The value proposition of PARQOR for potential subscribers is built upon a trend I labeled “the post-‘streaming wars’ media convergence".
What did I mean when I first used it when moving over to The Information’s platform last November? How has it evolved since ? Does the term still apply?
The basic premise was that direct-to-consumer (DTC) streaming business models would enable companies to monetize the same consumer via additional DTC models beyond streaming.
The simplest example? Apple and Disney each launched streaming services to monetize consumers they already have within their respective ecosystems, and charge those users an additional monthly or annual subscription fee for access to a streaming app.
Where that trend has been a bit more complicated is Netflix moving into mobile gaming without charging an additional fee, or past WarnerMedia management selling an opaque strategy of pursuing narrative storytelling around “beloved” IP and characters across linear, streaming, and interactive storytelling in gaming (“Multiverses”).
There is generally a lack of transparency across the market into how convergence is happening: only Disney and Netflix break out their subscriber numbers in detail, but even they don’t offer any insight into how gaming helps to drive growth (Netflix) or how Disney+ helps improve Theme Parks revenues.
Ultimately understanding ‘post-streaming wars’ media convergence is about the available evidence we have on how the dots may be connecting. But none of the evidence is conclusive because public companies *so* tightly control the optics for shareholders and the media. In the rare instances we do get this information, it gives us guideposts and perhaps a little bit more, but nothing else.
Given this, what should a subscription service built upon analyzing “post-’streaming wars’ media convergence” look like? And how can and/or should PARQOR evolve to be more like that service?
The Big, Broad, Overarching Theme from Interviews
The one big, broad, overarching macro theme that has emerged in the interviews I have conducted, to date, is that convergence is a slow, iterative process. Free markets have made possible incredible technological leaps for consumers. But they also make it harder, and not easier, for “post-’streaming wars’ media convergence” to happen. So there are often more “structural misalignments” [1]
For example, one reason we may not hear as much about the convergence of gaming and streaming offerings is that the post-production process is oversaturated with demand, and impacting the ability of TV series, movies and video games to get to market. Drew Magary of Decoder wrote a good article on this, “Inside Hollywood’s Visual Effects Crisis”, about how post-production is
“undergoing a rebirth, on the fly, across a global patchwork of studios, effects houses, boutique shops, and freelance contractors. Visual effects departments didn’t even exist, particularly in television, until roughly a decade ago. Now they, along with secondary effects houses, are being tasked with a sizable portion, if not a majority, of post-production duties on shows that have hard premiere dates which rarely, if ever, get moved.”
Media convergence is playing out at a deeper level, too: visual effects (VFX) studios increasingly rely on Epic Games’ Unreal Engine - a standard-bearing 3D computer graphics game engine - for post-production, and to an extent that the supply of VFX talent for gaming and video production is going to overlap, if hasn’t already. Assuming fixed supply in the face of growing demand, we are going to start seeing marketplaces begin to show their seams (and Drew Magary highlights how this is already happening) as productions struggle to meet their deadlines with limited available skilled talent.
In other words, the point is not that there are disconnects; rather, it is there are disconnects AND their existence creates extraordinary circumstances that create financial and operational pain points across the media and tech marketplaces. As I understand it from my conversation with readers, researching the details of these extraordinary circumstances are more valuable than the act of identifying them in an essay.
Example #2: Connected TV
As I‘ve written on multiple occasions, another set of extraordinary circumstances lies in the Connected TV (CTV) marketplace. CTV seems poised the solve for the “attribution gap”, or the gap between (1) where people learn about products, services and brands, and (2) the mediums where they do the shopping and the buying. Effectively, the connected TV is a nexus for the convergence of TV viewing, gaming and e-commerce.
However, advertisers, streaming services, and device makers are struggling to work together: Market leaders believe that without better data-sharing in the marketplace - something every walled garden existentially refuses to do - there will not be the ability to target and track individuals watching the content. In turn, that will make solving for the “attribution gap” harder.
Meanwhile, CTV spend is projected to more than double from ~$18B in 2022 to $39B in 2026. And Connected TV devices are only one device among many in automated households (there are, on average, 3.9 CTV devices per household, according to Leichtman research). Consumers are navigating multiple devices, often not the same brand, and advertisers need to reach those consumers when those multiple devices do not share the software to communicate with each other.
What are the optimal set-ups for a CTV consumer in an automated household? And what are advertisers optimal paths to the consumer? How valuable will the connected TV be to advertisers if walled gardens persist and smart home devices offer better, more effective means of reaching them?
And Therefore…
So, I think the term “the post-’streaming wars’ media convergence” still applies. But all signals suggest there is more value in exploring it one or more levels deeper than I have been, and not only with a newsletter. Right now there are three topics that have emerged from interviews:
Post-production marketplaces in TV and movies, gaming and the creator economy (I have learned there are issues in the YouTube marketplace, too);
Connected TVs and Smart Homes (see above)
The slow adoption of Customer Data Platforms (CDPs)
There is also a broader theme about emerging privacy laws and Apple’s Anti-Tracking Transparency initiative as existential threats to digital advertising models that applies to all three topics.
An essay may not always capture the nuances - especially the financials - of the disconnects or “structural misalignments” in these marketplaces. So what else can I offer? And what areas would I explore?
I am working through a few proposals with some readers. If there is anything more you would like on these topics - e.g., Zoom calls, private lunches or dinners, or something else that you believe would make your subscription feel more valuable to you and your teams - please let me know.
Thank you for your continued support.
Footnotes
[1] A term an executive in the Connected TV measurement space used to describe to me his pain points in the advertising marketplace. It's a great term with broader use cases.