Covid burst the dam: with a viewer watching YouTube content on their connected TV and Game of Thrones on their mobile device, distribution platforms and screens have blurred, meaning that eventually, the price an advertiser will pay for a viewer will converge… there will be no more digital pennies vs analog dollars.

When Covid hit, we entered “bizarro world,” where the definition of risk and diversification, and how companies viewed their core competencies changed dramatically.

All of a sudden, 

  • Speed trumped Size
  • Agility trumped Scale
  • Diversification trumped Core Competencies

Same way that wars serve as accelerator of history, so will this pandemic. For one, government policy decisions will allocate resources to certain fields which will benefit. Second, consumers’ habits will change.

But now, we’re in the new normal realizing that even if a vaccine brings a sense of “normalcy,” we will live in a new normal on many fronts, including but not limited to the Work from Home (WFH) Revolution, the minimum threshold required to travel, the bifurcation of society, acceleration of older employees retiring, etc.

Content is the New Software

Marc Andreessen boasted a decade ago that software was eating the world, he was right and everything that ensued reflected that.

I have been saying since 2006 – and repeated in 2011, 2012, and 2013 (links below) – that content is the new software (watch my recent interview on Bloomberg on that theme):

How so? With close to zero marginal cost of distribution, all of these new distribution platforms usher new revenue streams for content owners. This is what Sumner Redsone meant when he said content is king (and which Bill Gates subsequently further popularized).

The field I work in mainly – particularly in ad-supported media/content is about to experience a major inflection point. Covid is forcing companies to restructure for that reality. It’s not a coincidence that the head of WarnerMedia is a streaming pioneer in Jason Kilar (via Hulu, mainly, and Vessel). Covid just left zero doubt and moved up the timeline and sense of urgency.

The distribution pipelines have been built. Consumer behavior has changed. But the huge ad dollars from TV have yet to truly flow over to digital. 

In the graph to the left, you see how the 2008 econocalypse accelerated print’s demise; meanwhile you see how with online consumption having finally overtaken TV media consumption (right graph), a repeat of that print pattern is imminent, if history were a judge.

History Repeats Itself

Don’t just take it from me:

“I don’t think we’re anywhere near the saturation point with streaming. There’s a huge, insatiable appetite for the next three-to-five years.” – Tuna Amobi, Analyst (SFRA)

“The AVOD gold rush is here, and it represents a prime opportunity for service providers, new AVID entrants and content companies.” – Sarah Henschel, Analyst (Omdia)

“That $70 billion of TV advertising needs to go somewhere.” – Rich Greenfield, LightShed Partners.

“Competition builds markets. Streaming will take over because there are a lot of companies creating great content and getting viewers to shift from linear to streaming, and COVID will accelerate the ad dollars from TV to the Web.” – Peter Horan, former CEO Ask.com & About.com. Board member, LendingTree.

Covid burst the dam, with a viewer watching YouTube content on their connected TV and Game of Thrones on their mobile device, distribution platforms and screens have blurred, meaning that eventually, the price an advertiser will pay for a viewer will converge… there will be no more digital pennies vs analog dollars.

This is not limited to media, of course. In fact, it’s manifesting itself in many areas such as fintech and eCommerce which explain some of the private investments I have been making.