Fantasy-League Media If You Could Draft an All-Star Team of Entertainment and Media Assets and Capabilities, Who Would You Pick?

strategy+business

ISSUE 84 AUTUMN 2016 Fantasy-League Media If you could draft an all-star team of entertainment and media assets and capabilities, who would you pick?

BY SARAH ELLISON

REPRINT 16301

issue 84 issue strategy+business ------, it is clearit , But what could ifBut you start from before. Sobefore. a new age media of con is alreadyglomeration us. upon Wit purchases digital of ness Time Inc.’s players Hello Giggles and Viant; purchase of telecom giant Verizon’s AOL; investments andin Comcast’s Media andBuzzfeed. of Vox Some the most unexpected new-look me dia conglomerates are emerging from technologically adept upstarts, such as Amazon and Netﬂix. But creating a thoroughly modern me a matter simply of dia isn’t empire mashing the up mind-sets media of and technology, analog and digital, legacyand startup. the 2000 From merger Face to AOL/Time Warner book cofounder Chris Hughes’s short-lived (and disastrous) owner the Republic shipof New that the two realms often speak dif languages.ferent scratch? What could if you take a cue from the fantasy legions of sports themselves have (who players become key participants in the emerging and media assem world) your own all-starble team? What if you could cruise around the world in your Gulfstream and as G650 the optimalsemble collection as of exec and cultures, capabilities, sets, - - -

revolutions across the Middle East; the next, a faltering stock in it’s turnaround. a of need Most mediaMost CEOs I talk to that what made sense matter, a to (slightly) Williams younger Ev or DorseyJack just years ﬁve ago doesn’t necessarily work anymore. (the company Twitter moment One they cofounded) foment is helping anymore. the justLegacy for old isn’t admitting about even shy thataren’t they like would own to assets that make sense the for current more en Invironment. the aughts, media bosses resolved this pining spin by ningoff slower-growing businesses and those to holding on deemed there is valuable. now, But more change much too simply and unpre dictability make to bets. such simple And even as audiences fragment, scaleimportant is more than ever - - - he media he conglomerates we have known and loved (and sometimes hated) inour

lifetimes are, deﬁnition, legacy by institutions. The mix of businesses assembled to multibil createtoday’s lion-dollar are empires theresult decisions media of moguls began making than more years 50 ago. Back newspapers then, were verticallyproﬁtable, integrated op erations (many newspaper compa nies owned paper mills); televisions black andwere white; and the @ symbolwas rarelya used feature on What manualtypewriters. made perfect sense a young to Rupert sittingMurdoch in in Melbourne the family over took he when 1952, newspaper business, may not make For sense mogul the to older today. by Sarah Ellison by Sarah If you could draft an all-star team of team an all-star draft could If you Fantasy-League Media and and media assets entertainment pick? you who would capabilities,

Ideas Leading

leading ideas 1 leading ideas

utive skills that would allow you to They want to be informed about the young people who inhabit alternate succeed not just in 2016, but in world. Our fantasy conglomerate universes for several hours each day. 2020 and beyond? must have the kind of mobile plat- And I’d plug EA’s gaming properties For the purposes of this thought form and products on which people into the portfolio of rival Tencent. experiment, I decided that money is want to spend a lot of their time, the Tencent is the largest Internet portal no object. (This is fantasy, after all. ability to create and market top- in the world’s largest country (Chi- Hence the G650.) I’m similarly un- quality content, and a global pres- na) and the home of WeChat, a bound by practical concerns of relo- ence. It will also need the ability to largely unheralded social app devel- cations and separation packages that incorporate data and usage knowl- oped for mobile phones with voice might be required to woo individual edge to build customer loyalty and and text messaging and time lines. executives, or the real-life rules that great consumer experiences. WeChat, with its 700 million users, make it tricky to transplant corpo- If the future of media is control- drives more interactions a day than rate cultures. However, even in this ling slivers of human attention, I’d anything Facebook has on offer. fantasy world, my company — let’s start with Electronic Arts, the gam- Controlling screen time doesn’t 2 call it Ellison Global Media, or ing company that owns EA Sports just mean controlling the intake of EGM — does have to abide by regu- titles FIFA, Madden NFL, NCAA media content. It means holding the lations and antitrust laws. Football, NBA Live, NHL, and keys to interactions between hu- Let’s assume that people want SSX, not to mention Battleﬁeld, mans, who increasingly interact only to watch long and short stories on Need for Speed, The Sims, Medal of through the language of their social video and listen to them on the ra- Honor, and Command & Conquer. apps. And so I would make sure to dio, listen to music, read stories, and EA has shown it has the capacity to include Facebook’s main sharing communicate with one another. hold the attention of the legions of platform. Aside from being the new town square where citizens argue about politics, parents brag about their children, and exes try to make each other jealous, Facebook has implemented the most successful zero-to-60 mobile strategy of any of the major tech players today. CEO Mark Zuckerberg understands that the future of interaction lies largely in gaming technologies and prac- tices. He also understands the value of owning the platform on which others play. (Just ask the New York Times, National Geographic, and Buzzfeed, early partners in Face- book’s Instant Articles experiment.) The challenge for Facebook is acquiring its next billion users, in part because of the limitations to broadband connectivity, and in part because there’s no guarantee the next generation of users will ﬂock to it. Which is why I’d also want to include Snapchat in my fantasy media conglomerate. The mobile messaging application, which started as a

Illustration by Benoît Tardif, colagene.com way for college students to share leading ideas

impermanent photos and texts, has this time I wouldn’t shy away from tent with friends.) In the long run, become one of the world’s fastest- legacy businesses. Strip away the everyone wants to move up the growing and most dynamic media properties the company acquired in chain from distributing others’ con- properties. Although its user base its 1995 merger with Capital Cities/ tent to producing their own. You- (100 million daily users) is one-tenth ABC (the television and cable net- Tube is financing $9 million mov- the size of Facebook’s (1 billion dai- works), and the premerger Disney ies, and walking up the content ly users), Snapchat’s users spend a lot had a fantastic film and television value chain. It reminds me of when of time inside the app watching business, theme parks, and mer- AMC wanted to stop distributing news and entertainment videos. chandising genius. Now add Dis- other people’s movies and bought With 21 publishing partners, Snap- ney’s acquisitions of Pixar, Marvel, Breaking Bad. These transitions can chat is blending communications and Lucasfilm. Disney’s dominance happen pretty fast. and content on a global scale. And in the film business is astonishing. My fantasy conglomerate won’t it’s growing fast. Sixty-four percent The Marvel characters and Lucas- just have fantastic video. For de- 3 of U.S. smartphone users between film’s Star Wars franchise provide cades, conventional wisdom held the ages of 18 and 24 used Snapchat multiple universes from which to that television would kill radio. It in late 2015, up from 24 percent in early 2013, according to comScore. You have to capture the attention of investors Penetration among 25- to 34-year- and the public 24/7, you have to gain millions old users increased to 31 percent, up from 5 percent in 2013. What Snap- of followers, and you have to achieve ubiquity chat is so good at, and what many in across a range of platforms. the media industry have missed, is that the app continually reengages draw — for movies, yes, but also never happened. Today, people still its users, as they check back to see games, apps, and products. The om- spend two hours of their day listen- what their friends are sharing. nipresence of Star Wars books, toys, ing to podcasts, audiobooks, and My fantasy conglomerate is go- costumes, and even waffle makers is music as they sit in traffic, walk to ing to have to be sophisticated about evidence enough to give the Disney work, shop, and generally go about using its knowledge of what custom- merchandising chief a sunny office their quotidian tasks. Where are ers are looking at, and what they like on the top floor of my office build- they going to listen to all these to look at, to deliver to them in- ing. Can you imagine what that things? On Sweden’s Spotify, which formed and surprising offerings and kind of surround marketing could has a global and mobile presence. recommendations. Which is why do for the products of Electronic I’ll also need some pipes. Distri- we’d need Netflix for long-form Arts? Since this is fantasy media, bution isn’t sexy. But it is very valu- content. Netflix has shown its abil- EGM will also add a prestige film able, and I am trying to build a prof- ity to create original content, with company, such as A24, which pro- itable company. Ultimately, we’re hits such as House of Cards and Or- duced Oscar darlings Ex Machina, moving toward a world in which ange Is the New Black. But it also has Room, and the documentary Amy, broadband is a utility, and an in- a global delivery system and data which recounts the short life of creasingly regulated one at that. But that other media companies can Amy Winehouse. when I think that I may not want to only dream of as they scan their For short-form content: You- own pipes, I take a look at Warren Nielsen numbers. While big media Tube, a US$10 billion business Buffett, a one-man fantasy investing is still just guessing, Netflix knows where people are spending a tre- team. Last year, Buffett boosted his exactly who Sarah Ellison is and mendous amount of time. (One investment in Charter Communica- how much she really lets her kids might argue that Snapchat is the tions as part of the Charter–Time play on her iPad. (And she pays for newer version of YouTube, but I Warner Cable merger. Why? He issue 84 that service.) would say that the platforms are recognized that like Coca-Cola, one On the subject of engaging complementary; the latter is pri- of his longtime holdings, broadband long-form content, I’d need a piece marily focused on content creation, is going to be very much around for

of the Walt Disney Company. And and the former on sharing that con- a long time and can deliver ample strategy+business leading ideas cash flow. (As a thought experiment, missing. Media is a business in imagine how difficult it would have which image, marketing, and sales been for the iPhone to succeed with- matter a great deal. It’s not enough out Apple’s deals with AT&T or Ve- simply to assemble a great set of as- rizon.) Avoiding cable, with its ex- sets. You have to capture the atten- pensive infrastructure costs, and tion of investors and the public 24/7, looking at the billions of people you have to gain millions of follow- around the world who are just get- ers, and you have to achieve ubiquity ting online, I’d choose India’s Bharti across a range of platforms. That Airtel. The world’s fifth-largest mo- means I’ll need a public relations bile phone carrier, Bharti Airtel has department that understands how at least 350 million subscribers in to thrive in today’s media miasma India and Africa. like nobody else. Since money is no I want all my company’s prod- object, I’ll hire the Kardashians to 4 ucts to be beautiful, which is why run it. + I’d want Jony Ive, Apple’s chief de- Reprint No. 16301 sign officer, to oversee the design of Sarah Ellison the offerings. And EGM would sarah.l.ellison@gmail.com want to have a great advocate and a is a contributing editor at Vanity Fair ruthless negotiator on board. Sha- and the author of War at the Wall Street Journal: Inside the Struggle to Control an ron Jackson of Hollywood power- American Business Empire (Houghton house WME (William Morris En- Mifflin Harcourt, 2010). deavor) would head up the talent division, bringing the power deal making of her boss, Ari Emanuel, without the attitude. This team needs a head coach, and finding the right CEO will be a challenge. I don’t want a pure Inter- net executive. All the movie people will quit once we start adding these other capabilities. Nor do we want a media executive who is hung up on the good old days of broadcast. I’d opt for a partnership of Reed Hast- ings, CEO of Netflix, and Evan Spiegel, cofounder and CEO of Snapchat: two people who are in no way tied to the previous ecosystem, who have encountered roadblocks and dealt with failure (recall Hast- ings’s Qwikster fiasco?), and who have shown a willingness to change on a dime. (Netflix’s pivot from DVD rental to streaming is already legendary. But think of how quickly Snapchat has changed and updated its app.) There’s one last thing EGM is strategy+business magazine is published by certain member firms of the PwC network. To subscribe, visit strategy-business.com or call 1-855-869-4862.

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