WEBVTT 1 00:00:00.100 --> 00:00:17.840 [upbeat music] Welcome to the Rebooting Show. I'm Brian Morrissey. 2 00:00:17.880 --> 00:00:30.090 I'm very excited to be joined by Michael Wolff, the CEO of Activate, a management consulting firm that is very prominent in, I guess, what would be called the TMT space, but technology, media, and telecom we see as today. 3 00:00:30.160 --> 00:00:41.420 But basically, what, you know, we were talking beforehand about what I consider, you know, the information space and the content space, because it is no longer just about media companies. 4 00:00:41.480 --> 00:00:52.960 Media companies are a smaller part of this space, if you will. Michael, welcome. Yeah, so it's interesting because the core media companies, in some cases they're thriving, in some cases they're not. 5 00:00:53.500 --> 00:01:02.620 But what's interesting is you see so many people who are somewhere else in tech or retail or other places that wanna be in the media business. 6 00:01:02.700 --> 00:01:11.350 Let's not forget that the great majority of the internet a- and is funded by advertising. Yeah. 7 00:01:11.350 --> 00:01:32.520 You see retailers now are media companies, and so we, we calculate that this year the major retailers are going to sell about, about $50 billion worth of advertising, and, and we see that going up to about 100 billion in the- in the next years. 8 00:01:33.060 --> 00:01:41.370 And so, and they're... But Walmart, Amazon, Target, Best Buy, so many of them are now selling ads on their sites. Yeah. 9 00:01:41.380 --> 00:01:51.539 And what's really fascinating is that- And they have closed loop attribution, they've got buying data- Exactly... and, and it's pure margin for them. It ain't their business. [laughs] Yeah. 10 00:01:51.620 --> 00:02:11.200 You know, what- what's fascinating if you step back, the, the paradox of privacy with the big, big companies is that they're saying in the name of privacy they're eliminating things like cookies and other, and letting people opt out, but that brings more power to them, less privacy. 11 00:02:11.720 --> 00:02:25.680 It puts, puts all people's- Yeah... data in their hands. But coming back to this issue about media, so we, we do have the retailers. The retailers are now buying their way into connected television, CTV. 12 00:02:26.280 --> 00:02:32.680 You already have Amazon doing so with Fire Stick. You have Walmart, which bought Vizio. 13 00:02:32.760 --> 00:02:41.000 Most people thought the reason why they're buying Vizio is because they're, they're vertically integrating because they sell so many, in so many screens. 14 00:02:41.020 --> 00:02:48.420 But in reality, part of it is, is being able to track what their customers are doing and having combine that with the data that they have. 15 00:02:48.860 --> 00:03:01.030 And you see other companies, you see companies outside the US, Rakuten, Mercado, and, and we're gonna- we're gonna see this continue. Yeah. So my, my core question I wanna... Is media still a good business? Yeah. 16 00:03:01.030 --> 00:03:13.180 'Cause New York Magazine just had this, this, this big, like, package and it, it was mostly focused on what I consider the sort of traditional media space, right, of, of publishers and broadcast companies and it's... 17 00:03:13.200 --> 00:03:25.080 You get them in a room and it's woe is me. It'll [laughs] make you, like, really depressed, right? But the, you know, I go through your report, and this is a thriving, growing space. 18 00:03:25.340 --> 00:03:36.720 It's just different now than, like, five years ago. Yeah, I mean, the- these, all of these people, they, it, it's not as if they just woke up and find that the world is different. 19 00:03:36.769 --> 00:03:48.980 They have, they've had lots of time, and some of the companies have done a great job of starting to move into, into some of the other businesses. The, the, the most obvious one, of course, is streaming. 20 00:03:49.440 --> 00:04:02.360 But broader licensing. A- a- all sorts of, o- of other areas, and like s- the, the traditional digital publishers that were text and editorial are now in video. So, so we're seeing that. 21 00:04:02.420 --> 00:04:09.120 But I mean, the industry then to a large extent, there are parts of the industry that are, that are thriving. There are parts that are not. 22 00:04:09.140 --> 00:04:15.980 The parts that the, the number of the cable programmers and cable television is enormously profitable business. 23 00:04:16.500 --> 00:04:22.860 But all of those cable programmers are gonna have to manage down to a world where they have 50 million subscribers in the US. 24 00:04:22.940 --> 00:04:31.660 Today we, we show that there are roughly 70 million cable households, that it's gonna go down to 50 million, and we're gonna have- Hmm... 25 00:04:31.720 --> 00:04:44.020 about 60 million people in the US which we call, with a little smile on our face, battleground households, because those are the people, they have broadband, but no p- paid TV, and that's who everyone's gonna be fighting for. 26 00:04:44.620 --> 00:04:48.740 Yeah. I saw that. I mean, just a quick note, 'cause I wanted to get to that, but, like, when... 27 00:04:48.780 --> 00:05:00.790 To talk about the, the differences, when you talk about it going, you know, to 50 million, that's also virtual pay TV, right? Like, 'cause- Yes. No, it definitely-... YouTube is the new, is the new cable provider. 28 00:05:00.840 --> 00:05:08.220 'Cause you, you see that it, by I think it's 2028, it's gonna be basically the majority of virtual TV, right? Yes. 29 00:05:08.280 --> 00:05:16.440 It, it, it, virtual TV is still not picking up, so the, the virtual providers, it's, it's not just YouTube TV. 30 00:05:16.720 --> 00:05:25.440 It, it's of course Hulu and, and, and there are a couple of others, Sling, but those are not, they're really not offsetting the declines in cable. 31 00:05:25.680 --> 00:05:34.440 If anything, they're, they're just making it easier for people to get to their signal. A- and, and here's one thing that's fascinating about it. 32 00:05:34.540 --> 00:05:48.780 There are a lot of people, and we've seen this in our research every year, there are a lot of people who continue to scri- to sc- subscribe to cable television, and at the same time are subscribing to virtual cable. 33 00:05:49.260 --> 00:05:57.680 I think they're just confused. No, no, I don't think- Nobody knows what anything is. [laughs] I, I don't think so. I think that part of what, what it is, is, and we've, we've gone out and done the research. 34 00:05:58.240 --> 00:06:09.848 Part of it is, is they, they believe that-There are things that they can get on virtual cable. They also wanna be able to access it elsewhere and- Yeah... 35 00:06:09.868 --> 00:06:20.398 the, this, the individual networks have done a bad job of creating their, their, what is called TVE services that, that they've been around 15 years and nobody- Oh, the TV everywhere? 36 00:06:20.488 --> 00:06:28.988 Oh my God, they've been talking about that for 15 years [laughs]. I keep getting- Well-... older, they keep talking about the same thing. Doesn't happen. Right. But the, the, the, the, there are people who... 37 00:06:29.008 --> 00:06:39.268 And, and there are people who want other, they want Fubo, they want other things that are other types of services and programming that they can't get so easily on- Yeah... on cable TV. 38 00:06:39.828 --> 00:06:47.628 But also, if you just look at, like, the channel guide, think about, like, how long these companies have had to fix this, right? 39 00:06:47.648 --> 00:06:56.188 And the reality is, to me, like, a lot of media is just downstream of the, of tech, 'cause tech controls the interface. They're really good at it, okay? Yes. 40 00:06:56.268 --> 00:07:00.488 They're really g- And they're gonna control distribution, and that is the commanding heights. 41 00:07:00.848 --> 00:07:09.668 So, you know, too bad, so sad for a lot of the traditional media companies that are downstream of that, but isn't that inevitable- I-... that they would be disadvantaged? 42 00:07:10.188 --> 00:07:17.128 I think that part of, part of the challenge for them is these are companies that were publicly traded. 43 00:07:17.708 --> 00:07:43.988 They, they en- enjoyed very high multiples before, and even though they saw in, in different places, of course, the decline of cable television which drove the valuations of all of these companies, they did see it near in sight, but, but in some ways they've been, they've had to balance the need to, to really grow for their future and at the same time deliver cashflow. 44 00:07:44.488 --> 00:07:50.108 And in some cases, deliver cashflow that can pay off huge amounts of debt that they've taken on. Yeah. 45 00:07:50.768 --> 00:08:00.168 One of the, the things that I noticed from the big picture takeaways was I started to wonder if we're at the upper bands of where we can... time spent with media, right [laughs]? 46 00:08:00.208 --> 00:08:09.868 I think you had it at, like, at 13 hours, right? And but, but it's, it's only growing nine minutes- Yes... right? And then the, like, look, it's, it's a massive market, right? 47 00:08:09.968 --> 00:08:18.468 So, you know, when you back out nine minutes extra, if you go, yeah, that was $10 billion or something. So it's, it's not like, you know, peanuts, but at the same time, we only have so much time. 48 00:08:18.528 --> 00:08:30.548 People have only so much time. Until the AI does everything for us, we're gonna have to, like, not be consuming media at all times. So are we reaching peak media? I don't think so. 49 00:08:30.768 --> 00:08:50.328 I think that, that what happened in the pandemic, one of the things that we show is that during the pandemic, that we, before the pandemic and the way we've measured, and we've been doing this for a decade, we on average calculated the average American was spending 12 hours and 24 minutes consuming technology and media. 50 00:08:51.008 --> 00:09:07.248 That it jumped up to 13 hours and 11 minutes, and it's largely been sustained, and we're forecasting that there's going to be, there's going to be more growth ahead, but we're also at the same time, we're see- it- there's an average. 51 00:09:07.428 --> 00:09:13.517 There are people who might spend 30, 40 hours a week in video games. Or the average- Yeah... 52 00:09:13.517 --> 00:09:24.848 amount of time that people are watching video averages five hours, but, but we know that there are people who come home and on a weekend and plop themselves down in front of the TV set and they're watching every game. 53 00:09:24.948 --> 00:09:35.368 So these are averages. A- and, and there are people who, who are super consumers. They're c- they're spending 18 hours a day watching media. That scares me. 54 00:09:35.488 --> 00:09:40.428 I saw the super consumers, you call them super cons- I was like, are these- Super users... just the extremely online people, super users? 55 00:09:40.568 --> 00:09:51.968 Because basically almost every waking hour, and they're not sleeping that much [laughs] with media. Right. So, yeah, so they're spending every waking hour, they're, they're spending time with everything. 56 00:09:52.028 --> 00:09:59.328 They're going to more events, they're playing games, they're listening to podcasts. It's, it's overall the... 57 00:10:00.008 --> 00:10:11.698 W- we're seeing this is, this is, this is a consistent theme, and it's been going on for the longest time that we've been creating our technology and media report each year. And our- Yeah... 58 00:10:11.748 --> 00:10:21.448 work is based on huge amount of consumer analysis and, and it's triangulated, it just shows this is what people are doing. So I wanna drill down on a few specific areas, but before that- Please... 59 00:10:21.508 --> 00:10:36.408 just give me, give, give me, like, give me three winners in the current, you know, you- you're going up to 2028. Like, what are, like, three areas that are poised for strong c- growth between now and 2028? 60 00:10:36.488 --> 00:10:47.468 So a couple things. I think that we've, we have the largest streaming services are at scale. And, and so we of course are gonna see growth there. The... 61 00:10:48.008 --> 00:10:59.658 And that's gonna continue, and people are gonna continue to subscribe to more services. We still forecast that people are gonna either watch or subscribe to six services, six streaming services a year. 62 00:11:00.008 --> 00:11:12.348 Now, they're gonna churn through them, so that's one winner. But fascinating, free is also winning. So we see Roku, I'm sorry, we see- Yeah... Tubi, the Roku Channel, and- Tubi, I s- I can't believe. 63 00:11:12.448 --> 00:11:20.048 I would've never bet on Tubi. Like, I, maybe that's me [laughs]. Well- Like a few years ago, I'm like, "Tubi, really?" Well- What did Tubi do right? 64 00:11:20.508 --> 00:11:25.288 Yeah, I mean, well, a part of it is, is part of what happened is, what happened is Fox bought it. 65 00:11:25.748 --> 00:11:37.828 And so Fox could put the weight of their entire company, their ad sales force, their ability not just to put their programming in, but to promote it, to run ads. It was a very, very smart deal. 66 00:11:37.908 --> 00:11:48.968 So free, if, if you wanted to be somewhere, it's gonna be in, in terms of the free services, it's going to be those three I just mentioned. Yeah. So I think that's another area. 67 00:11:48.978 --> 00:11:56.248 And, and I should say, like, ads, ads have, uh, I mean, ads never count ads out. They are the cockroaches. They will always find a way. 68 00:11:56.468 --> 00:12:06.788 Because, like, when streaming started, I remember it was like, "Oh, well, only poor people will see ads. Nobody's gonna... I pay to get rid of the ads." And guess what? 69 00:12:06.828 --> 00:12:11.118 Guess where, guess where the strongest growth is in ad-supported services. This... 70 00:12:11.128 --> 00:12:32.416 But, but, but see, but you're so right, and there's even more here, which is that all of the streaming services are going to lower pricedAd-supported tiers and people look at it and say, "Okay, they're, they're raising their prices a- and for their best subscribers, and they're lowering their prices, they can get more subscribers." 71 00:12:32.976 --> 00:12:44.456 Here's what's fascinating, when those lower priced tiers with advertising, they're much more profitable o- on, on a specific subscriber basis. So to your point, don't count out ads. 72 00:12:44.996 --> 00:12:47.396 They were all in den- they all de- denied... 73 00:12:47.476 --> 00:13:00.536 I mean, Netflix for, for years denied it was gonna get into advertising, but for Netflix, for Disney, for any of those services, the ad-supported piece of it is, is very, very important, and we already- Yeah... 74 00:13:00.546 --> 00:13:05.956 see Amazon- And you can make more money too. I mean, like, incentives drive a lot of the market, right? 75 00:13:06.076 --> 00:13:16.446 I mean, so, I mean, having a lot of these services found that a, that their ad-supported tiers can actually be better than, than their paid tiers. Oh, yeah. 76 00:13:16.496 --> 00:13:27.396 I mean, what I meant just now is that they're making more money on an average subscriber who's ad-supported versus one that's just paying. And by the way- Right... 77 00:13:27.406 --> 00:13:41.016 the other thing that's happening is they keep those subscribers longer, because one of the challenges for all of these streaming services, really probably Netflix is not included, is customer acquisition, customer retention. 78 00:13:41.476 --> 00:13:53.956 So there, Apple is taking the 30% keyboard tax or, or, or phone tax for you to, you to subscribe to one of those services. 79 00:13:54.056 --> 00:14:01.056 Amazon, which sells more of these services than anybody else, is taking as much as 40% in the first year. 80 00:14:01.076 --> 00:14:13.676 I mean, this is like you opened a pizza parlor and some guy shows up and says, "I'm not gonna pay for the pizza, the sauce, the s- the staff, or the cheese, but you're gonna give me 30% of, of all your revenue for a year." 81 00:14:14.256 --> 00:14:21.016 So that's been a challenge, and those ad-supported tiers- Sounds like a great business, to be honest with you. Well- [laughs]... it's, it's... 82 00:14:21.246 --> 00:14:31.356 Look, it's a, people, people always ask me who's winning, and, in this, and I always say Apple and Amazon, and they say, "What do you mean?" Yeah. And said, like, they're g- they're, they're able to get the money. 83 00:14:32.056 --> 00:14:41.376 For, by the- Yeah, well- But other people are selling. Let's not, let's be clear. Verizon is selling streaming services. There are lots of others who are gonna sell as well as direct. Right. 84 00:14:41.396 --> 00:14:51.376 But I get the sense from, from this point that, that consolidation is absolutely coming in this, in this area. They don't... So there are two things that they don't have a choice about. 85 00:14:51.856 --> 00:15:08.476 They say, "We're spending less on programming," but all you have to do is look at the number of hours of any of these services have versus Amazon Prime, and so in a lot of cases, people are indifferent to the library programming that they're watching. 86 00:15:08.516 --> 00:15:13.436 They just wanna have it available. They want more of a, a passive experience. 87 00:15:14.236 --> 00:15:27.556 And, and, and, and I think that, that, that in addition to that, you've, you, you've got a moment where there are many of these streaming services that need to be larger, need more distribution, 'cause they're not gonna pay their way into it. 88 00:15:28.056 --> 00:15:38.756 So I, if, if you ask me to guess who's, who's gonna merge with who, I'm not sure that the, the sort of accepted wisdom is correct. 89 00:15:38.816 --> 00:15:50.336 People talk about the, a merger of Paramount Plus with whether it's Max or with, w- with Peacock. I, I'm just not sure who, who ends up, because it's not clear that, that, we got... 90 00:15:50.596 --> 00:15:59.516 Somebody has to figure out what's the benefits. I mean, this is one of the things that people come to us about, which is looking at if we put two businesses together, what, what's the benefit? 91 00:15:59.636 --> 00:16:12.106 How much synergies are really? Yeah. But I mean, Netflix is as escape velocity in this, in this category, right? It, it is, but, but there's lots of room for others- Yeah... and especially- But-... 92 00:16:12.476 --> 00:16:24.136 in, in a, in a moment where people can produce great original programming. And I guess somewhat unsurprising, but it's, it's good to put figures against the traditional TV will continue to erode. 93 00:16:24.216 --> 00:16:37.296 I think you added to, to, like, time spent going from 2 hours 39 minutes in 2022 to 1 hour and 41 minute in 2028- But the-... and with pay-TV households eroding 6%. 94 00:16:37.816 --> 00:16:46.496 Yeah, I, but also what that doesn't capture is- Mm-hmm... the fact that people are watching television in different ways. They're watching on a time-shifted basis. 95 00:16:47.036 --> 00:16:57.796 The, lot of the move to digital includes the, the long form shows that they're watching on, on YouTube, and where, where, by the way, the media companies make money. 96 00:16:58.276 --> 00:17:13.776 If you look at the news category on YouTube, you see the largest news organization that is really on YouTube is, is not CNN, it's, it's, it's NBC News, and it's followed by Fox News, because there are a lot of people who get their news there. 97 00:17:14.466 --> 00:17:15.856 But there are a lot of people who get other stuff. 98 00:17:15.876 --> 00:17:25.356 There are pe- there, there's a much younger audience, you would say they're not watching TV, but they're going on YouTube and they're stringing together the Jimmy Fallon's monologue- Yeah... 99 00:17:25.366 --> 00:17:31.216 because they wanna watch it, but they just don't wanna watch it on TV. Is TikTok a competitor here? Is that a replacement? 100 00:17:31.306 --> 00:17:35.696 Because I mean, how do you think of these categories, 'cause they completely, they completely blur. 101 00:17:35.736 --> 00:17:45.346 I mean, you have, you have a great part in here about, about multitasking, and it's hard to, like, truly understand, whereas there used to be these... I think it's the story of media. 102 00:17:45.416 --> 00:17:51.896 There used to be lines between these, these areas, and those lines are all blurry or completely erased. Yeah. 103 00:17:51.936 --> 00:18:00.176 The, there, there are a number of activities that, that we call ambient, and probably the one that's the most important is, is audio. 104 00:18:00.716 --> 00:18:14.156 So whether it's, it's podcasts, it's, it's recorded books, or it's, or it's music, and so people, and, and 22% of all time is spent now with mainly music, but with the other forms of audio also. 105 00:18:14.196 --> 00:18:25.116 So you can do a lot of other things. You can drive a car, you can, you can run, whatever you wanna do, you're... Th- that audio is, is definitely a multitask behavior. 106 00:18:25.156 --> 00:18:34.806 But the, the activity, there are activities that are not easily multitasked.And so vi- PC and console video games, people have to be focused. 107 00:18:34.886 --> 00:18:44.306 When you look at, at TikTok and mobile games, they're definitely, they're like little stolen moments during the day. So TikTok- Yeah... 108 00:18:44.346 --> 00:18:55.856 on average is fifty-one minutes a day of the average user of, of attention, so that means somebody somewhere is g- is getting little bites and they're, they're not doing it all in one session. 109 00:18:55.866 --> 00:19:04.826 They may be walking around, they may be at the office or wherever they are, and they're waiting for something and, and they go through TikTok. Yeah. 110 00:19:04.886 --> 00:19:13.516 I, I've talked with a f- a couple people about this, but a big increase in media availability is autonomous driving. You're gonna have to have something to do- Absolutely... 111 00:19:13.516 --> 00:19:22.626 and it's gonna be media, and it's not just gonna be ambient. We're gonna be able to, you know, there's screens everywhere and that they need to be programmed. I, you are so correct. 112 00:19:22.906 --> 00:19:34.106 It's, it's, uh, when people, people are... But we already see h- when somebody's riding around in an Uber, they're looking. When they're in a subway, they're looking. So they're watching something. Yeah. 113 00:19:34.146 --> 00:19:46.346 It's, it's not just listening, it's watching- Yeah... it's playing. And so- And that is gonna be competitive for ad dollars, and like Uber is in the ad game, everyone, it just to g- like competition is everywhere. 114 00:19:46.406 --> 00:19:56.846 I like called it like omni competition. And that's why it's a growing business, but a really difficult business. But I wanna talk about some of the difficult stuff, and that's around the open web, right? 115 00:19:57.086 --> 00:20:04.026 I mean, I- Yeah... believe in the report you, it said digital publishers face existential risk. [laughs] I think that was from, from GenAI. 116 00:20:04.546 --> 00:20:13.166 But how much, how much of the, of the existential risk really falls to those who are reliant on text? 117 00:20:13.346 --> 00:20:31.186 I think in a position you don't wanna be right now is you don't wanna be, you don't wanna have your portfolio too exposed to text, particularly text that isn't behind a paywall that people can put down like ideally a corporate credit card, uh, to pay f- for access to. 118 00:20:31.196 --> 00:20:44.025 Yeah. Well, we're gonna see it. The, the publishing, and what I mean publishing, I really mean on digital publishing, they're, they're, they've learned the lessons. They learned the lessons of what happened with Google. 119 00:20:44.086 --> 00:20:51.786 They've, they've learned those lessons, and so they're moving much more aggressively, as you saw News Corp is now suing Perplexity. 120 00:20:51.846 --> 00:21:03.506 You're, you're gonna see more of this because they don't want, they don't, they, they wanna be able to be in a position where somebody... It's the AI is, is taking from a human being. 121 00:21:03.586 --> 00:21:14.706 The AI didn't write the article, the AI didn't do the investigation or the point of view, and so they're right. I, but, but at the same time there are, like there's other businesses. 122 00:21:14.886 --> 00:21:27.096 I mean, certainly the music business with all of the music clones is, is also a challenge. And so there are gonna be parts of these businesses that are gonna be challenged. 123 00:21:27.646 --> 00:21:40.726 But I, I, I think there they have enough time to get ahead of it. Yes, we've got very large, we've, we've got very, very large audiences or users for each of the dedicated search platforms. 124 00:21:41.126 --> 00:21:52.775 I'll tell you where it's also may not be an existential threat, but it's definitely a threat, is with web search. So if you think web search, this is, like if you wanna know where... 125 00:21:53.026 --> 00:22:04.426 Web search is a $300 billion business, but if you wanna know where it's going to, where, where the, the web goes, it's so much of it's driven by web search. It's what you see, what you buy. 126 00:22:04.726 --> 00:22:18.506 It, it's really the, the, the critical piece of it. So what we're, we're seeing is there are already 15 million people in the US who are using a dedicated AI platform to start their web search. 127 00:22:19.026 --> 00:22:24.566 And we're forecasting that's gonna- Like a ChatGPT or a Perplexity. Exactly. That kind of- Anthropic... 128 00:22:24.576 --> 00:22:41.446 okay Whatever it might be, but that's where they're, they're starting, and it's, it, it's not, it's hard, it's not hard to understand because they, there's very deep penetration of these, these services and people have seen the answers may be more useful. 129 00:22:41.486 --> 00:22:52.586 It's a different, the an- and of course both Bing and, and Google are building in the AI into your answers, but, but people are now establishing a new habit. Yeah. 130 00:22:52.966 --> 00:23:03.086 Y- it's funny 'cause you, this is how fast the, this world works, like you, you, you talk about legacy search services, [laughs] which I love. Guess what? Like the newcomers always become legacy. 131 00:23:03.266 --> 00:23:10.666 You know, like I think about legacy digital publishers and they're like, "Wait a second, weren't we the disruptors?" [laughs] Like it seems like yesterday. Yeah. 132 00:23:10.726 --> 00:23:22.826 It, it, it's, it's, I, I think the thing- But won't, won't, won't Google just adopt the... I mean, they're, they've got GenI- AI overviews in a portion. That's gonna grow next year. They have so many advantages. 133 00:23:22.926 --> 00:23:36.386 These, Google can make so many mistakes. They can make so many, and it, it, it doesn't dent them. Do you see this as a real threat to the dominance that Google, uh, holds over- I-... basically all of the internet? 134 00:23:36.666 --> 00:23:47.216 I, I, I don't see it as a threat to the overall dominance. What I do see is lots of new players who are nipping at their heels, and given the, 135 00:23:48.226 --> 00:24:15.296 the, the need for Google to continue to grow to maintain its stock price, the, the need for Google to literally take, take away margins from, from businesses, it's not such some, it's not just the big retailers, it's not just Nordstrom or, or, or Target, it's also the, the guy who has a restaurant who, or a car dealership in town and needs to, to pay for Google, and Google continues to get more expensive. 136 00:24:15.846 --> 00:24:29.496 So it's, it's different than the, the battle between Bing and, and Google, Bing from Microsoft of course, because- Mm-hmm... because B- like Mi- Google controls the business. 137 00:24:29.566 --> 00:24:42.146 But you only have to have a percentage point of search move to another place and it, and it, it is a challenge for them.Yeah. I mean, people talk about Bing as some kind of, like, embarrassing failure. 138 00:24:42.186 --> 00:24:52.746 Like, Bing [laughs] is like a big business compared to, like, most particularly publishing businesses. You can lose at search and you still win. I mean, that's how- Yeah... great the, the, the search market is. 139 00:24:52.886 --> 00:25:08.676 I've never seen a media business which is more profitable than, than search engines, and especially as you get to a point where, I mean, these two, th- th- these are dominant services. It's hard for anybody. 140 00:25:09.106 --> 00:25:19.166 It's been hard for anybody to compete with them. But, but let's not forget, all of these things go in cycles, so the people who are the innovators later become the, the legacy. Yeah. With... 141 00:25:19.326 --> 00:25:32.426 There was a point, Yahoo went public at $100 billion originally, and before that, let's not forget, it was called Dave and Jerry's Guide to the, to the World Wide Web. And so there's nothing... 142 00:25:32.506 --> 00:25:47.406 Technology does not stop when somebody gets rich. Yeah, that's true. You've gotta expect that somewhere along the way there's g- Nobody expected TikTok. It's, it's really driven. Look at what's happened to Instagram. 143 00:25:47.446 --> 00:26:00.126 Instagram is now a video service. YouTube Shorts, definitely. So, but TikTok keeps growing. TikTok- Yeah... we're forecasting that TikTok's gonna have a lot of advertising in the next couple years. 144 00:26:00.166 --> 00:26:11.516 But you, you also, it seems like you think that social video is not going to... So y- you have social video hitting a bit of a wall. Well, it's slowing down. Did I read that wrong? It, it's slowing- Yeah, slowing down... 145 00:26:11.526 --> 00:26:24.526 absolutely. It's slowing down in the US because, and when I mean slowing down, it's just the amount of time that, that people are spending with it, but it's still at very high levels. On average, TikTok at 51 minutes. 146 00:26:24.706 --> 00:26:37.726 On average, YouTube at 51 minutes. When you start going through this, Instagram at 30, y- y- you start seeing that these businesses are, are really saturated. So with TikTok, are they hitting... 147 00:26:38.046 --> 00:26:49.366 Is there a risk of them hitting a ceiling? Because, you know, sh- the short form video, at least the figures that you have, you know, there's, there's less... You forecast a slowdown in the growth of consumption here. 148 00:26:49.706 --> 00:27:01.826 That is very likely. The... Well, where TikTok is likely to go is longer videos. Already they, they have ways of keeping people on the site. 149 00:27:01.906 --> 00:27:17.826 One of them is, is going part one, part two, part three, part four on some of the most engaging videos. And they're gonna just give people the ability to do longer video, and w- we should expect to see that. 150 00:27:18.046 --> 00:27:26.306 We, I would suspect that they're already testing it, and, and, and this game is all about engagement, and engagement will come from somebody else. 151 00:27:26.316 --> 00:27:32.586 As the market goes down, you're gonna see that, that they're gonna move share. Everybody's going to try to do so. 152 00:27:33.126 --> 00:27:43.665 So one o- th- something that stood out to me, and it's just stood out, like, in general, is the resilience of live events. And if not just resilience, just, like, growth of them. 153 00:27:43.886 --> 00:27:57.606 And it's interesting 'cause I, I almost feel like there's these two counter narratives or just realities, right, of, you know, people are spending more time, like, immersed in their own sort of personal media bubbles 'cause you can now, right? 154 00:27:57.886 --> 00:28:10.466 But then at the same time there is, like, a very vibrant live events, you know, sector that, that you highlight in the report. Are... How are... How do th- you square those two things? Well, the, the people... 155 00:28:10.566 --> 00:28:20.746 A couple things have happened in the last years. One is people were cooped up at home during the pandemic, and they were hungry to go out and do things out of their homes. 156 00:28:21.246 --> 00:28:32.846 Second of all, they're going out not just because they wanna see an artist perform or they wanna go to a theme park, but they also wanna... It's a, it's a social environment. 157 00:28:33.086 --> 00:28:46.726 Even if they're with people they don't know, it, it does become social because they are going to an event n- most of the time not by themselves, and going with either with a partner or, or a small group. 158 00:28:47.246 --> 00:28:58.666 And, and then finally, it's, it's being able to experience something together and feeling like you're, you're going to a concert, and you're with all these other people. It's... There's a... 159 00:28:58.705 --> 00:29:10.946 People don't just go because they w- to Taylor Swift because they wanna hear her music. They, they wanna be in her orbit, and they wanna be around other people that are Swifties. Yeah, for sure. 160 00:29:10.966 --> 00:29:24.706 And finally I have to, any podcast has to talk about podcasting, right? So you have that podcast advertising will grow from 2.3 billion this year to about 3.1 billion in- Yes... 2028. 161 00:29:25.156 --> 00:29:37.386 I mean, podcasting is one of those things that, man, it just keeps going. It never, it never took off. It was never a rocket ship, but it keeps, it keeps going and going and going, and I don't know. I don't... 162 00:29:38.866 --> 00:29:43.926 What do you, what do you... How do you, like, assess, like, the, the podcast market? 163 00:29:44.106 --> 00:29:57.466 I mean, it never became this, like, massive media form, but then when you look at what's going on in the presidential election, like, we're in the, like, last couple of weeks, and it's, like, dueling podcast appearances. 164 00:29:57.786 --> 00:30:10.466 There's... Podcasting has grown very quickly. Uh, we are at 130-plus million u- pe- users or audience listeners, and it comes back to what I said earlier about audio. 165 00:30:10.526 --> 00:30:20.026 It's definitely an ambient, it's a, an activity you can do with everything else. I mean, the challenge has been not the interest and engagement. 166 00:30:20.086 --> 00:30:36.286 It's been the money, and it's not, it's not that great because it's really only the top podcasts, it's the top 30 that really are able to make money because they can attract a advertising and they can consistently get large groups of listeners. 167 00:30:36.806 --> 00:30:48.694 But- Yeah... there's something in po- I think you said, like, half, half the listening goes to the top 25 shows out of- Yes... 4.2 million.Yes. That's a power law. [laughs] Yeah. 168 00:30:48.734 --> 00:31:01.854 I, and, and by the way, it doesn't have to be the same. There are people come into this, but, but it comes down to this is you could argue it's the long tail, but of, of programming. I, I don't like the word content. 169 00:31:02.054 --> 00:31:11.994 I think it, it makes everything seem sort of vanilla. Yeah. But it's, it- people have deep interests. They listen to you, they're gonna listen to... Think about some of the other podcasts. 170 00:31:12.014 --> 00:31:17.754 They're gonna listen to somebody who's got a very fine point of view about something, and they want that insight. 171 00:31:18.294 --> 00:31:29.814 And they either wanna hear stories, they wanna hear information in a way and, and narratives that they're not gonna get some other way. Yeah. I think podcasting, I've been trying to work it out, but like they... 172 00:31:30.154 --> 00:31:40.014 Podcasting in some ways is benefits from being downstream because it's downstream of, you know, news, right? But like it is, it... 173 00:31:40.054 --> 00:31:57.814 So the costs can be like, can be lower, but because it's very like human driven, like it's a very personality driven medium, like either the, you know, you either like the, the, the, the viewpoint of, of Joe Rogan or whatever the host is, or you like the dynamic between, between the hosts. 174 00:31:58.004 --> 00:32:11.434 And I also think that podcasting, because it has had such a discoverability issue, like it, it hasn't been able to be growth hacked as easy as other forms [laughs] of digital media. That's my working theory. 175 00:32:11.894 --> 00:32:17.654 And I think people kind of like gravitate to that. It's, it's a little, it's got a little- I think there's another... I totally agree with you. 176 00:32:17.774 --> 00:32:29.434 But there's another reason why the only the top podcasts are making money and are getting the revenue and, and part of it is, is advertisers don't know what to make of it. 177 00:32:29.854 --> 00:32:41.874 And so you see the advertising that's the most effective are people that are direct to consumer brands, and those are the people that, that really find it useful. And they're just... 178 00:32:41.914 --> 00:32:52.914 So it may be small amounts of money going around. It's a habit that is here to stay. It's spending almost two half hours a day listening to audio. It's not just Vic then. 179 00:32:52.934 --> 00:32:59.534 Podcasts are gonna be a big part of their daily diet. Yeah. I don't know. I don't wanna tell the advertisers how to do their business. 180 00:32:59.554 --> 00:33:09.114 But I just think that the obsession with performance marketing and being able to put everything on a spreadsheet and like closed loop attribution everything, sometimes you miss things. 181 00:33:09.154 --> 00:33:22.254 Like the branding from, from podcasts like has to be tremendous because people are immersed. I know it's like an ambient medium, but like they have a connection to it. And I just know just when you talk... 182 00:33:22.334 --> 00:33:29.034 If you have a podcast and you talk to someone who li- listens to your podcast, like it's qualitatively different than other media formats. 183 00:33:29.154 --> 00:33:36.794 There's something about the human voice, and I don't know if this is just a measurement issue or whether, you know, it's probably a, a combination of things. 184 00:33:36.914 --> 00:33:46.894 But I think the fact that it's like a DR medium kind of is weird because you can't click on anything. It's a pain in the ass to like actually- Yes... take an action. You're like, what? 185 00:33:46.994 --> 00:33:55.753 Like dri- running and then you're gonna pull over and get your phone out and do something? Buy some socks. Well, I mean, I, I totally agree with you. It's a very personal... 186 00:33:56.044 --> 00:34:10.034 It is also, let's not forget a lot of the ads, these are not like radio ads. A lot of them are really spoken or explained by a host, which well, it adds a lot more credibility to the advertising. And in some... 187 00:34:10.074 --> 00:34:17.504 And it, it's no different than what we're seeing across YouTube, which is there are a lot of people who have large audiences and they're sponsored. 188 00:34:18.034 --> 00:34:31.334 In the case of podcasts, the extent to which you've got a personal connection with the host, and the host is a person who is, who is talking to you about the product, but that's more upper funnel and it's more brand. 189 00:34:31.364 --> 00:34:41.954 A lot of perform marketers, as they get to the where performance marketing, it gets very expensive for them, then podcast's a great place for them to be. Yeah. 190 00:34:42.494 --> 00:34:54.134 And the final thing is on, on the podcasting front is, I mean, you expect more media companies to move to subscription models. I know you cited like The Economist and, and The Times is, is going. 191 00:34:54.214 --> 00:34:59.454 I don't know about the Time- how The Times is doing. They're just- But- They're just raising their paywalls even higher. Yeah. 192 00:34:59.994 --> 00:35:07.034 Is that because the ad market is not as robust here, or is this just the direction of travel for most digital publishers? 193 00:35:07.394 --> 00:35:23.834 I think that they, there's a general belief, and in most cases they're correct, that they're not capturing the full benefit of their editorial and, and especially in digital publishing business where the advertising gets to be more difficult. 194 00:35:23.994 --> 00:35:33.794 The open web has less advertising, and so they know they can get money from subscriber, and when you've got a subscriber, they tend to be more loyal. 195 00:35:33.894 --> 00:35:53.013 And the publications or the digital publishers that are increasing or moving to, to different kind of subscriber models value the, the programming or the editorial, and at the same time from an advertiser perspective, they are the people that advertisers are the most interested in. 196 00:35:53.274 --> 00:36:05.274 Yeah. Sadly, newsletters did not make the cut for this report, unless I missed them. Unless [laughs] No. Exactly. [laughs] We can't, we can't cover everything. One, one area- Someday newsletters will get on the report. 197 00:36:05.334 --> 00:36:16.134 Well, there are a number of things that I'd like to, to cover. This is a huge amount of work every year, and our team begins in January. They choose the topics. 198 00:36:16.194 --> 00:36:33.953 They, there's usually some skepticism, so everybody started off wondering about spatial computing, and later on really dove in and agreed with that the iPhone moment, spatial's iPhone moment is, is within sight, that we're gonna have it in the next couple of years. 199 00:36:34.554 --> 00:36:42.974 And there are areas that, that we haven't covered this year that we'll cover in future years. Messaging- Yeah... and more so than practically anything else. 200 00:36:43.514 --> 00:36:51.674 I like the spatial computing part 'cause I was like, first I was like, "I'm not even sure what, if I know exactly what it is." And I was like, "Oh, this is like a broad category for all the VR and AR stuff." 201 00:36:51.694 --> 00:37:01.674 And I think VR needs to leave behind VR. I think the branding of VR is just tough now at this point. I mean, AppleI think you're gonna have to soon ask at an Apple store. 202 00:37:01.694 --> 00:37:11.064 They're gonna keep the, like, that Vision Pro behind the counter because [chuckles] they-- I've noticed, like, it keeps shrinking in prominence in the store, and they're like, "Oh, let's just forget about that." 203 00:37:11.114 --> 00:37:14.754 They, they just announced that they're going to stop production of the current model. 204 00:37:14.994 --> 00:37:30.474 They have enough inventory, so that really means they're not giving up, and i-if anything, they're going to produce a low- [audio glitches] been the Apple strategy, which is to go out with a high-priced product, and, and you can see they did that with monitors. 205 00:37:30.574 --> 00:37:41.734 So will they win? Yeah, I mean, we believe that the device that wins, going back to what you were just saying, is not a VR device, and it's not even what you can call a passthrough device. 206 00:37:41.774 --> 00:37:55.464 It's not like the, the Vision Pro or Meta Quest. It's more about which, which have a camera in front. It's more of the passthrough. W-explain passthrough. A see-through device. Okay. It's like a regular set of glasses. 207 00:37:56.014 --> 00:38:08.334 Oh, yeah. Okay. You can wear them all the time, and Snap Spectacles is getting there. It, it hasn't been released to the general public, but developers are, are working with it now. Okay, cool. That was all on my list. 208 00:38:08.394 --> 00:38:14.774 We didn't get into the video games, which will, it will depress my other podcast co-host, Alex- Yeah... 'cause he's into video games. 209 00:38:14.834 --> 00:38:23.174 Any other sort of things that stood out to you that's different from, from previous years? I'm just trying to think about what's the difference. I, I, I think it... 210 00:38:23.234 --> 00:38:33.034 Well, we're-- You don't wanna talk video games a-and let me just think for a second. Uh, something- I just feel like they're, like, a massive category that almost is, I don't wanna say it's overlooked. 211 00:38:33.494 --> 00:38:44.924 It almost has always operated parallel to the overall media industry, but- Yeah, I mean, we could talk a little bit- It's massive... about sports and- Oh, yeah, sports. But, I mean, is sports... 212 00:38:44.974 --> 00:38:55.394 Like, sports has, has, has had such a moment because it is the last thing that's keeping up live TV. At least that's my theory. Well, it's been the last thing, but it's now moving to streaming. 213 00:38:55.474 --> 00:39:05.254 So you look at the deals that the NBA has done, it's a lot is going off of television into streaming. Right. But a shared experience. You do not have shared... 214 00:39:05.954 --> 00:39:21.874 Shared experiences have been atomized away, and so everyone watching the same thing, I don't care if it's on a computer, on a watch, on a phone, on a streaming pay TV, cable, whatever, is kind of unique. It's unique now. 215 00:39:22.034 --> 00:39:29.594 I mean, there's no- Yes... what-- however many people watch the Mash finale that everyone... [chuckles] Like, that's gone. It's not coming back. Yeah, but that's been declining. 216 00:39:29.724 --> 00:39:40.724 That's been declining for years and years and years. I mean, I- Yeah... we look at this 25 years ago, and we'd see the same thing, which is the audiences. It's, it's not, not everybody's converging on the same thing. 217 00:39:41.214 --> 00:39:50.854 But sports is also, it's, it has such a, a cultural resonance that is, is kind of, to me, it's, it's one of the last bastions of truly mass media. 218 00:39:51.054 --> 00:40:03.484 I mean, and it's not necessarily mass like it used to be, but this is something that cuts across, like, lots of demographics. It is, you know... It has cultural resonance. Compare it to, like, video games. 219 00:40:03.554 --> 00:40:15.454 I always, I always say this to Alex. Yes, like, video games have, like, complete, you know, cultural resonance in that. However, it's a large niche to some degree, where I don't think sports is the same. 220 00:40:15.534 --> 00:40:27.234 Well, I mean, if you've got three point six billion people globally who are playing video games, so three point six billion global gamers, then it's hard to ignore it, and a lot of people just forget about it. 221 00:40:27.754 --> 00:40:41.494 We believe that most tech companies will end up buying the, the major video game companies. The, the amount, what it would take to buy out these companies is really one day's volatility for any of those huge companies. 222 00:40:41.974 --> 00:40:52.274 I mean, that's why, like, uh, the, the order is technology and then media. [chuckles] Exactly. Exactly. All right, Michael. Thank you. Thank you so much for this. This has been such a pleasure. Really a pleasure. Yeah. 223 00:40:52.494 --> 00:41:02.494 Thanks again. [outro music]