content Archives - Steve Sammartino

Is Netflix Over?

Posted on May 27, 2022May 27, 2022 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

Forbes ironically forgets Economics 101

Posted on February 3, 2016 by Steve Sammartino

A few times I’ve had friends link me to interesting articles from Forbes. The topic looks good, I’m excited, and click in and I get this:

Forbes ad blocker request

What Forbes are really saying is this: “Sorry Steve, even though you have an ad blocker, and you’ve taken definitive action to not see advertising, we want you to turn off your ad blocker, so we can trick our advertisers that your eyeballs are worth paying for.”

And here is what happened. I clicked out and read something else. I’ll never read a Forbes article online again. I’m not sure if it’s a shame or a sham? Why would any media organisation try and trick it’s advertisers into believing they are getting more value than they really are. If I did do what Forbes suggested, then I’d be getting the advertisements, but ignoring them. Certainly a worse outcome for the advertiser, they’d be paying for attention they’re not getting. It seems most people agree.

Forbes ad block comments

What Forbes and anyone else putting up barriers seem to forget is the first lesson in economics – demand and supply. And content is supply rich for readers. If you lock us out, we’ll get it elsewhere. If anyone in the content game wants their audience to jump over walls they better ensure what they’re offering is not on this side of the barrier as well.

You should totally read my book – The Great Fragmentation.

Distribution is King-er than content

Posted on December 27, 2015 by Steve Sammartino

Apparently content is King. Well, hopefully I can present some evidence which might help you open your mind to who the real king is, and I’m saying it is distribution. I’ve had this contention for some time, and while amazing content can ride the sharing train and be crowned in the online kingdom, the big D of Distribution still determines who wins and loses when it comes to the commercial market.

Let’s take this current day example: The Youtube Rewind 2015 video. Which a few years ago was a fun and creative piece of content. This years version was marginal at best. If it didn’t have the front page on Youtube and a bazillion emails to distribute it to do you really think it would have 65 million views? You be the judge.

It simply would not make the cut. It wouldn’t be seen. It wouldn’t be shared. A few thousands views at best I reckon. And you can add to this to any number of average articles you read on Buzzfeed, Business Insider or any other powerful channel that have many views and shares. Invariably we’ll see that the key driver wasn’t the content itself, but the distribution engine behind it. The irony is that the great hope of the web was that the best stuff will bubble up to the top – no matter where it came from. Occasionally it still does, but mostly this new ‘great stuff’ resides in obscurity. How many blogs do you read, or podcasts do you listen to which you totally love and think should be ‘bigger’, but they never seem to hit the big time? I’m guessing your feed is full of great unknown content. Now that everyone is here and we all have something to say, powerful distribution matters more than it ever did. And if you can’t be heard, well it’s back to the future … you need to paying for attention. Except now it’s done on social forums and search. Who said history never repeats?

The one difference is that now we have access to the same tools and we can at least prove ourselves in micro channels. Even better, we can now make a living in niche land by talking to those who really care about what we have to say.

You should totally read my book – The Great Fragmentation.

Twitter vs Facebook vs Linkedin – is the medium still the message?

Posted on June 4, 2015 by Steve Sammartino

The medium is the message, first coined by Marshall McLuhan has been a staple belief in the world of advertising and communications for a very long period. During the heady days of Mass Media, being seen on TV itself was beacon of success. Products on the shelf would proudly beam ‘As seen on TV’ on their packaging. For only those who sold a lot of their product could afford it, or was it that if you were on it, you’d sell a lot of product? Regardless, the channel a brand appeared in said a lot about its place in the commercial world.

While, it feels like the now infinite number of media channels might make this maxim less true, I’m certain it still applies to a large extent. Ofttimes the context shapes the content.

As far as this blog goes there are some clear patterns. If you’re a regular reader you’ll notice that I have only 3 social sharing buttons at the bottom of a post. One for Twitter, one for Facebook and one for Linkedin. I ditched Google+ because it was just too embarrassing have a share button with no shares. Here’s what I noticed with the sharing of my posts:

Twitter – always gets more shares if the post is tech, startup heavy, recent news commentary or political in nature.

LinkedIn – always gets more shares if it’s about escaping a corporate position, about becoming an entrepreneur, industry disruption, human motivation, selling and horrible bosses.

Facebook – always gets more shares if it’s about personal finance, goal setting, hope, criticism and social issues. Yet, I’m connected to the same people in all these channels.

My takeout of all this? For startups or any business using social forums trying to reach an audience, it is far less about the demographic and for more about the ideology and topic of the particular post. The interest graph is far stronger than the social graph. Now the only question on my mind is what category does this post fall into?

New Book – The Great Fragmentation – out now.

The global content playbook & how the internet actually works

Posted on March 24, 2015 by Steve Sammartino

I’m a big fan of the John Oliver show Last Week Tonight. Which, in an unconnected web world I wouldn’t even know about as it has never been shown in Australia. But through the wonder of sharing great content online I became a big fan. The show airs in the USA on Sunday nights, and in their wisdom, HBO would publish much of the shows content on Youtube a day later. I’d eagerly await to watch it here on Monday night in Australia through the Last Week Tonight Youtube channel. At last, a media company that gets it. A media company that understands the value of building connection and fan bases globally in real time. They even made it available to non subscribers – wow.

That was until this week. For some reason, most likely the HBO launch in Australia or some other licensing arrangement in Australia with Stan, Presto or Netflix, I now get the classic picture above: Sorry, This content is not available in your region.

Wrong.

This content is available in my region, they simply made a decision to give up their direct relationship with me, and forced me to get it elsewhere. Now they won’t share any of the potential advertising revenue or other prizes which come from direct customer relationships. Weirdly, much of it is ‘still’ available on youtube channels where others have uploaded it. The back door has been opened. And it’s licensing deal structures born of the late 1970’s cable TV era that create this back door leakage.

More than 20 years into this thing, here’s a simple lesson every media company should already know: Once it is released anywhere digitally, it is released everywhere digitally. The desires of the content owners to limit distribution are irrelevant. Given this is the new truth, a better strategy might be to just embrace it.

New Book – The Great Fragmentation – out now.

When receiving is better than giving

Posted on April 27, 2014 by Steve Sammartino

I’ve had a few discussions with friends lately about their social feeds. A few of them have mentioned that they don’t even read their twitter feed. That they don’t read other peoples blog posts, or tweets and they only pay attention to the attention their own content is getting. The views, the shares, the open rates, the followers, that’s what they care about. And I understand why they might do this. It’s only natural to see if we are having an impact. It’s natural to focus on the work we are delivering to the market, even if this work is content creation and curation. We’ve all heard the argument that much of the content is created by the motivated few. But in a world where content is being replaced by digital conversations I wonder if everybody is so busy talking that no one is actually listening.

What if we all did that? What if every one of us was so introspective that the only work that mattered was our own work?

If everyone is posting and creating and not reading where does that leaves us?

It leaves us in a place where the internet becomes a noisy auditorium of nothingness. There’s a reason why we have two ears and one mouth. We should listen twice as often as we speak. If attention is the asset in the modern economy we need to ask ourselves the question of how much we are giving others. Are we being generous enough with our own attention for others content? Are we respecting the gift of knowledge dissemination provided by others? I feel like this is becoming an important question in these times of data deluge.

It comes down to a simple fact which is as old as human language. If we want to be heard, then we first need pay our respects and listen first. People in our specific communities are making an effort with their thoughts and we should support it. Because the things that don’t get attention and support eventually disappear. Content is no different. We need to look at our physical make up and read 2 for every 1 we create. Answer 2 tweets for every 1 we send. Comment twice for every blog post we create.

This is one of the few times in life where it is better to receive than give.

The abundance crisis

Posted on October 18, 2013 by Steve Sammartino

The late great comedian Greg Giraldo was one of the smartest and funniest guys who ever lived. He really had an eye on society. In 2004 he had a bit in his stand up comedy routine which spoke of the Obesity Crisis:

He said:

They say were in the middle of an obesity epidemic. An epidemic like it is polio. Like we’ll be telling our grand kids about it one day ‘The Great Obesity Epidemic of 2004’. How’d you get through it grandpa? “Oh, it was horrible Johnny there was cheesecake and pork chops everywhere.”

It is not without a small amount of irony that we are now entering what I regard as a great content crisis. There is such an abundance of content available that we are literally gorging ourselves on omnipresent opinion and data. We are doing this without thinking about how this shapes our minds.

“… Oh it was horrible Johnny, there were blog posts and celebrity stories everywhere….”

Both of these consumption problems are a function of our make up. Our desire intake as much information and food as we possibly can is mostly out of our control, it is coded into our DNA. Our current human operating system which dates back around 2 million years has us programmed to eat all of the food available to us (which is why sugar and fat taste best), and to take on all of the data available to us (which is why we are mesmerised by media). These behaviours are part of the human species survival doctrine. Our ability to be omnivorous, control our food supply and acquire knowledge are what put as atop of the food chain. The problem is than our DNA is yet to update its operating system to cope with an over abundance of food, and now information. Given our operating system updates via natural selection, we are faced with an intellectual challenge – the ability to ignore the instinct for more, and instead to choose less, but less with the required nutrition.

As we enter an age where we have access to most everything, both physical and mental, longevity and success are being redefined. The art of living well is becoming less about wealth and more about the ability to choose, and choose well. And that choice will invariably need be about the nutritional value of our inputs into our person, both mental and physical.