In my previous blogs about media, I might have left the reader the feeling that I do not see much future for the national media. There are two types global media companies growing: owners of fictional content like Disney and providers of self-service platforms like Facebook and Twitter. Meanwhile traditional national or local media companies are starving.
Still, there is room for providers of media services to smaller segments. The segments can be e.g. geographical, vertical industries, or hobbies. These services the powerboats that offer the future for national or specialized media companies.
Self-service wins in customer intimacy
Experts and analysts that have been studying the transformation of traditional product industries to service businesses often see media industry as one example of an industry in this transformation. They then suggest the panacea solution of media companies moving closer to the customer and servicing all their different needs in some interest area.
But this is not a solution for smaller media companies. There are two reasons. First, when dealing with a focused need, people want to dig deep. This is proven by the importance of the “long tail” of Internet traffic. Increasingly, they do not believe that the expertise of one person or one organization is sufficient.
Second, and more important, is the fact that the general customer intimacy market position is taken and protected currently by economies of scale. Facebook, Twitter and their rivals are the interfaces through which people increasingly receive their general information feed. Self- and peer-service and network effects make these platforms efficient.
There is always a possibility of new technologies and use cases that make their inroads to the customer interfaces. But currently, the success of social media platforms has made start-ups working in the area major targets of venture capital investments. Thus, the new entrants are prone to emerge from the tier 1 start-up community.
Fictional content to be owned by internationals
As mentioned in my earlier blog, local fictional content has been increasing in popularity. Therefore, one might expect that there are potential for local media companies in this area.
In some extent, this is true, especially as the national broadcasting companies many times participate in funding the production. But in general, the direction is most probably the same as what has already happened in music production: Local content is owned by the international players. To complement the, ther will be some local indie “powerboat” companies.
The reason, why this development happens, can be seen from the figure on the left. It presents an analysis framework of Gearshift Group applied to the media industry. Essentially our thinking start sees three different winning strategic positions for companies:
1) The company has high customer intimacy that it can provide efficiently. The position is occupied by social media giants.
2) The service/product is based on some differentiating asset or competence like fictional content is, but the structure of the industry provides barriers of entry or economies of scale like investments in production and distribution channels in TV and movie productions. The position is occupied by global giants owning large portfolio of fictional content assets.
3) The company has some new or special competences it can exploit in its customer relationships. This is the natural space for smaller, specialized players. The position offers room for new growth services “powerboats” in media industry.
How to build a powerboat
It is easy to do analysis of strategic positioning. Much more challenging is to really recognize opportunities and build services that are fitting the position detected—to design a real powerboat.
Many times the recognition of opportunities emerges from recognizing patterns in business and use case development. In the case of media, one development that gives ideas what the potential segment focused services might be is the development of self-service media.
The figure below illustrates the development.
Thus, the next step of development might be services that produce more focused content on to of social media platform.
The needs underlying the general potential development are
• There is a need to read bout local news and developments that are not just happenings to friends.
• There is a need to add value to global news. Adding understanding and data on how developments somewhere affect the reader himself.
• There is still a need of just translating some content.
• There is a need to produce news to people who are traveling elsewhere.
• There is a need to collect data and research from different sources and deliver them in such a form that it can be studied fast.
• There is a possibility for new formats.
Besides these needs for content services, one must also to remember that even powerboats need a harbor and supplier of key components like engines. Thus providing technologies for the new content services offers also business possibilities.