www.activate.com

RedefineRs: CaptuRing Media gRowtH dollaRs

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WILL GO TO THOSE WHO

IN THE NEXT 3 YEARS

325 BILLION GROWTH DOLLARS

REDEFINE THE MEDIA BUSINESS

Source: Activate analysis and estimates; Veronis Suhler, 9/10; PWC, 6/10; eMarketer, 2011; Yankee, 2011; Analyst Reports & Company Data, 2010/2011

MEDIA COMPANIES HAVE A CHANCE TO BE THE REDEFINERS

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growth from media businessesExISTING

growth from media businesses

NEW

MEDIA GROWTH DOLLARS

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$212 billion

NEW BuSINESSGROWTH MATTERS MOST

$1.4 trillion

$325 BILLION MEDIA GROWTH DOLLARS

$1.1 trillion

$113 billion

existing business growth

[3% p.a.]

20142010

newbusiness growth

[15% p.a.]

Source: Activate analysis and estimates; Veronis Suhler, 9/10; PWC, 6/10; eMarketer, 2011; Yankee, 2011; Analyst

Reports & Company Data, 2010/2011

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WHO WILLWIN?

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HOW MEDIA COMPANIES CAN BuILD NEW GROWTH BuSINESSESTHE REDEFINERSA new generation of upstarts has an advantage in winning media growth dollars, scaling quickly with new cheap technologies. To compete, media companies need to become redefiners themselves.

HACK THE ORGANIZATIONMedia companies will create more value from building, rather than acquiring, emerging digital businesses. ‘Hacking’ – creating a virtual startup outside the organization – enables a build-first strategy.

AN UNFAIR ADVANTAGECompanies that want to gain an advantage in creating the next wave of media businesses must face the challenge of combining content and technology to build new user experiences.

REDEFINING STRATEGYStrategies must address the fact that there will be multiple business models, audiences, devices and platforms. Companies need to determine how to win as their businesses are being redefined.

THIS PRESENTATION:

hack the organization

AN UNFAIRADVANTAGE

REDEFINING STRATEGY

THE REDEFINERS

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WHO ARE THE REDEFINERS?Businesses Born at the intersection of tech and media

driven By human experience first, Business model follows

will Be the ones to win the Battle for growth dollars

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REDEFINERS ARE FREE FROM THE LIABILITy OF LEGACy

ContraCts

TradiTional righTs

Production and editorial models

UnbUrdened by legacy constraints tHey can tHrive even witH lower margins

Distribution Deals

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Today redefiner

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DISRUPTORS

NATIVE TO THE WEB AND APPS ERA

FOCuS ON BETTER SERVING INCuMBENTS’ CORE CuSTOMERS

DRIVEN By A BETTER ExPERIENCE

RESuLT IS A NEW BuSINESS

REDEFINERS

REDEFINERS: SuCCESSORS TO DISRuPTORS

Driven by technology

Focus on targeting the periphery oF incumbent companies’ business

removes the value or revenues From an establisheD market

result is chaos

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WHO WILL REDEFINEyOuR BuSINESS?

IF IT’S NOT yOu

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ExPECT HITSFROM NOWHERE

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ONE GAME PROGRAMMER WORKING ALONE GENERATES 2 MILLION PAYING DOWNLOADS AND OVER $30 MILLION IN REVENUES IN LESS THAN TWO YEARS.

expect hits from nowhere

Source: Company data, 4/11

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140 million downloads of the game in 18 months, creating characters that spawn merchandise & films.

expect hits from nowhere

Note: Paid & free; includes iOS and other platformsSource: Company data, 3/11

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Pioneered location-based aPPs, reaching 500 mm check-ins from 8 mm users in just over two years.

expect hits from nowhere

Source: Company data, 3/11

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iPhone APP showing PotentiAl for hyPer-growth by reAching 1MM users in 8 weeks And 3MM in 9 Months.

expect hits from nowhere

Instagram

Source: Company data, 4/11

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Most popular Music subscription service, with over 10% of 10 MM users choosing to pay freeMiuM subscription.

expect hits from nowhere

Note: Based off total number of free usersSource: Activate analysis of company and industry data, 2010/2011

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25MM USERS, STANDING OFF COMPETITION FROM AMAZON, GOOGLE AND MICROSOFT.

expect hits from nowhere

Note: Grew from 4MM users in 2010Source: Company data, 4/11

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HITS yET TO COMEexpect hits from nowhere

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REDEFINERS DON’T WANTALL THE CuSTOMERS, they want the

MOST VALuABLEOnes.

WHEN SOMEONEGETSRICHTechnology Doesn’T sTop

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TECHNOLOGy DOESN’T STOP WHEN SOMEONE GETS RICH

AN UNFAIRADVANTAGE

REDEFINING STRATEGY

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HACk THE ORGANIzATION

the redefiners

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EVERyONE’S INNOVATION quESTION

Buy OR BuILD?

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(And mediA compAnies need To AVoid suckinG The life ouT of Acquired sTArTups)

yOu CAN Buy TALENT,Buy INNOVATION.But You

can’t

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THE RARE ACquISITIONS THAT HAVE THRIVED WERE

GIVEN SPACE TO INNOVATE

™

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EVERyONE’S INNOVATION quESTION

Buy OR BuILD?

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GROWTH DOLLARSBuILDING yIELDS

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BuILDING A NEW BuSINESS MEANS

HACkING yOuR ORGANIzATION

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Work outside of the media company org chart

Liberate team from the Legacy business compLiance and constraints

aLLoW the team to Work independentLy

focus on buiLding neW (vs protecting the oLd)

HOW TO HACk yOuR ORGANIzATION

HACkING MEANS BuILDING A

VIRTuAL STARTuP

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USE TODAY’S ASSETS AS THE SEED FOR TOMORROW’S NEW BUSINESS

THINK ABOUT YOUR GOALS FIRST, AND RISKS SECOND

PUT A STRONG LEADER IN CHARGE, NOT A COMMITTEE

OPTIMIZE FOR GROWTH, NOT SHORT TERM MARGINS

DRAW THE BEST TALENTS FROM WHEREVER YOU CAN FIND THEM

BuILD A VIRTuAL STARTuP:

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THE HEIST FILM STARTuP MODELASSEMBLE THE BEST TEAM FOR THE JOB

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HACKING THE ORGANIZATION ENABLES A

BuILD-FIRST STRATEGy

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WORkSHACkING

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ACTING AS AN INDEPENDENT NIMBLE VIDEO STARTUP HELPED HULU ATTRACT A WEB SCALE AUDIENCE INCLUDING 1 MM PAyING USERS.

&

Source: Company data, 4/11

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Conde nast worked with aCtivate to assemble a virtual startup to build the first-ever massively multiplayer magazine.

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UniqUe mUlti-media celebrity-news bUsiness: television show, app and website; watched by 2.1m tv hoUseholds nightly and 16m UniqUe visitors per month.

&

Note: TV show ratings and website trafficSource: The Nielsen Company, 2010/2011

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THE ANDROID TEAM LAUNCHED LIKE A STARTUP WITHIN GOOGLE, GROWING FROM NO MARKET PRESENCE INTO THE MOST POPULAR SMARTPHONE PLATFORM IN A FIERCELY COMPETITIVE MARKET.Note: Based on share of U.S. smartphone subscribers as of January 2011Source: Comscore, 3/11; The Nielsen Company, 3/11

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yOu’RE A MEDIA COMPANy NOT A DATA CENTER

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ONCE-COstly tEChNOlOgy CapabilitiEs arE NOw availablE as frEE Or OpEN sOurCE

iNvEst iN thE parts that arE uNiquE tO yOur busiNEss

yOu CaN makE a grEat ExpEriENCE by CONNECtiNg thEsE piECEs

tEChNOlOgy EvOlutiON is ONly gOiNg tO gEt fastEr

databaseCMS real-time messaging search

DON’T INVENT TECHNOLOGy

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hacked organizations

AS TECHNOLOGyEVOLVES

THRIVE

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LEARNING FROM

REDEFINERSUX FIRST

LOW COST

LAUNCH + LEARN

TAKE FROM THE BEST IDEAS

FAST IS BETTER THAN PERFECT

REDEFINING STRATEGY

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AN uNFAIRADVANTAGE

hack the organization

the redefiners

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EVERy STARTuP WISHES THEy HAD GREAT CONTENT

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quALITy CONTENTis anuNFAIR ADVANTAGE

CONTENT COMBINED WITH TECH DELIVERS NEW ExPERIENCES

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50

over time

TECH BECOMES A COMMODITy,CONTENT DOES NOT.

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quALITy CONTENT BuILDBuyone.

an audiencethan to

can make it cheaper to

quALITy MATTERS: CONTENT FARM SuBSIDIES ARE DEADFactory Farms are as unhealthy For content as they are For Food

Businesses which treat users like cattle are vulneraBle to Being redeFined By those creating For actual humans, instead oF search engine roBots

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Fully exploit the Features, Formats and experiencesoF each platForm

don’t createshovelware

A NATIVE ExPERIENCE ON EVERy DEVICE quALITy DEMANDS

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No platform wiNNer takes all: there will Never be aNother wiNdows

it’s Not just oNe persoN, oNe device

plaN for dozeNs of platforms aNd billioNs of devices today, aNd a New successful device every moNth

platform promiscuity is a virtue

AND MORE DEVICES MATTER

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REDEFINED MEDIA COMPANIES DON’T JuST MAkE MEDIA,THEy HELP PEOPLE CREATE MEDIA

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yOuR FINISHED PRODuCT IS THEIR RAW MATERIAL The momenT qualiTy media is

released To The world isn’T The end of The process, iT’s The beginning.

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LET THE MASSES MANuFACTuRETHE AUDIENCE WON’T JUST SHARE YOUR CONTENT, THEY WILL REMIX IT AND TURN IT INTO PHYSICAL GOODS.

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REDEFINING STRATEGy

AN UNFAIRADVANTAGE

hack the organization

the redefiners

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it’s not a

it’s aDIGITAL STRATEGy

STRATEGy

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STARTuPS OVERuSETHE WORD

BUT IT’S STILL AN IMPORTANT IDEA FOR MEDIA COMPANIES

PIVOT

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RedefineRs know they need to change diRection when new oppoRtunities demand it

media gRowth RequiRes continually aligning the business to the customeR

to gRow, a media business can piVot by changing audiences, pRoducts, content, functionality, inteRnational maRkets oR foRmats

WHy IS EVERyONE TALkING ABOuT “PIVOT”?

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from magazine publisher to continuity marketer for books, video, events in health and wellness

from giant screen documentaries at museum theaters to mainstream blockbuster 2d/3d films in multiplexes

from mailing dvds to streaming

from “the point” group organizing to group buying

PIVOT TO BIG BuSINESSESBringing

The

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GROW A WEB-SCALE AuDIENCE

1 millionapps: success

100 millionweb: success The Apps business is fundAmenTAlly

differenT from The Web business

Apps don’T (yeT!) go virAl The WAy WebsiTes do

App Audiences Are A differenT scAle, requiring A differenT kindof AdverTising business

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uSE APIs AS MEDIA BIz DEV 2.0

PartnershiPs should start from what PeoPle want, not what comPanies want

use social networks as a Platform

don’t just send your biz devs to the meeting, also send your develoPers

Facebook is not always your Friend

GooGle’s neither Good nor evil

TwiTTer followers are noT a digiTal sTraTegy

AMAZON NEEDSTO BE NAVIGATED CAREFULLY

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Most new successes will be in the freeMiuM Model

custoMers care what the price is, not what your costs are

assuMe that pricing will evolve as an iterative conversation with custoMers

GIVE PEOPLE A REASON TO PAy

$$$$$$

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Focus on measurability, not cPc resPonse rates

Don’t conFuse social meDia metrics with real aDvertising metrics

strategy must anticiPate a Future where every imPression can be connecteD to real consumer behavior

MAkE ADVERTISING ACCOuNTABILITyAN OPPORTuNITy

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WIN.REDEFINERSWILL

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HACK THE ORGANIZATION BUILD NEW GROWTH BUSINESSES AS VIRTUAL STARTUPS

ANTICIPATE HITS FROM NOWHERE

PIVOT THE STRATEGY TO EXPLOIT NEW OPPORTUNITIES

USE CONTENT AS AN UNFAIR ADVANTAGE

CREATE ENGAGING NATIVE EXPERIENCES FOR EVERY AUDIENCE

TO CAPTuRE MEDIA GROWTHDOLLARS, BECOME A REDEFINER

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Michael J. Wolf Michael@activate.coM tWitteR: @MJW

anil Dash anil@activate.coM tWitteR: @anilDash

Michele anDeRson Michele@activate.coM tWitteR: @Micheleactivate

hiMesh Bhise hiMesh@activate.coM tWitteR: @hiMeshBhise

chRistopheR MoRf chRis@activate.coM tWitteR: @chRisMoRf

© 2011 Activate Text CC BY - SAPlease remix and reuse this presentation by attributing and linking it to: http://activate.com/redefiners

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