The changing ways in which we all consume media, and how the media itself needs to evolve in response to such changes, were major topics at the recent . Executives such as Dean Baquet of The New York Times, Jeff Bewkes of Time Warner, Reed Hastings of Netflix, and Shari Redstone of Viacom and CBS each talked about how their businesses were changing.
As usual, Mary Meeker of Kleiner Perkins (above) set the stage for many of the media discussions with her annual report on .
What I found most interesting was the amazing growth in
Five years ago, the average person spent less than an hour a day consuming digital media on a mobile device; today that number is more than 3 hours a day.
Mobile advertising has grown as well, and the combination of mobile and desktop Internet media consumption now accounts for more time—and more ad spend—than TV in the U.S. And, Meeker said, the same will soon be true globally. She addressed the growth of ad blocking and how the leading ad platforms are providing more ways of tracking and measuring ads, with the goal of helping advertisers to reach people with the right ad at the right time and place.
On other topics, I was most surprised by her focus on gaming, to which she credited Bing Gordon, now of Kleiner Perkins but formerly with Electronic Arts. She highlighted the growth of interactive games, and how these are now impacting learning and engagement, as well as how gaming concepts, techniques, and tools are becoming the foundation for all sorts of Internet services well beyond standard gaming.
Meeker also touched on the growth of cloud computing and its impact on enterprise computing in general; the Chinese and Indian internet markets; and health care. It’s worth a look at to capture the full scope of the changes she sees.
Dean Baquet, executive editor of The New York Times, said that he thinks “news is not relevant if it’s not widely read,” and that while it is important the Times gets subscribers, it’s also important to have a “permeable” paywall, which is how the sites gets 130 million monthly readers.
Baquet talked about how the Times needs to evolve, with writers having different voices, and perhaps also adding their pictures and biographies to the stories so readers understand their backgrounds. He said everyone involved with the Times understands that the paper has changed, has to change
“I think the biggest crisis in journalism in America is the crisis in local news,” Baquet said, noting that the Times, the Washington Post, and the Wall Street Journal are doing okay, but that smaller, local papers are not. He said that we need to figure out a way to ensure that local issues, such as school boards, are covered, but he isn’t sure what the right model may be. Asked about philanthropy funding journalism, he noted that the Times is doing a project with the New Orleans Times-Picayune about the environment. In this effort, the Times-Picayune’s reporting was subsidized by a philanthropist.
Netflix CEO Reed Hastings talked about the success the company has had with TV shows, such as House of Cards and Orange is the New Black, but said it’s “just getting started” in creating its own movies. Hastings said Netflix chose to create serialized media first, because of binge watching, which the company could see on repeats of other shows, but now wants to create a wide variety of movies, from high-end to low-cost films.
Currently, movies are typically available to content distributors through windowing systems:
Hastings noted that most of Netflix’s growth is now international, and said that the firm is currently commissioning original content in more languages and from more countries, in particular citing France, Germany, Turkey, Japan, and India.
Asked about the other technology companies—Google, Facebook, and Apple—getting into the business of commissioning unique content, he said the market is “nowhere near saturation” and said the more entrants, the more work for the talent. Hastings did say that the concept of linear TV has lasted almost 100 years, but predicted that in the next 20 years “it’s all going to be on-demand.”
I was particularly interested in how he differentiated Netflix from Amazon Prime Video, saying he would rather be compared with a premium service, such as HBO, as opposed to Amazon, which wants to be very broad. Hastings doesn’t think Netflix would consider ad-supported content as opposed to subscription-supported offerings, saying companies like Facebook and Google are better suited for ad-supported models.
Hastings acknowledged that “[Netflix is] not trying to meet all the needs” of its customers, and noted that customers watch
A lot of the discussion focused on “net neutrality,” and Hastings acknowledged that Netflix isn’t playing the lead role in the conversation that it did a few years ago. “We think net neutrality is incredibly important,” for society, innovation, and entrepreneurs, he said, but added that Netflix is now so big that net neutrality is no longer its “primary battle.”
Jill Soloway, creator of Amazon Prime TV shows Transparent and I Love Dick, said she first pitched Transparent to many other channels and wasn’t sure what to expect. Amazon offered to give her back the pilot episode if they didn’t pick it up as a series, and also mentioned that Amazon didn’t give her as many notes on shows as other TV networks did. Amazon and others are now more open to the idea of a flawed female lead, she said.
Soloway talked about how she discussed with Amazon founder Jeff Bezos how stories such as Transparent can have more impact on the culture than politics. Soloway’s new company, called Topple, aims to “topple the patriarchy,” as well as to produce more content by women, people of color, and those with different voices.
Defending the company’s plan to be acquired by AT&T, Time Warner CEO Jeff Bewkes said that combining Time Warner’s content with AT&T’s abilities and retail distribution will enable the integrated organization to move faster, as we move into a new era for video. He said the acquisition is in the normal Department of Justice review; he doesn’t think the change in administrations will impact it going forward.
Bewkes talked about the big changes in media over the past five years, mentioning mobile video, broadband video, improved at-home video choices, and better navigation. He said, “we tried to do ‘TV everywhere’ 7 years ago,” but it didn’t work because the technology wasn’t there.
Bewkes said Time Warner had content and distribution together for 20 years (because of its former ownership of Time Warner Cable), but noted they spun it off “because it wasn’t national.” He said it only covered 12 percent of the country, while AT&T, through its DirecTV and Mobile businesses, has a national footprint and national competitors. “It has to be everywhere,” Bewkes said, emphasizing that with national mobile, broadcast, and video distribution, the company will have direct information about consumers across the country.
While Bewkes said the combined company could offer new products faster, he said it wouldn’t offer content that isn’t also available on other platforms. One advantage is that if you have distribution with direct retail data, you know who is watching when you launch new products.
“We think there ought to be more innovation and more competition,” Bewkes said, noting that Time Warner invented TV supported by subscribers with HBO, and also has sites that are supported by a combination of subscriptions and advertisements such as TNT, FX, and CNN.
On the subject of net neutrality, he said: “
Shari Redstone, vice chair of CBS and Viacom, acknowledged that last fall she had backed a merger of CBS and Viacom, but has since changed her mind. “They’re both stars,” she said, and since the change in management at Viacom—now under CEO Bob Bakish—she sees much more “energy” at that company. It became apparent to her that assets were undervalued at Viacom, and that a merger would have hurt the momentum of Viacom.
Redstone said it’s now a great time to do deals because
Redstone also discussed CBS, where CEO Les Moonves just signed another contract. Asked about the value of sports with NFL ratings down, she sees sports as very important, and part of the success of the network going forward. “People want exclusive content,” she said. She believes the ratings for the NFL were down because things “got very confusing” for consumers last year, with too many networks and social issues, and stated she has “full confidence in the NFL.” In the future, it will not just be about content, but about the experience around the content, she said.
Redstone, who is also a co-founder and managing partner of Advancit Capital, explained that the venture capital firm invests in early-stage ventures like digital measurement company Moat (recently acquired by Oracle), video suppliers like Maker Studios (recently acquired Disney), and a number of augmented reality firms, while Viacom and CBS look at later stage investments. Redstone said that the most value she can add to the larger companies is an understanding of what is going on in that world. She said her biggest mistake as a VC was passing on Twitch.