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I agree that it seems like Instagram is well-positioned to win over the long-run. I also remember reading an article about how advertisers were having difficulty understanding the many different ways of advertising with Snapchat—it’s a less familiar medium for them, and oftentimes they don’t know how the pricing works for Snap filters, geotags, stories, etc. If advertisers are already having trouble with the available features, I think any potential incremental e-commerce options would be even more challenging to navigate. Instagram / Facebook seem to have been better able to communicate and partner with advertisers. I think it will be really interesting to see if Snap makes a bigger push into AR / VR content.

Great post, Christy!

I really like your idea of making the NBA VR experience more interactive by promoting a sense of community. Along similar lines, I think it would be cool if they give VR viewers the option of replaying certain plays (like an alley-oop or a nifty drive to the basket for instance) close up and allow subscribers to “like” or comment on the plays. They can then use this feedback to automatically generate content (“Best 10 Plays of the Game”) for their apps and shows. Really interested to see how it will play out.

Great post, Ellen! Based on what I know, it would be really interesting for Niantic to leverage its Ingress / Pokemon Go AR platform to extend to other IP. I think they should consider partnership opportunities with entertainment brands to use its AR platform to create unique games, especially ahead of major releases of films and TV shows. For instance, how cool would it be to have a Wizarding World AR game developed by Niantic for Fantastic Beasts? Given that there are likely going to be five Fantastic Beasts films, the game could potentially have longer legs than a Pokemon game, especially if it is updated frequently with new content.

Excellent question on diversity of perspectives on Quora. Quora currently hosts annual gatherings where, similar to Yelp, Quora elites are gathered together for special days that include cool events and mixers. They could encourage more diversity by making sure to invite a wider range of Quora users for the events, have events focused on topics that would be interesting to a broader cross-section of people, and host them in different locations.

Thanks for the post.
Do you think that 23andMe should consider broader expansion internationally, both in terms of sample genetic data and customer base? I think one of the disadvantageous aspects of 23andMe is that the results tend to be more comprehensive for Caucasian people in the US. As an Asian, for example, it may not even be worth it to purchase an ancestry report from 23andMe due to the lack of data on non-Caucasians in the data set. I think this article does a good job of pointing out some of the problems of 23andMe concerning lack of diversity in its data sets: https://qz.com/765879/23andme-has-a-race-problem-when-it-comes-to-ancestry-reports-for-non-whites/

Agree that requiring real identities would be a way to diminish the “rambunctious” user engagement piece. However, I think there would be clear tradeoffs—-there are many subreddit topics for subcultures that are not legal (such as the stoner subreddits), and those subreddits would be hurt by implementing a change that required real identities of its participants.

Thanks for the post! It’s a great analysis of Netflix’s strategy to date.

I think one of Netflix’s key risks is that as content becomes more and more important, traditional content creators and distributors will demand more from Netflix for streaming rights. I believe that these content deals are also becoming more complex, with studios negotiating terms that allow them to get paid per number of views of their content over certain viewership thresholds. IMO these dramatic increases in content costs will not necessarily get offset by increases in customers’ willingness to pay. To make matters worse, Netflix will have to spend billions of dollars to purchase huge amounts of content internationally as well, as many local markets have very different preferences for what viewers want to watch. In addition, since content deals are negotiated on a region-by-region basis, Netflix may have to pay even more to gain access to content it already has in the US for new international markets. At the same time, many people in developing markets are not willing to pay the same $7.99+ per month price point that Netflix’s US customers pay. Netflix has thus far failed in India due to this combination of inadequate content and way-too-high price point. This article does a good job of examining Netflix’s poor expansion strategy in India: https://backchannel.com/amazon-is-out-punching-netflix-in-the-worlds-most-important-market-india-1faf3f4a067c#.g6k7sxmao

My view on Netflix’s business model is that it will eventually become a margins-focused business in the long-term that is quite similar to traditional cable providers today. It will have to balance increasing content costs by adding new subscribers while cutting opex. In the medium-term, however, Netflix is essentially done growing in the US in terms of the number of subscribers, so it must expand aggressively into international markets (number of subs is the primary metric that investors use to evaluate Netflix). I’m pretty bearish on Netflix’s long-term prospects given its poor execution to date in international markets—it’ll certainly be really interesting to see what happens.

Hi Andrew – That’s an interesting thought. I’ve read about some studios (such as Legendary Pictures apparently) using big data to figure out what content to produce, but I have a lot of doubts about that strategy. Thus far, it doesn’t seemed to have worked particularly well for Legendary (if World of Warcraft and The Great Wall are any indication). I also think that in the entertainment business, creative execution is so critical that it is difficult to just say, “make a movie on this IP” and bank on its success. I do think that it is important to make sure that there is a potential market for entertainment content that is created, but good execution is ultimately a more important driver of both creative and financial success.

Here’s the link to an article on what Legendary is doing: https://www.bostonglobe.com/business/technology/2016/03/31/making-movies-moneyball-way/Uzgwh2cdGthA1N3nZHqz0N/story.html

Yes, I had a similar question as I was going through this post. Perhaps another explanation could be that Blizzard is afraid of cannibalizing revenues from its own games by allowing third party developers to access its platform and sell to its existing customer base.

I find the online to offline model particularly interesting in this space. What kind of partners do you think Blizzard should team up with in offering offline experiences to its gamers? There has been a lot of innovation in the augmented reality space, so that’s one area where I could see Blizzard partner with someone to bring components of its mobile games into real physical spaces.

You make a really interesting point on multi-homing from the restaurant side. From what I’ve seen (pure anecdotal evidence), it seems like many higher end restaurants are choosing to use one app, such as Reserve or Resy, for online bookings. I do think that there may be some potential negative impacts of being associated with OpenTable for these restaurants, as OpenTable points offers or seeing many available tables at popular reservation times on Fridays and Saturdays affect customers’ perceptions of the quality and popularity of the restaurant.

I think one aspect of OpenTable that really hurt them was that many restaurants only chose to make certain reservations (such as really early or late slots) available through the platform. They held back a sizeable percentage of tables for call-ins. Once I discovered this, I oftentimes would call the restaurant directly, as they were typically more flexible and had much better availability.

I wonder if there are ways for OpenTable to improve on the customer experience / product side to differentiate more from competitors. For example, one of the features that I’ve really liked about Resy is the ability to put yourself on a waitlist and be notified in case tough to get reservations become available. And for Reserve, the back and forth interaction with an online “concierge” makes reservation changes and requests easier to make. OpenTable doesn’t have anything like these features as far as I know. It seems like there is a great potential opportunity for OpenTable to leverage its platform to work more closely with restaurants to gather data about customers’ preferences—their dietary restrictions, likes/dislikes, table preferences, etc.—to make their dining experiences more enjoyable and seamless.

Hi Annie – I thought you’d be interested in this article which was just published on Variety: http://variety.com/2017/film/news/warner-bros-kevin-tsujihara-1201981417/

It looks like Warner Bros. is moving ahead with pursuing an early window strategy that would allow certain films to be available for home entertainment about two weeks after theater release. The thesis behind this strategy is that with a larger number of tentpole / franchise films dominating the box office, independently-branded adult dramas are having a lot of trouble making money in theaters. By releasing certain types of films like adult dramas after a two week window, Warner Bros. believes that they will be adding incremental studios revenue while avoiding cannibalization of box office.

Yes, I agree. I don’t think that SVOD is really the reason behind the decline in viewership for the NFL this season. That argument doesn’t make sense to me because college football ratings have held constant, and you would expect both the NFL and college football to experience similar trends from the SVOD effect.

I think there are many other reasons why NFL viewership has suffered this season. The lack of stars (Tom Brady sitting out the first 4 games, Peyton Manning retiring) and lack of marquee / exciting games are likely more significant in explaining the drop off. For example, the Cowboys vs. Steelers game in Week 10 still drew high ratings because it was a good matchup and close game, but many nationally televised games were blow outs.

I think one of the key differences between the NFL and college football is that in the NFL, viewers generally have little interest in watching two teams play if the game is lopsided or they aren’t fans of either team (unless they are fantasy football players); in contrast, in college football, viewers are often excited to watch games between two teams that they aren’t fans of because they can always root for ranked teams to lose (and every game is important in determining who makes it into the college football playoff). I think to win in digital, the NFL needs to do a few things well: grow fantasy football, cultivate up-and-coming stars, and choose more exciting match ups or locally relevant games for nationally-televised slots. Another possible option is to allow fans to choose one team to follow on their digital platform NFL Game Pass and allow them to subscribe to access for all live games for that team, giving fans options to closely follow non-local teams.

Nice post, Ravneet. Sephora was one of the clients I worked with at Medallia, and I was very impressed by their adoption of digital technologies to improve customer service. Medallia helped Sephora track customer satisfaction metrics and service-related issues through online surveys, and Sephora was quite proactive about both monitoring results as well as looking for ways to utilize the data to further strengthen customer loyalty. They had high NPS ratings, especially for the retail segment (and I’m guessing that has not changed).

As I’m thinking about Sephora’s business model, it seems like many of the brands that Sephora features do not have strong online presences currently. Some of them primarily sell through Sephora and department stores’ online sites (i.e. Bloomingdale’s, Macy’s) while others actually want to emphasize the in-person experience of going to a brick-and-mortar store. As digital technology improves and brands embrace online channels more readily, do you think that Sephora’s business is at risk? My initial thinking on this question is that the percentage of online sales for beauty will continue to increase steadily, but the brick-and-mortar channel will still be fairly resistant over a long period of time (similar to how pharmacies like CVS and Walgreen’s have stayed in business despite Amazon’s growth).

Thanks, Ophelia. Very interesting post. I didn’t realize that Legendary was engaged in this type of business.

The idea of using analytics and crowdsourcing to determine new movie ideas is a thought-provoking one, and we certainly talked about it at a lot at Warner Bros. The Kickstarter campaign which ultimately funded the Veronica Mars film released in 2014 was a pretty unique example of this—the film project raised $5.7 million through Kickstarter donations, providing “proof of concept” that fans were highly engaged and were willing to contribute financially to support the film being made.

I think the challenge for filmmakers, however, is that even if you know that your film has a huge potential market, the actual creative content and execution of the film will still drive the box office; to a certain extent, even box office projections are relatively unpredictable, even after studios have tested the film with sample audiences. I think it is probably very difficult to prove value-add with these analytics services, especially because it isn’t clear what the “status quo” case would have been if a film had been released on a different date or had a different cast. To that point, how successful do you think Legendary has been by using LAA’s technology? (And is it partially responsible for giving us The Great Wall and Warcraft?)

Thanks for the post, Alex.

I also think that Pandora has not been as successful in monetization because they have not developed the appropriate technology to track ad efficacy for advertisers and have a difficult time justifying the high CPMs that they charge. I used to work in Customer Acquisition at Tapulous / Disney Mobile in 2012, and I remember that at the time, Pandora was attempting to charge CPMs of $7-8+, which is ridiculously high compared with other customer acquisition channels. Moreover, at the time they didn’t have the ability for advertisers to track their campaigns with Pandora through clicks or installs, which were critical to mobile user acquisition efforts.

Felix – Thanks for the comment! From what I understand, most of their physical production facilities are based in LA, so rather than shipping equipment they fly content creators to LA when they work with them. You make a really great point about software/hardware capabilities, though. They should definitely explore lower-cost packages that can be directly mailed to channel partners.

I think that most of the contracts that are signed guarantee content creators exclusivity with a particular multichannel network. However, you’re right that new content creators could certainly form a group together and agree on terms. I think it’s tougher given dispersion of talent, making it difficult for content creators to discover one another. I also imagine that it would be harder to coordinate / negotiate revenue-sharing terms.

I guess another related question is: are there enough barriers to entry in this space? I think that there are now several multichannel networks that have gained strong brand recognition and are well-known for focusing on specific interests (i.e. youth, video games, food, etc.). They are probably the easiest networks to turn to when content creators are starting out. That being said, I think there are opportunities for content creators to successfully form their own networks in other interest areas where there isn’t a dominant player yet.