What do Netflix and Sesame Workshop have in common?
Which death is preferable to every other? The unexpected. (Julius Caesar)
by Marta Gaia Zanchi & Anurag Mairal
Digital health has been known since the beginning as a sector of convergence. Convergence not just of health care needs with enabling technologies leveraging digital data (one of our preferred definitions), or of medical devices with connectivity and consumer technology (a definition by the Food and Drug Administration); but also of people and of organizations from different industries — both established and new.
Digital health is not only territory of life sciences companies, which are (in theory) best positioned to understand health care needs. It is, also, the territory of information technology companies that have traditionally not served the health care market. Surely these companies have suffered setbacks, some of which very visible and highly criticized . But, hardly anyone has been surprised by their efforts: the information technology industry has long sought growth in new sectors, where products and services are different but opportunities exist to facilitate their delivery. And now despite initial limited success, we are seeing several of these newer constituents reach a turning point: their understanding of the health care stakeholders and level of sophistication around the complex nature of innovation processes in this area is increasing and for some, is very high (not in minor part due to a steady influx of talent from the medical device, diagnostic, pharma and biotechnology industry).
Does this mean that all players have entered the field?
We believe no, and we advise existing digital health companies to be unprejudiced when it comes to assessing competitive threats (and, potential partners!), as well as imagining what the future landscape of players might look like.
Understanding these forces is difficult even when an organization limits their assessment to both traditional and “expected” new entrants. Unfortunately, this is hardly enough: at the minimum, assessing the digital health landscape would benefit from organizations learning from what information technology companies have done in the past years, and anticipating that others from different sectors may very well bring their unique assets to digital health in a similar way.
Why now? We have made the case in a previous post about how the digital health community has only recently learned that growth requires a shift in emphasis from Technology to Solutions. Solutions are powered by a lot more than just their differentiating technologies — and there are an awful lot of companies that are neither life sciences nor information technology organizations, yet have much to contribute to the delivery of complete digital health solutions.
Take entertainment company Netflix, for example. According to Yossi Feinberg, Professor of Economics at the Stanford Graduate School of Business, Netflix has lived through four distinct eras from 1997 to 2015:
A.) the Pre-IPO Era, within which Netflix withstood the dot com bubble and settled on a successful DVD-rental-by-mail business model; B.) The DVD Growth era, within which they held an initial public offering and scaled their business to more than 850,000 subscribers; C.) The Introduction of Streaming era, where Netflix introduced their online video-on-demand service and eventually pivoted to offering streaming only subscriptions; and D.) the Content era, within which Netflix began producing their own exclusive television shows and movies to in response to the ever rising costs of content licensing. [excerpt from The Competitive Advantage of Netflix, By Yossi Feinberg, Christy Johnson. Case No. SM268 2017]
In the Content era, Netflix’s economics are global. The service is available in nearly all the countries around the world, reaching almost 100 million subscribers. This centralization comes with significant efficiency, including an unsurpassed position for worldwide data collection that drives many of its content decisions: based on it, Netflix invests in creating hundreds of hours of original programming this year, tailored to a wide variety of audiences.
Will Netflix ever capitalize on the fact that over 8 million of these subscribers have diabetes, for data collection and targeted original content creation? How is this more unlikely than Amazon becoming a key player in the clinical trial management space by levering the Echo devices — now on sale at Whole Foods, of all places —already deployed in millions of consumers’ homes?
If Netflix entering digital health seems unlikely, consider another entertainment giant that already is very well positioned in this industry: Sesame Workshop.
After launching the television program Sesame Street in the 1960s as an educational tool to help underprivileged children in inner cities in the United States, Sesame Workshop is now bringing the program on the air in more than 120 countries, supported by a world-renowned brand, a strong discipline of finance for sustainability, and a diligent effort identifying great partners on the ground in every corner of the world.
Sesame Workshop could go far in digital health by leveraging these same strengths and its knowledge of (and, access to!) a growing and global pediatric population. In a way, it already is: since 2006, Sesame Workshop has started making investments in startups focused on using technology to help children’s health with a $10 million fund “Collab+Sesame” in partnership with Collaborative Fund, a New York-based firm that has backed the likes of crowdsourcing giant Kickstarter, ridesharing company Lyft, and online community Reddit. Startups that take money from Collab+Sesame Fund have money and the opportunity to work closely with Sesame Workshop, gaining expertise from the organization’s advanced research on children and families from the past five decades.
In addition to an investment arm, Sesame Workshop displays an enviable network of just the right sponsors and collaborators. UnitedHealthcare partners with Sesame Workshop to provide families with tools and strategies for keeping children healthy through programs such as Food for Thought: Eating Well on a Budget, Lead Away!, A is for Asthma and We have the Moves. The National Center for Telehealth & Technology provides funding for the Sesame Street for Military Families program which helps military families cope with the challenges of deployments, homecomings, changes and death of a loved one. And, the U.S. Department of Health and Human Services provides funding for the Healthy Habits for Life Initiative.
In the era of maturity of digital health, companies from unsuspected industries have a lot to offer. And so do individuals. Did you know that Apple’s new health leader Dr. Sumbul Desai (who is also Clinical Associate Professor at Stanford School of Medicine) worked in strategy and planning at The Walt Disney Company in the early years of her career? We consider these enormous strengths and established digital health players should too. After all, health is a human affair — and companies that serve people’s most basic needs (whether they be health, education or entertainment) have more to bring to digital health than is acknowledged.
