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1. Redefiners:
www.activate.com
Capturing Media
GrowtH Dollars

2. IN THE NEXT 3 YEARS
325 BILLION
GROWTH DOLLARS
WILL GO TO THOSE WHO
REDEFINE
Source: Activate analysis and estimates; Veronis Suhler, 9/10; PWC, 6/10;
eMarketer, 2011; Yankee, 2011; Analyst Reports & Company Data, 2010/2011
THE MEDIA
BUSINESS
2

3. MEDIA COMPANIES HAVE a chance
TO BE the
REDEFINERS
3

4. growth from
existing
media businesses
growth from
NEW
media businesses
media
growth
dollars
4

5. New Business
Growth Matters Most
$325 billion media growth doLlars
$212 billion
$1.4 trillion
new
business growth
[15% p.a.]
$113 billion
$1.1 trillion
2010
existing
business growth
[3% p.a.]
Source: Activate analysis and estimates; Veronis Suhler,
9/10; PWC, 6/10; eMarketer, 2011; Yankee, 2011; Analyst
Reports & Company Data, 2010/2011
2014
5

6. WHO WILL
win?
6

7. THIS PRESENTATION:
HOW MEDIA COMPANIES CAN BUILD NEW
GROWTH BUSINESSES
THE REDEFINERS
A 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 ORGANIZATION
Media 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 ADVANTAGE
Companies 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 STRATEGY
Strategies 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.
7

8. the
redefiners
hack the
organization
AN UNFAIR
ADVANTAGE
REDEFINING
STRATEGY
8

9. 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
9

10. redefiners are free from the
liability of legacy
Unburdened by legacy constraints
THEY Can thrive even with lower margins
Traditional rights
Distribution deals
Contracts
Production and
editorial models
10

11. Today
redefiner
11

12. Redefiners:
Successors to Disruptors
DISRUPTORS
REDEFINERS
Driven by technology
Native to the web and apps era
Focus on targeting the periphery
of incumbent companies’ business
Focus on better serving
incumbents’ core customers
Removes the value or revenues from
an established market
Driven by A better experience
Result is Chaos
Result is A New Business
12

13. who will Redefine
your business?
if it’s not you
13

14. expect hits
from nowhere
14

15. expect hits from nowhere
ONE GAME PROGRAMMER WORKING
ALONE GENERATES 2 MILLION PAYING
DOWNLOADS AND OVER $30 MILLION IN
REVENUES IN LESS THAN TWO YEARS.
Source: Company data, 4/11
15

16. expect hits from nowhere
140 million downloads of the
game in 18 months, creating
characters that spawn
merchandise & films.
Note: Paid & free; includes
iOS and other platforms
Source: Company data, 3/11
16

17. expect hits from nowhere
Pioneered location-based apps,
reaching 500 mm check-ins
from 8 mm users
in just over two years.
Source: Company data, 3/11
17

18. expect hits from nowhere
Instagram
iPhone App showing potential for
hyper-growth by reaching
1MM users in 8 weeks and
3MM in 9 Months.
Source: Company data, 4/11
18

19. expect hits from nowhere
Most popular music subscription
service, with over 10% of 10 Mm
users choosing to pay fREEmium
subscription.
Note: Based off total number of free users
Source: Activate analysis of company and
industry data, 2010/2011
19

20. expect hits from nowhere
25MM USERS, STANDING OFF
COMPETITION FROM AMAZON,
GOOGLE AND MICROSOFT.
Note: Grew from 4MM users in 2010
Source: Company data, 4/11
20

21. expect hits from nowhere
hits yet to come
21

22. Redefiners don’t want
all the customers,
they want the
Most Valuable
Ones.
22

23. Technology Doesn’t Stop
When SOMEONE
GetS
Rich
23

24. Technology Doesn’t Stop
When SOMEONE GetS Rich
24

25. the
redefiners
hack the
organization
AN UNFAIR
ADVANTAGE
REDEFINING
STRATEGY
25

26. everyone’s innovation question
buy or build?
26

27. You CAN
But You
can’t
BUY TALENT,
BUY INNOVATION.
(And media companies NEED TO AVOID
suckING the life out of acquired startups)
27

28. The Rare Acquisitions That Have Thrived Were
Given Space to Innovate
™
28

29. everyone’s innovation question
buy or build?
29

30. building yields
growth dollars
30

31. building a new business means
hacking your
organization
31

32. how to
hack your organization
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)
32

33. hacking means building a
virtual startup
33

34. build a Virtual StartUp:
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
34

35. THE HEIST FILM STARTUP MODEL
ASSEMBLE THE BEST TEAM FOR THE JOB
35

36. HACKING THE ORGANIZATION ENABLES a
BUILD-FIRST
STRATEGY
36

37. hacking
works
37

38. &
ACTING AS AN INDEPENDENT NIMBLE
VIDEO STARTUP HELPED HULU ATTRACT
A WEB SCALE AUDIENCE INCLUDING
1 mM paying users.
Source: Company data, 4/11
38

39. Conde Nast worked with Activate
to assemble a virtual startup to
build the first-ever massively
multiplayer magazine.
39

40. &
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 traffic
Source: The Nielsen Company, 2010/2011
40

41. 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 2011
Source: Comscore, 3/11; The Nielsen Company, 3/11
41

42. you’re a
not a
media company
data center
42

43. DON’T Invent TechNOLOGY
CMS
database
real-time messaging
search
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
43

44. hacked organizations
thrive
as technology
evolves
44

45. Learning From
Redefiners
UX FIRST
LOW COST
LAUNCH + LEARN
TAKE FROM THE BEST IDEAS
FAST IS BETTER THAN PERFECT
45

46. the
redefiners
hack the
organization
AN UNFAIR
ADVANTAGE
REDEFINING
STRATEGY
46

47. every Startup wishes they
had great content
47

48. quality content
is an
unfair advantage
48

49. CONTENT COMBINED WITH TECH
DELIVERS NEW EXPERIENCES
49

50. over time
tech becomes a COMMODITY,
content DOES NOT.
50

51. QUALITY CONTENT
can make it cheaper to
BUILD
BUy
an Audience
than to
one.
51

52. quality matters:
content farm subsidies are dead
Factory 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
52

53. Quality Demands
A Native Experience On Every Device
Fully exploit the features, formats and experiences
of each platform
Don’t create
shovelware
53

54. And More Devices Matter
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
54

55. Redefined Media Companies
Don’t Just Make Media,
They help people
Create Media
55

56. 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.
56

57. LET THE WON’T JUST SHARE YOUR CONTENT, THEY WILL
MASSES MANUFACTURE
THE AUDIENCE
REMIX IT AND TURN IT INTO PHYSICAL GOODS.
57

58. the
redefiners
hack the
organization
AN UNFAIR
ADVANTAGE
REDEFINING
STRATEGY
58

59. it’s not a
digital strategy
it’s a
strategy
59

60. STARTUPS OVERUSE
THE WORD
pivot
BUT IT’S STILL AN
IMPORTANT IDEA FOR
MEDIA COMPANIES
60

61. WHY IS EVERYONE TALKING
ABOUT “PIVOT”?
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
61

62. Bringing
The
Pivot To Big Businesses
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
62

63. Grow a
100 million
web: success
Web-Scale
Audience
The Apps business is fundamentally
different from the Web business
Apps don’t (yet!) go viral the
way websites do
1 million
App Audiences are a different
scale, requiring a different kind
of advertising business
apps: success
63

64. Use APIs As MEDIA Biz Dev 2.0
Facebook
is not Always
your friend
Google’s
neither good
nor evil
Twitter
followers are not
a digital strategy
AMAZON NEEDS
TO BE NAVIGATED
CAREFULLY
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
64

65. Give People A REASON TO PAY
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
65

66. Make Advertising Accountability
AN OPPORTUNITY
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
66

67. redefiners
WILL
win.
67

68. to capture media growth
dollars, BECOME A REDEFINER
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
68

69. CREATED BY
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 - SA
Please remix and reuse this presentation by attributing
and linking it to: http://activate.com/redefiners
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