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Mika Salmi is the former president of Global Digital Media at Viacom/MTV Networks (NYSE: VIA). He has been involved in a number of startups and currently serves as Chairman of Sulake (Habbo Hotel), and on the board of Blinkbox, among others.
The global media business is in the midst of a major transformation. Everyone wants to know when this change will end and how media will look tomorrow.
Sorry, but the future is destined to remain unclear. Media, and most importantly the distribution of media, has gone digital. That means change will be ongoing, and media will be subject to the same non-stop innovation present in the broader technology sector. The core content – videos, music, games, print, etc. â€“ will in many ways look/sound/play/read like today but everything about the way it is consumed and delivered will continue to change.
The digital revolution hit the music business first. Print media came right on its heels. The TV industry has been watching these businesses’ woes and has wondered what it can do to prevent the same fate. Interestingly, the games space is not immune to these issues either â€“ even though many media companies have looked to games as a diversification play.
What do all these industries have in common? First, the distribution of their product is changing from physical/analog to digital. Also the creation of content across them has exploded, with thousands of new content creators taking advantage of the lower cost and ease of digital content creation. Critically, the consumption of media also continues to grow, as more video, music, games and texts are being consumed than ever before.
Positioning for the Future
If we don’t know where this all ends up and the business landscape is in constant flux, how can a media business be positioned and structured for the future?
One answer lies in the software industry. Software as a Service (SaaS) has taken that industry by storm. Shipping or downloading a static physical or digital product is a dying business. Pioneers like Salesforce.com, and now *Google* with their office apps, are showing how a “product” is not a discrete thing. Rather, it’s an ongoing relationship â€“ with continuous updates and two-way communication â€“ with customers and even between customers.
This revolution in software has been enabled not only by constant Internet connectivity and faster bandwidths but also by changing business models like subscriptions and micro-transactions and even by the rise in social networking. No software category has been unaffected by SaaS. In the software industry, if you don’t have plans to put your product in the “cloud,” your future prospects are dim.
So how do media’s products become Media as a Service (MaaS)? This is not just about putting up a pay wall and charging a subscription fee. Rhapsody tried that in music and the Financial Times has done it in print, both with limited success. The “S” in MaaS is not an afterthought or tacked on, it is the entire ecosystem attached to the content.
Games as a Service
Some notable examples to help guide other media businesses can be found in the games business. While the hardcore online game World of Warcraft led the way out of the boxed product and single transaction business, the casual social games of Playfish, Zynga, and others are taking it to a whole new level.
These “social gaming” companies have emerged in the past 18 months as powerful firms with all of their products existing solely on people’s Facebook pages. And their consumer is not the classic teen boy gamer of old but the coveted “non-gamer” with games like “Pet Society” and “Farmville” appealing to all ages and demographics.
These games are a “service,” with no discrete product for a consumer to own. Costing nothing and with no download or registration hurdles, they’re also easy to try. Yet they constantly evolve, with revenue being generated in multiple ways, from sales of virtual goods, offers for products/services, subscriptions and advertising. Critically, consumers’ social interactions and online profiles serve as a key part of the games’ play, driving engagement, popularity and revenue.
These social games companies have come from nowhere and many are generating hundreds of millions of dollars a year. The rest of the games industry is stunned. Games companies are quickly trying to figure out what they can do to get in on the action. Other media businesses should do the same.
But aren’t games different from other media? Not necessarily. Interactivity and social connectivity are what enables the Games as a Service approach, not the fact that they are games. In fact, many of these so-called games simply offer a minor activity â€“ like feeding a virtual pet â€“ as an excuse for online interaction.
The fact is all media has already become interactive and social via sharing of links, feeds, commenting, playlists, editing, uploading, embedding, etc. Media is a major focal point on Facebook and Twitter. People’s social graphs and personal details are integral to this experience.
Embracing TV as a Service
What if a TV company took the next step and thought of their content as a service? How would they approach their business differently?
Perhaps a TV “show” could become a continuum of short episodes distributed via Facebook, Twitter, or other social and real time means. The “show” could be free on a Facebook page, with standard ad units providing the first level of revenue. The show might contain social elements (pulled from the Facebook page) built into the content, which would connect the content, the user, and their friends more deeply. Additional “fees,” in the form of demographically tailored offers, micropayments, or subscriptions could come from users who want to see a show first, buy products from the show, create avatars, host a viewing party, and on and on.
Once a company, producer or content creator embraces its content/media as a service, the possibilities and ideas on how to approach it multiply. And since the business will be constantly changing, new revenue models and content ideas will emerge. This is not just about computers or mobile phones. The living room television may become the most exciting area for these media services.
It’s no longer just about playing media. It’s about playing with media. Hulu, Blinkbox, BBC, Warner Bros? Who will embrace TV as a Service?
The article was first published in C21, behind a paywall. Published with permission.