Content Is King
Content is King to quote Sumner Redstone. At CEORater we spend a fair amount of time thinking about content. Over the past 24 months we have considered the following for our platform: 1.) video streaming of earnings calls with associated analytics 2.) employee video reviews 3.) business news (original and third-party) and premium blogs, including this one (we hope to expand this roster across Technology and the Capital Markets).
The Media Landscape’s Tectonic Shifts
In recent years the media landscape has changed dramatically as traditional models (cable bundles, DVD rentals) have given way to new delivery models such as over-the-top (“OTT”)/ streaming and new original content producers such as Netflix, Amazon, Apple and Google.
More recently the OTT game has shifted toward original content production as media companies move to create proprietary OTT platforms. HBO rolled out its proprietary streaming service several years ago, Disney plans to do the same in 2019. This has forced third-party content aggregators such as Netflix to shift their business models to focus on original content production.
I say all this as a former sell-sider who is critical of the current model for valuing media companies. Yes, the number of subscribers matters as do the number of net new subscribers in the quarter, average subscription price etc. However, sufficient attention is not paid to the amount of content available on a given platform – particularly original content.
Introducing “Content Yield”
When Disney rolls out its OTT offering in 2019 – how many hours of original content will be available for streaming? Will this metric be disclosed quarterly? Same question goes for Netflix and other OTT services such as WWE.
The number of subscribers is a lagging indicator. Content is king. Content drives subscriptions. One would think there is a correlation between content hours and subscriptions – i.e. “content yield”.
- For every X hours of programming we have Y subscribers;
- For every X hours of original programming we have Y subscribers;
- For X hours of programming added to the platform we have Y net new subscribers;
- For X hours of original programming added to the platform we have Y net new subscribers and so on.
It would be interesting to test Content Yield across the media landscape.