Michael Wolff: Who Wins and Loses in Media's Great Pivot to Video
Digital media's latest shift away from words reveals the same old obsession: Steal some of TV's $70 billion ad pot. Can even Facebook succeed amid a tsunami of new content?
The transformation of digital media from a largely text-based format to a predominantly video experience has been underway for half a decade. In 2014, more because it was obvious than that I was prescient, I wrote a book called Television Is the New Television, the thesis being that every digital showboat really wanted to be in the TV business.
So the larger question about the overnight fixation on the "digital pivot" ("We will be shifting our resources and business model away from written content and instead focus on our fans' growing appetite for premium video across all platforms," declared Fox Sports then-president Jamie Horowitz this summer) is why everybody is acting like it's new.
Along with Fox Sports, Vice, Mashable, Vocativ, MTV News, Mic and in some fashion almost everybody else has shifted resources from written content to video production. Things move in a clunky manner in the digital media business, until everybody wakes up and realizes it is now or never. Like social media, like mobile, like apps. Like so many other transformative moments come and gone. It should be obvious to anybody who has been alive longer than a bug that the pivot to video is another risible internet chapter that will make a few fortunes and sink most everybody else. But that is really beside the point. There is just, suddenly, manifestly, no other option.
The video future may be uncertain, but that's more hopeful than an almost moribund text-based present. It's the old math: In text-based digital media, CPMs go down and the cost of traffic goes up. Arguably, the math is no better in video-based digital media, but calculations for the future are hopeful — and projected growth remains the real digital currency.
But even that is hardly the point. It is more that the nature of the medium itself has shifted. One would barely know how to have a conversation with someone proposing a text-based startup: "We're going to hire great writers!" Try that on someone. And if you do have great writers now or, even better, game and cheap ones, you are still saying — and have been for a while — "Yes, yes, we're working on our video strategy. Amazing stuff!"
Indeed, every digital media business is now being valued in good part on how efficiently it is deploying and monetizing video. You couldn't sell a digital media company, or attract new investment for it, at a reasonable multiple without a video growth plan. The nature of the medium is, of course, dictated by the big platforms, most singularly Facebook. In 2014, Mark Zuckerberg, still running a mostly text-based site, began to talk about an upgrade that in five years would transform Facebook into a product that was "mostly video." That alone would mostly be the ballgame: If you had a digital business that depended on the traffic skimmed off of Facebook, as virtually all do, then you had better be sharing video.
But perhaps as important was a change in language and media perspective. In the past, there were two media disciplines — print on the one hand, film and television on the other. Over 50 or 60 years, the balance of power might have tilted to film and TV (particularly TV), but print continued to command even more total ad dollars than TV. Then the digital text-based business — searchable, shareable and immediate — grievously undermined the print business. Functionality became the medium instead of specifically print or video. Text-based digital media could, with relatively simple functionality, transmogrify into video-based media.
If you had a video function and video could be produced as cheaply as text, why wouldn't you use video? Indeed, the act of publishing suddenly had nothing necessarily to do with print. Now you published video.
Video was an upgrade. Video was merely better technology. It didn't matter, for instance, that for more than 150 years, The New York Times was a print publisher that, when it might have had the opportunity, did not go into TV — that, in fact, it knew nothing about the TV business. Now it was a video publisher.
But the other aspect of platform hegemony, beyond Facebook's specific encouragement of video, was TV itself. TV remained the only medium where ad rates reliably went up instead of down. What's more, people paid for content. Digital was a fraught business model, sustained only by ever increasing the size of the audience. TV, after all these years, still was able to increase the value of its existing audience.
Digital media had, in its 20-year run, undermined and stolen print advertising, but it had not gotten much of the $70 billion TV ad pot. If digital media was to continue its growth promise — if Facebook was to continue its growth promise — it had to get a meaningful piece of TV ad revenue. There was a larger dread out there, too. If programmatic advertising sales had taken much of the profit out of text-based digital advertising, what would happen when it did that to commoditized video, too? It was already doing that. Worse, ad blockers, which had undermined text-based advertising, were now onto video. Moreover, the very nature of the digital attention span, as well as its audiences based on size rather than quality, threatened the long-term prospects for the digital ad business. Advertising had a troubled future.
This created a two-class digital video world. Platforms like Netflix and Amazon, eschewing advertising, were making and selling high-end video — vastly expanding the scripted video market — and trying to challenge TV. YouTube was trying to find its premium strategy. AT&T, with its proposed acquisition of Time Warner, was betting on a high-end content future. And then the rest was low-end, ad-supported, commoditized video — the tsunami of it. In this, Facebook was faced more and more with something of an existential crisis. Was the future social media or TV? Shared videos or paid-for videos? Could Facebook achieve world dominance without Hollywood dominance?
At any rate, that's it, there's only video.
This story first appeared in the Oct. 4 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.