Media Consolidation... And Then What?

In the months before I founded Paket Media, I was interviewing for product and strategy roles at a number of large tech and major media companies. One, in particular, roused my interest. It was at a company that, as far as its digital platforms were concerned, had long been considered an also-ran - but one that had recently found itself with an embarrassment of riches thanks to a series of smart acquisitions.

In an attempt to dutifully promote my candidacy, I assembled a brief deck outlining my outsider’s view on how I would navigate looming threats and capitalize on opportunities should I be offered the role. The theme of the deck was simple: “Your company is not owned by a telecom. This is an asset.” Needless to say, I wasn’t hired.

Vertical integration of content and distribution has long been the holy grail of the modern media conglomerate. Such was the impetus for AT&T’s $85B acquisition of Warner Media in 2018. The move - and others like it - harken back to the days when the Hollywood studios owned the process from development to exhibition. On the surface, the strategy seems sound. 

Discovery Networks’ recent purchase of WarnerMedia from AT&T (following in the footsteps of Disney’s now-legendary acquisition of Fox), however, seems to cement the majors’ new path forward: consolidation. So what happened to the dream of vertical integration? Where did things go wrong?

It’s important to acknowledge that vertical integration - on its own - is not a losing proposition. Things go wrong, generally, when synergies are fabricated and forced upon customers absent any real value to said customers. Unfortunately, parent companies have a penchant for tinkering with their new, expensive toys (one could argue the success of Comcast’s 2009 acquisition of NBCUniversal is due to Comcast’s relatively light touch with the media conglomerate - compared to AT&T’s notoriously aggressive handling of WarnerMedia).

What’s fueling these recent moves is that Hollywood is desperate for leverage against the massive scale - and, therefore, budgets - of the big tech platforms (and Netflix) that operate as both giver and taker. This has Hollywood on its heels and playing defense - first by vertically integrating, and, now, through consolidation.

I’m skeptical, however, that consolidation alone will spare the majors from the gravity of big tech’s (and Netflix) scale and may, in fact, only hasten customers’ frustration and exacerbation with even taller walled gardens. In order to compete - or, more aptly, hedge - against big tech, the majors must match or beat the platforms at their own game. Consolidation is a sound, defensive maneuver. But to play a winning offense, the majors need to place user experience at the core of everything they do.

What we see playing out in real time is something we, here at Paket, have been anticipating for quite some time. It is an obsession with finding innovation opportunities by validating user behavior and expectations. This is what inspires us and it’s why we’re building a first-of-its-kind utility platform that makes discovering, personalizing, and signing up for services - whether independent, niche, or a staple - a frictionless experience that puts the user first. 

Paket’s disambiguation of authentication, billing, bundling, and discovery across disparate services allows streamers to focus on what they do best, which is make and program great content. For streamers, Paket improves marketing ROI and customer retention - helping every content dollar spent go further. And, unlike the platform channels, we do this while keeping users in streamers’ native app environments, an invaluable customer touchpoint.

Consumers are overwhelmed and confused. A recent survey conducted by Verizon Media and Publicis discovered that 80% of those surveyed wished they could search, universally, across services; 48% worried about how much money they were spending on streaming services; and 56% were overwhelmed by the number of streaming services available to choose from. 

In short: somebody needs to make sense of streaming.

I, for one, do not believe that it is a fait accompli that big tech will emerge with total domination of the media landscape - even if, say, Apple someday snaps up its own major. Content needs to be able to find an audience - and the best way for new storytellers and voices to be discovered is not necessarily by creating larger walled gardens through consolidation - but by eliminating the barriers to discovery and access to large and niche services alike.