Media Watches You : data-driven platforms in the living room

[Excerpts from a talk I recently gave. There’s a lot of change washing over media companies. Here I highlight a couple fundamentals: web giants colonizing the living room, and the value and risk of data-driven business.]

The media landscape continues to undergo dramatic shifts driven by digital transformation. Those that are quick to make the shift are establishing competitive advantages over slower rivals. As we might expect, old media incumbents are being outpaced by younger, web-native and data-driven players.

This has serious implication for how businesses grow and how the rest of us trade the details of our lives for services and conveniences.

In the past 10 years the mass human migration onto the Internet has evolved away from the desktop web and onto smartphones, with about 2.8B of us now using handhelds to access content and information. At the same time, we’re losing interest in traditional cable and pay TV. There are now 22 million US broadband households with no use of TV services (telcos, cable, satellite).

A major consequence of these shifts is now hitting hard.

Moving onto the web dealt the first blow to incumbents: they lost control of content creation and distribution to the masses. Moving onto mobile has delivered another blow: they lost control of the audience to a handful of new digital networks. A major consequence of these shifts is now hitting hard. Google and Facebook account for almost all growth in digital advertising because of their dominance on the Search bar and the mobile home screen.

This is the current stage of our digital migration: we’ve aggregated onto the new dominant platforms and we’re now much more measurable and programmable. In this landscape, cable TV is being increasingly marginalized, eroded, and unbundled.

With over 8 billion video views every day from over 2 billion monthly users, Facebook has a staggering audience with massive engagement — so much so that there are growing calls to regulate them (and Twitter) as utilities. The top web destinations are now Google, You Tube, Facebook, and Baidu, in that order (Amazon is #11).

This is the fundamental advantage that the new web giants are exploiting.

What’s really important to understand about this shift is that these platforms not only deliver content, they measure and track how we interact with it all. Facebook integrates 29,000 data categories into its user models so they can better match content and advertising.

This is the fundamental advantage that the new web giants are exploiting. They are data and web natives with massive audiences on measurable and programmable digital platforms. Cable TV gets little to none of these spoils.

But when data is the new oil and data is your business, your business needs to keep getting more data. The new front in this battle is the living room.

While the incumbents try to hang onto their content licensing monopolies, the web giants are outflanking them with data.

The set-top has been controlled by the cable providers for decades now — here in the US that’s mainly AT&T/DirecTV, Comcast, Charter, Dish, and Verizon. And they’ve generally done what most companies do when they keep getting bigger and bigger. Both Comcast and AT&T have repeatedly been recognized as the most disliked companies in America. (Note that Facebook made the list this year…)

Such poor customer experience creates the market for disruptors before they even exist. See also Quark and InDesign, taxis and Uber, hospitality and Airbnb, etc…

So now we have Amazon Echo (Alexa), Google Home (Assistant), Apple HomePod (Siri), and Microsoft’s recent announcement with Harmon Kardon (Cortana) moving into the living room trying to capture the human interface and deflect us to their partners and away from their competitors. While the incumbents try to hang onto their content licensing monopolies, the web giants are outflanking them with data. Some are willing to let the old guard play. Amazon has offered to let cable companies integrate Alexa into their set-tops. (Of course they are.)

They’re establishing a competitive advantage with our behavioral data.

And this is the next big point: voice assistants in the living room are capturing the interface, the moment we request things of the network, and they’re doing it with precision. They’re not just receiving our commands. They’re identifying, measuring, and modeling us, and deriving data-driven insights to integrate into their product pipelines. They’re establishing a competitive advantage with our behavioral data.

Alexa is always listening though it only records to the cloud once the trigger word “Alexa…” is used. Same for Google Home. Both attach the recordings to your named user account. This data is used to reinforce the user models they build so they can better match services and advertising to our behaviors. Both Google and Amazon have the largest computational infrastructures on the planet with which to model us, as do Facebook and Microsoft.

Apple is putting a premium on privacy. The rest of use get the cheap seats in exchange for the data of our lives.

Google can use our voices to further weigh the value of search terms, reinforce analytics, and design Android functionality. Amazon can use our content requests to predict product demand, drive content partnerships, and design their next round of original shows. You can do so much more with lots of data about people.

Apple takes a local approach. They maintain that anything sent to their servers has no identifying data. Hence, their focus on bringing ML and data analytics to the device rather than keeping it in the cloud. The question here is will their SoC (eg the new A11 Bionic chipset with its neural engine) be able to deliver ML performance on par or better than their cloud-based competitors.

It’s worth noting that, as the luxury offering, Apple is putting a premium on privacy. The rest of use get the cheap seats in exchange for the data of our lives.

Oh and also note that Facebook might be pursuing their own living room assistant-in-a-box.

It will be Alexa, not Comcast, that talks to your connected car and your home A/C.

The web giants are vying for the living room, grabbing the user interface, diverting us to their partner services, grabbing the data to feed to their massive learning systems, selling access to advertisers, and taking coin at every point along the way.

They’re grabbing territory in a long game about data and human behavior while the incumbents are still mainly trying to keep the audiences they’ve captured so they can sell advertising over TV content. But over the next decade it will be Alexa, not Comcast, that talks to your connected car and your home A/C.

How will you trade the value of your data for services and convenience? Will you have any ownership over that data?

And this is another key point: these are platform companies that know how to build ecosystems of services around an initial anchor. Their voice devices are already integrating across our increasingly connected lives. This has significant implications for how media businesses grow and how we as media consumers trade access to our behaviors for entertainment and information.

So, what’s your voice assistant strategy? I’m not talking about chat bots here but the GAFA attention aggregators. How will you make sure Alexa and Siri and Facebook (and maybe Cortana) send their audiences your way when they ask for content? And how will you trade the value of your data for services and convenience? Will you have any ownership over that data? Will us humble users ever demand regulatory protections of the minutia of our lives being tirelessly mined by ever more capable corporate AIs?

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