Digitisation of content & media shaping our future
The traditional media had a single distribution structure where a content is created offline, let’s say a sports event, and a right to broadcast the event through is sold to licensee at a price based on potential viewership which in turn is offered to the viewers via conventional channels such as TV. The content creator/organisers rake in a ton of money from this. For instance, in 2019, NFL earned $4.5B while EPL (English Premier League) earned $3.8B by selling these rights and the licenses happily pay the hefty fee because the viewership attracted by the content generates them equally high amount of revenue by selling Ads.
What makes the content so valuable is that 1) the content is created in an offline world by an organizer through aggregating a handful of talented participants such as LeBron James or Lionel Messi and 2) the event is a snapshot incident rather than a continuum (i.e. there is a game day and a game time). In other words, by aggregating some of the world’s best players and letting them play with/against each other at a specific date/time created a highly sought after content that millions of people are dialing in at the same time and that rare moment where millions of eyeballs focused on one same event is what makes the event so valuable.
However in recent years, the number of viewership is declining for the conventional content and one of the reason is because the way that we consume content/media is changing.
For one, anyone can create a content by sharing a part of their life on YouTube or by streaming their game playing on Twitch. This phenomena has reduced the value of the conventional content because now the viewers can enjoy a more variety of contents on a continuous basis. Essentially, the platforms such as YouTube and Twitch have democratized the content creation by giving the crowd a tool to create their own and share it among themselves.
Another example is that we are consuming media through a ‘platform’ rather than through a specific ‘channel’ such as TV and radio. Often called Over-the-top (OTT) media service, a content is consumed on a platform that can be accessed from multiple channels. For instance, Netflix can be consumed on our TV, computer, cell phone, and Tablet, now matter where we are and more importantly, whenever we want.
Three notable results from these changes are:
#1 Viewership and revenue redistribution for contents
As of 2019, there are ~31m channels on YouTube and this is massive compared to perhaps hundreds (or thousands including cable channels) of conventional TV channels around the world. Even more astonishing is that about 80 million videos (or fresh contents) are uploaded every month (that is 2.6 million EVERYDAY!) on YouTube which means contents are essentially served on a continuous basis, unlike the traditional TV channel where you would need to wait days or more for a fresh content.
These ‘micro or ‘casual’ content creators are taking, no wonder, taking away viewership from the traditional content creators (as evidenced by Figure 2) and with it, some of their revenue as well.
This is, in my opinion, by far the most positive result that the phenomenon is creating because it is redistributing the economic revenue WHILE increasing the size of the pie. Hence, this is net positive to our economy.
#2 Switch of Power
Another noteworthy transition is that the power of media is being shifted from the conventional broadcasting companies that dominated ‘channels’ through rights and licenses to the online ‘platforms’ that attract viewers by offering more choices and convenience. This is another positive move in a sense that the new platforms are a foundation to the movement of the content democratization and that viewers exert more power to the industry but it should be discounted by the fact that it is still dominated by a handful of players (and arguably even more concentrated then the conventional broadcasting companies). For instance, in the case of game streaming, there are really only two players in the industry that dominate almost the entire market.
In other words, the baton is merely handed over to the a handful of the platforms from those who had dominated the licensed channels. We are still in the early days of this transition and hence yet to see how regulation would hinder/spark further growth.
#3 Growth in viewership and its diversity
Another result from this skyrocketing number of contents available as well as ubiquity of the contents’ availability is that viewership is more diversified and that means more potential viewers in the industry. For instance, we rarely see nowadays a family gathered in front of a TV every Saturday 5pm to watch their favourite weekly show. Instead, each member of the family are essentially consuming their own content on their own devices; dad watching a hockey game, mom watching Martha Stewart show, daughter watching a beauty YouTuber while son watching a League of Legend on Twitch. Essentially, total potential viewers of the industry is tripled to 328M (population of the US) from 128M (number of households in the US).
This is very interesting to me because technology increased the size of the entire market without an actual growth of the human population! Increasingly, the tech industry is rebuffing some of the old notions, especially the Malthusian Trap, and hence this is a sign that we are making a positive progress.
The future
Such transitions that we see happening have a larger impact to our future than we might think because it is how we spend our time. For instance, when TV was first introduced and during its rise, one TV set was often available to a small group of people who live together (a family, roommates…etc). Hence, contents that catered towards the audience that was sitting in front of the TV, such as the Fresh Prince of Bel-Air or Friends, gained in popularity. It also impacted the design of our homes because most homes were built with a living room that has a space for a TV and a couch. It probably also had an impact to what we eat as well because people would find it easier to order a pizza while all facing the TV watching their favourite show at the same time.
In the similar way then, we could see the contents we consume, the way our houses are being built, the food we eat…etc be influenced by the transitions. . Who knows? Maybe it will help us discover the next big idea as well
