New York Times: 360 degrees news
In 2015, the New York Times launched its virtual reality app. It proved an instant hit. Where to go from there?
In 2015, the New York Times launched its virtual reality app. It proved an instant hit. In the first four days, it was already downloaded more than any other app from NYT3.
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The core of the idea is to create new value for its customers. On the one hand, by directly targeting specific jobs to be done for its reader. If you are looking for an immerse journalistic experience, beyond paper and 2d video, virtual reality can provide an unrivalled opportunity. In addition, if you are looking for entertainment, beyond what already exists on your phone or direct environment, VR can give a string of new applications.
On the other hand, value is created by targeting its other customer: advertisers. For instance, Samsung and NYT have teamed up to make 360 reporting happen. Samsung supplied journalists around the world with the necessary equipment. Interestingly, this showcases the value of NYT and its subscribers to platforms and device producers such as Samsung and Google. Earlier in 2015, Google sent 1.3 million VR headsets to NYT Sunday Magazine subscribers1.
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And that’s where NYT’s value capture mainly comes from: other companies wanting to use NYT’s good brand and subscriber base to launch their products, and the novelty effect for advertisers.
The NYT brand and subscriber base is incredibly valuable for platform companies and device manufacturers. Platform companies are desperate for scale, especially at a time when it is still uncertain whether multi-homing will occur (often this can only really be understood once users start to experiment with the products). If platforms want to bind content providers and stimulate other users of the product, it will need to scale as soon as possible. NYT’s subscriber base, along with specific applications targeting this segment, could provide the perfect kickstart.
Device manufacturers at the same time hope that their device can become the standard. Also here, the cards are still not shuffled yet – much is to gain. Early movers will try to capture early adopting consumers, and in doing so hope to make their product the reference for most consumers. Google basically hopes that when you think VR, you think Google cardboard boxes (and thus Andriod phones, which in turn are underpinned by Google Search). That means they are willing to pay for premium customers who would convey that message – and the NYT subscriber base could be a perfect segment for that cause.
There is another value capture option: advertisement. In specific, the ability for sponsors to have a corner in the 360 degrees view with your logo (e.g. a billboard in the middle of a sports game). A source within NYT told me that advertisements in the VR space are booming right now for the newspaper. However, my source speculated, this likely is related to the novelty effect: you want your company to be cool, cutting edge – and that’s what VR represents right now2. Once that blows over, the value capture opportunity could quickly subside.
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NYT has profited smartly from the boom in VR. The question is how sustainable their model is. Right now, most of the value capture is centred around the willingness of platform players and manufacturing companies to achieve scale, and advertisement focused on the novelty effect. Both of which are unlikely to be sustainable in the long run.
My hope is that they use these value capture options to allow themselves to make further investments in VR content and applications. That would keep them ahead of the curve, and relevant for platform players, device manufacturers and advertisers.
Perhaps most importantly, the technology could bring the NYT back to its original value creation: bringing subscribers the news in an unparalleled and unique way. That used to be through the newspaper. Perhaps the newspaper of tomorrow is in VR. Since this technology requires upfront infrastructure investments, journalists on the scene, and quality accounts of what is happening on the ground, NYT could regain a unique and more defendable position in the market for news.
Sources
1 https://www.wired.com/2015/11/google-cardboards-new-york-times-experiment-just-hooked-a-generation-on-vr/
2 Interview with former NYT employee
3 http://adage.com/article/media/mini-ny-times-created-a-watershed-moment-vr/301334/
Very interesting blog post! I wonder what kind of news content is suitable for VR? I assume it requires much more time and cost to be produced than regular articles
Hey Dan! Another great post about the media industry! I’m curious to see your comments on @Venkat’s blog who also wrote about New York Time’s VR efforts. I agree with @Carolin that VR-powered stories are costly to produce. As many other media make their foray to VR, why would readers still watch NYT stories? Readers like to read NYT stories is one thing, but the VR version is another. TV networks are much better in image production and live coverage.
Hey Dan! Great insights. I have raised the pertinent issues about cost and time involved in VR content production in my blog post on NYTimes. Could you give your viewpoints on any strategy that Nytimes could employ to reduce both costs and time as they would have to fight for instant news in the future.
Interesting point Venkat! Actually, I spoke with someone from the NYTimes, and they actually welcome the initial costs. This because they see it as a barrier to entry. If they can provide good content from their superior scale / revenue base, then they could temporarily capture part of the market. The only problem is that they’ll have to keep innovating constantly to stay ahead of the curve… might require a totally new organizational set up to make that happen. Very curious how it will pan out in the future!
Thank you Daniel, it’s interesting who is capturing more value here, NYT or Google? Stepping into Google platform, NYT creates a powerful partnership, but the down side is that it becomes a provider of Google product to its audience. Of course NYT customers will satisfy their informational needs first with Google cardboard, but after that they will pursue other needs (events, theatre, cinema, travel, games, etc). That’s going to be almost all Google’s revenues as soon as Google provides this platform for NYT. So, this is a very arguable decision: it definitely expands NYT horizons, but makes it dependant on Google product.
To eliminate this effect, I would definitely go for another VR platforms (Oculus Rift, Hive, Samsung Gear, etc) to create competition among various VR platforms for NYT audience. What do you think?