  • Decipher organisational hierarchies and working norms reshaped by emergent generations
  • Figure out work-arounds in a volatile global environment with increasing costs of capital and supply chain risk

This list could be a 100 lines long. The one takeaway is that we can’t get too comfortable with the status quo. We need to embrace uncertainty and become accustomed to a state of flux.

The best way to prepare is to develop daily habits that are change-centric. We need to deliberately do things differently, so that it becomes second nature. This is less about technology and more about ourselves as people. By changing our approach, we cope better with rapidly changing technology. This is particularly important when we’ve been successful in business or work, because success hates change.

We all had to do this as a part of the COVID pandemic. Now it’s important that we don’t fall back into the habits of yesterday as work normalises. Personally, my TV show The Rebound would never have happened if COVID didn’t force my hand. Beyond that, there’s many things I do in my career that just don’t work as well as they used to. My Twitter account is a classic example. Engagement in that channel is now very low – change happened. Occasionally, I didn’t adapt as quickly as I should have.

Hack your future – change gears often

Hack your own mind to improve at changing gears by using different approaches to work and life. Treat different situations differently – adapt your style and messages in different forums. It forces an internal shift and helps you cope better with changes that are outside of your control. Kind of like CrossFit for the mind.

Here are examples of how I change gears:

My books and blog: Mostly about technology and its impact on business and the economy, my writing is where I flex my knowledge on the future, emerging technology and geopolitics. These are more intellectual forums for potential clients who want to scrutinise my work and be comfortable in the depth of my knowledge before they hire me in some capacity.

Media: In this forum (News, TV, radio), the gear I’m in is technology translator of the future. I want to show how I can explain the complex in simple terms. I also want the market to know I’m the go-to guy on anything tech and the future. I use the media to build confidence and brand awareness.

Keynote speaking: As the veteran of 500 keynotes in 14 countries, I often tell people that when you’re a keynote speaker, every day is a job interview. You don’t have the luxury of a bad day. In my experience of making speeches, the entertainment factor is more important than knowledge. How engaging you are is what gets you the next gig. However, unless you’re perceived to be an ‘expert’, you’ll never get that first gig. I focus on involving the audience, not talking at them. So it’s a gear that constantly oscillates between expertise and entertainment. In keynote speeches, I need to turn boring tech into something that electrifies a live audience.

Boardrooms: In this forum, my game is full-on economics. It’s about the impact technology has on future business strategies. My gear here is to use a strong financial dialect. It’s all about market capitalisations, price earnings ratios, revenue streams, cost infrastructure, disruptive technology and industry margins. The audience must immediately understand that I’m more than a technologist – I’m actually an economist by training, who just happens to have a deep understanding of technology.

Projects: My projects are all about getting my startup and innovation hat on – to show that I practise what I preach. I’m not an academic, but instead, a practitioner. I know it, because I’ve done it. My latest project is 3D printing a house with Tom from SlikBuild. Here it is all project managment.

Linkedin: This is where I share the work I’m doing. It’s uncomfortable to self-promote.. I aim to show others I’m doing lots of media, projects and keynote speaking. Here I want the masses to see what I’m doing, and that I’m in demand. My prospects will feel assured they are in good company when they hire me.

TikTok: This is my latest social media foray – and it is quite daunting and awkward. In every other digital forum, I have relatively sizeable followings. On YouTube, my videos have enjoyed over 12 million views. I’ve got 10k+ followers on LinkedIn and Twitter. But on TikTok, I am at total ground zero. I’m a beginner again. Two weeks ago, I started posting every day and even have a bet with my son that I can get to one million views by the end of the year. It’s very unlikely I’ll get there, but it’ll force me to upskill in short form video. Despite only having a measly 200 followers, I have posted two videos on TikTok which gained 10,000 views. TikTok has super high engagement levels, hence my investment in the channel. The gear here is one I rarely use in my work – it’s pure motivation and inspiration. I focus on teaching people life hacks to get more out of their career and money. It’s generally something I’ve avoided until now, but I think I have something to offer in this realm, so I’m putting myself out there to see what happens. Get on my TikTok here – it’s gold, baby!

If you can change, everything can change in your favour

Moving between gears doesn’t mean we throw out the skills we have. Instead, we should change how they are used and interpreted in our market segments. The more gears we regularly employ, the more future-proof we become, ready to respond to anything the market throws at us.

If you challenge yourself, you’d be surprised how many gears you can access in your skill base. By changing pace and thought patterns around your work, you’ll garner more respect in your industry, and make an investment in your future.

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Keep Thinking,

Steve.

Headlines from the Future

Posted on by Steve Sammartino

For your reading pleasure, I’ve included 10 headlines from the Future. While they seem unrealistic, they are all based on current and historical exponential improvements in these technologies. Every single one is a predicted reality – by scientists who work in these fields. Under each I’ve put a link or a little description for context as to why these headlines aren’t mere science fiction. Enjoy.

‘Robot performs first cancer surgery unaided by Doctors’ – 2027

Minimally assisted surgery is already here. It’s a relatively small step from here, not a leap, this timeline is possibly too long.

‘First synthetic human born’ – 2028

Artificial sperm and eggs have already been created to give birth to rats. Doctors say that synthetic babies are just a few years away, without the need for cloning. In addition 3D printed male sperm cells were recently created.

‘NanoTech foglets make food out of thin air! ‘ – 2045

I’ll start by saying foglets are tiny robots which can reorganise molecules. If robotics get small enough, and materials smart enough, we’ll be able to create everything from nothing. This is a great summary of how far we’ve come and why it seems inevitable to reorganise atoms eventually.

‘First human connects to internet via neural lace’ – 2037

Connecting a human to the internet, with information transactions occurring by thought has already been done. Now it’s simply a game of improving connectivity, computation, inference and resolution.

‘Brad Pitt’s new movie – 100% AI version of him’ – 2032

This is also probably an understatement – a good chance this will happen sooner. I don’t even have to provide a link of how good deep fakes have gotten. The way Tom Cruise is looking at 59, I’m not even sure that’s him! But we can be sure of this, they’ll be very few new movie stars, maybe we’ve minted our final batch, because big movie studios love nothing more than saving money by extending franchises, I’m sure they’d recycle actors too if they could!

*Bonus: Get 2 people to join my email list (this link) and get a 15 minute one on one mentoring session with me. Just reply email to this to tell me who joined thanks to you. I’ll change your life. Promise.

’60 year old gets 18 year old lung back with lab grown lung transplant’ – 2029

Just this week an ear which was 3D printed with bio ink was transplanted onto a human using their own cells to form it. The path from here is actually quite proximal and linear.

‘First ever full human brain simulated in cloud’ – 2028

Side note: we are by stealth, right now storing our lives, memories, plans, ideas, relationships, knowledge and work in the cloud…. But at a deeper level work is being done to upload entire humans minds.

‘World eats more meat grown in labs than farms’ – 2040

For starters, this process is already possible. The world’s first lab burger cost a cool $330,000. Since that time the cost of production of ‘lab meat’ has declined significantly. Today it costs around $6000 for a quarter-pound of beef and by 2024, it is estimated that the cost of a meat patty could be as low as $5 – not far off an acceptable cost for a gourmet patty these days. It’s important to note, that lab meat is the exact same molecular structure. You will not be able to know, see or taste the difference. While this might sound crazy, 50 years from now killing an animal to eat it, will be regarded as worse than slavery.

‘Renewable energy greater than 50% of global usage’ – 2029

It’s already above this is many countries. Australia, a renewable laggard already has 29% of all electricity and 24% of all energy usage from renewable sources. Pure economic forces will drive this. Free energy is a very enticing price.

The net out take should be this: It is easy to forget how many technological advances we take for granted today: a light switch, a car, air travel, air conditioning, TV, satellites. This is before we get radical and consider things like AI, 3D printing and crispr. Even the internet and a smart phone were literal science fiction when I grew up, and yet, here we are.

If you want to navigate the future, it pays to remember, that something is impossible, right until the moment it happens. Believing in ‘fantasy‘, isn’t just fun, it gives us a chance to participate in its creation.

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Keep Thinking,

Steve.

Is Netflix Over?

Posted on by Steve Sammartino

Imagine if an industry spent $4 to generate $1 in revenue. Stop imagining – this is exactly what Video On Demand streaming platforms are doing in 2022. It really is astonishing:

  • Forecast VOD streaming content spend = $US230 billion
  • Forecast VOD streaming revenue = $US83.4 billion

Don’t forget – this is before profit. No wonder no one can decide what to watch!

The tyranny of choice

Is content still king? My wife and I tend to perform the same ritual every night, where we take turns with the remote control to suggest shows that might entice both of us, but can never agree on one. After an hour of fruitlessly scrolling through content from four streaming platforms, we end up going to bed, having sampled an average of three minutes from six shows.

When it comes to content, we have a tyranny of riches. Netflix has even added a button that appears to prompt us, ‘Can’t decide what to watch? Play something.’

If you think this is bad for consumers, I can assure you it is much worse for companies. There are very few times in corporate history where offering more product options has performed better financially, in contrast to careful market curation. This is especially true when the company is directly making and acquiring the products. User-generated content platforms like YouTube don’t have this problem.

Market reality bites

Since its peak in late 2021, Netflix has lost US$230 billion, which is 73 per cent of its market value. It’s rare for a large market-leading firm like Netflix to suffer such a large hit. It’s another indication that we are moving from a future expectations economy to a reality economy.

Quite frankly, it is long overdue. Tech companies have been getting a free pass for a long time on their valuations. So long as they were growing, no one seemed to care about profit. We can include Tesla into this category as well. Incidentally, Telsa has lost nearly half its value since Elon Musk submitted a bid for Twitter, using his Tesla stock as security.

The streaming market is now seeing an endless slew of competitors with a deep back catalogue, deep pockets or both. Of course, this erodes Netflix’s advantage. While Netflix is planning to invest a massive US$S17 billion on original content in 2022, it’s hardly a leading position. In addition, much of its long-tail content has been removed in recent times, as its former suppliers (like NBC, Paramount and Disney) have become direct competitors.

  • Apple TV is expected to spend US$7 billion this year on content
  • Amazon Prime will spend US$13 billion
  • Disney is investing a colossal US$33 billion to grow their bank of nearly 100 years in deep content and nostalgia
  • Paramount Plus is also investing a large sum of $US15 billion in 2022

Without even considering all of the VOD platforms, it does seem like the market has got this right and is asking hard questions about the true worth of certain stocks in this and other tech sectors. All of a sudden, Netflix looks expensive and replaceable.

It is funny how often the market fails to look into simple financials until stocks start heading south.

Bonus: Speaking of Streaming, Catch up on my TV Show, The Rebound, latest ep. the Internet of Things. Tomorrow we explore Web3 – 12.30pm on Channel 9

Next-gen content

As far as entertainment goes, it is financially impossible to compete with platforms where the content is generated by users for free. YouTube, Meta platforms and TikTok have the advantage of literally billions of content producers working for free. Ironically, it’s the dream of many content producers that their work goes viral and they are eventually picked and paid to make something for a streaming platform. It’s easy to delineate that these platforms don’t compete directly, but in reality they do. They are all competing for attention. Attention is something the market can never get more of, despite the corporate investment in chasing it.

From a marketing and technological perspective, it is clear that spending more on content is not a sustainable strategy. However, it does feel like there is a shift in how content is made and consumed. For any streaming platform to stand out from the crowd, greater creativity is key. Netflix has shown signs of this via its interactive Choose Your Own Adventure storytelling – like Bandersnatch – in which viewers make decisions on how the story unfolds. Another longer-term tech possibility is deep fakes that allow viewers themselves to literally appear in the shows via face swap technology. But the leading light in the future of content is clearly TikTok. (Follow my new content experiments on Tiktok here.) TikTok has managed to launch several simple, yet insightful, innovations that allow content iterations and layering on original pieces, combining something original with crowd participation. Their first move was to grant users the ability to grab someone else’s audio, and more recently, use it in duets. This one here is a classic duet song about Crypto Kids that went super viral last week. It’s brilliant. They really have gone beyond sharing and developed a new kind of iterative layering no other channel has conceived – so simple, yet so effective.

The take out here is that consumer-driven insight and utility always beats big budgets. A lesson we need to remember when investing or building our own company.

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Keep Thinking,

Steve