As we start 2020, the media and entertainment sectors are in flux. New technologies are enabling new types of content, streaming platforms in multiple content categories are spending billions in their fight for market share and the interplay between social platforms and media is a central topic of global political debate (to put it lightly).
As TechCrunch’s media columnist, I spoke to hundreds of entrepreneurs and executives in North America and Europe last year about the shifts underway across everything from vertically-oriented video series to physics engines in games to music royalty payments. Looking toward the year ahead, here are some of the high-level changes I expect we will see in media in 2020, broken into seven categories: film & TV, gaming, visual & audio effects, social media, music, podcasts and publishing.
Film and TV
In film and television, the battle to compete with Netflix continues with more robust competition than last year. In the U.S., Disney is off to a momentous start with 10 million Disney+ subscribers upon its launch in November and some predicting it will hit 25 million by March (including those on free trials or receiving it for free via Disney’s partnership with Verizon). Bundled with its two other streaming properties, Hulu and ESPN+, Disney+ puts Disney alongside Amazon and Netflix as the Big Three.
Consumers will only pay for so many subscriptions, often one, two, or all of the Big Three (since Amazon Prime Video is included with the broader Prime membership) then a smaller service that best aligns with their personal taste and favorite show of the moment.
AT&T’s HBOMax launches in May with a $14.99/month price tag and is unlikely to break into the echelon of the Big Three, but could be a formidable second tier competitor. Alongside it will be Apple TV+. With a $4.99/month subscription, Apple’s service only includes a small number of original productions, an HBO strategy as HBO gets bundled into a larger library. CBS All Access, Showtime, and NBCUniversal’s upcoming (in April) Peacock fall in this camp as well.
Across Europe, regional media conglomerates will find success in expanding local SVOD and AVOD competitors to Netflix that launched last year — or are set to launch in the next few weeks — like BritBox in the UK, Joyn in Germany and Salto in France. Netflix’s growth is coming from outside the U.S. now so its priority is buying more international shows that will compel new demographics to subscribe.
The most interesting new development in 2020 though will be the April launch of Quibi, the $4.99/month service offering premium shows shot for mobile-first viewing that has already secured $1 billion in funding commitments and $150 million in advertising revenue. Quibi shows will be bite-size in length (less than 15 minutes) and vertically-oriented. The company has poured hundreds of millions of dollars into commissioning established names to create dozens of them. Steven Spielberg and Guillermo del Toro each have Quibi programs and NBC and CBS are creating news shows. The terms it is offering are enticing.
Quibi, which plans to release 125 pieces of content (i.e. episodes) per week and spend $470 million on marketing this year, is an all-or-nothing bet with little room to iterate if it doesn’t get it right the first time; it needs hit shows that break into mainstream pop culture to survive. Billionaire founders Jeffrey Katzenberg and Meg Whitman have set expectations sky-high for the launch; expect the press to slam it in April for failing to meet those expectations and for the platform to redeem itself as a few of its shows gain traction in the months that follow.
Meanwhile, live sports remains the last hope of broadcast TV networks as all other shows go to streaming. Consumers still value watching sports in real-time. Streaming services are coming for live sports too, however, and will make progress toward that goal in 2020. Three weeks ago, DAZN secured the rights to the 2021/22 season of Germany’s Champions League, beating out broadcaster Sky which has shown the matches for the last 20 years. Amazon and YouTube continue to explore bids for sports rights while Facebook and Twitter are stepping back from their efforts. YouTube’s “YouTube TV” and Disney’s “Hulu with Live TV” will cause more consumers to cancel cable TV subscriptions in 2020 and go streaming-only.
The winners in the film & TV sector right now are top production companies. The war for streaming video dominance is driving several of the world’s wealthiest companies (and individuals) to pour tens of billions of dollars into content. Large corporations own the distribution platforms here; the only “startups” to enter with strength — DAZN and Quibi — have been launched by billionaires and started with billion-dollar spending commitments. The entrepreneurial opportunity is on the content creation side — with producers creating shows not with software developers creating platforms.
Gaming
The gaming market is predicted to grow nearly 9% year-over-year from $152 billion globally in 2019 to $165 billion in 2020, according to research firm Newzoo, with roughly 2.5 billion people playing games each year. Gaming is now widespread across all demographic groups. Casual mobile games are responsible for the largest portion of this (and 45% of industry revenue) but PC gaming continues to grow (+4% last year) and console gaming was the fastest growing category last year (+13%).
The big things to watch in gaming this year: cross-platform play, greater focus on social interaction in virtual worlds and the expansion of cloud gaming subscriptions.
Fortnite enticed consumers with the benefits of a cross-platform game that allows players to move between PC, mobile and console and it is setting expectations that other games do the same. Last October we saw the Call of Duty franchise come to mobile and reach a record 100 million downloads in its first week. This trend will continue and it will spread the free-to-play business model that is the norm in mobile games to many PC and console franchises in the process.
Gaming is moving to the social forefront. Many people are turning to massively multiplayer online games (MMOs) like Fortnite and PUBG to socialize, with gameplay as a secondary interest. Games are virtual worlds where players socialize, build things, and own assets much like in the real world. That results in an increasingly fluid interplay between socializing in games and in physical life, much as socializing in the virtual realms of social apps like Instagram or Twitter is now viewed as part of “real world” life.
Expect VCs to bet big on the thesis that “games are the new social networks” in 2020. Large investment firms that a year ago wrote off the category of gaming as “content bets” not fit for VC are now actively hunting for deals.
On this point, there are several startups (like Klang Games, Darewise Entertainment, Singularity 6 and Clockwork Labs) that raised millions in VC funding to create open world games that will launch (in beta at least) in 2020. These are virtual worlds where all players exist in the same instance of the world rather than being capped at 100 or so players per instance. Their vision of the future: digital realms where people will contribute to in-game economies, create friendships and ultimately earn income just like their “real-world” lives. Think next-gen Second Life. Expect them to take time to seed their worlds with early adopters in 2020 before any of them gain mainstream traction in 2021.
Few are as excited about social interaction in games as Facebook, it seems. Eager to own critical turf in the next paradigm shift of social media, Facebook will accelerate its gaming push this year. In late 2019, it acquired Madrid-based PlayGiga — which was working on cloud gaming and 5G technology — and the studio behind the hit VR game Beat Saber. It also secured exclusive rights to the VR versions of popular games like Ubisoft’s “Assassin’s Creed” and “Splinter Cell” for Oculus. Horizon, its virtual world for social interaction within VR, is expected to launch this year as well.
Facebook is betting on AR/VR as the paradigm shift in consumer computing that will replace mobile; it is pouring billions into its efforts to own the hardware and infrastructure pieces which are several years of R&D away from primetime. In the meantime, the consumer shift to social interaction in virtual worlds is occurring in established formats — mobile, PC, and console — so it will work to build the bridge for consumers from that to the future.
Lastly, cloud gaming was one of last year’s biggest headlines with the launch of Google Stadia and you should expect it to be again this year. By moving games to cloud hosting, consumers can play the highest quality games from lower quality devices, greatly expanding the market of potential players. By bundling many such games into a subscription offering, Google and others hope to entice consumers to try many more games.
As TechCrunch’s Lucas Matney argued, however, cloud gaming is likely a feature for existing subscription gaming platforms — namely Playstation Now and Xbox Game Pass — more so than the basis for a new platform to differentiate. The minor latency inherent in playing a cloud-hosted game makes it unattractive to hardcore gamers (who would rather download the game). Next to Sony and Microsoft’s offerings, Stadia’s limited game selection fails to stand out. The competition will only heat up this year with the expected entry of Amazon. Google needs to launch the Stadia integration with YouTube and the Share State feature that it promoted in its Stadia announcement to really drive consumer interest.
Visual and audio effects
In Hollywood, virtual production will gain more traction this year, with production companies and VFX studios using the two leading game engines, Unity and Unreal, to shoot actors within virtual re-creations of real-world settings (or within animated worlds), adjusting time of day, weather, and terrain in real-time. Virtual production enables cost and time savings plus new creative possibilities, but it requires a change to the process in which content is usually shot and that doesn’t come without resistance. The use of Unity and Unreal in two high-profile projects by director Jon Favreau last year, The Lion King and The Mandalorian respectively, put momentum behind adoption of these new tools though.
Synthetic content, also known as “deepfakes,” is content generated by AI (usually generative adversarial networks) that looks or sounds real. This year is the year synthetic content will hit the market in a major way, with the technology now good enough for numerous commercial applications in video production, gaming, advertising, and social apps.
Last year brought repeated warnings in mainstream media that “deepfakes” pose problems; in 2020 we will see widespread use of synthetic content to misrepresent public figures like politicians and celebrities as well as everyday people like ex-girlfriends and bosses. Expect fervent calls for regulation by politicians but uncertainty about how to actually regulate it. This will bolster calls for greater regulation of social platforms and media in general, particularly the idea that social media platforms must vet content before it is posted.
Just yesterday, Facebook announced it will attempt to block synthetic content from its platform, though that is far easier said than done: using technology to identify synthetic content is a challenge, and gaining consensus on the precise line that defines synthetic content is even tougher.
Social Media
TikTok exploded last year in the U.S. Beijing-based Bytedance created it as the foreign-oriented sister app to Douyin, one of the most popular apps in China. Bytedance then acquired Musical.ly and merged it into TikTok to create the app we see today: short dance and humor videos set to music.
Facebook’s new TikTok competitor, Lasso, hasn’t gone viral but expect it to launch new apps and Instagram features this year to counter TikTok’s growth. Facebook has already secured licenses from the major record label groups to cover users’ use of music in Instagram videos, but TikTok as an app dedicated to these performance videos remains an inherently different space from either the curated beauty of Instagram posts or the ephemerality of Instagram stories.
Facebook could get help from U.S. and European governments trying to restrict TikTok’s growth, however. TikTok’s Chinese ownership and its documented censorship of content that is pro-Hong Kong or pro-LGBT have made it a target for concerned policymakers. Bytedance is aggressively trying to prove that TikTok, or at least the American version, doesn’t censor content or store user data in China but that unlikely to ease politicians amid the current U.S.-China and Europe-China tensions. TikTok is forcing American politicians to wrestle with the idea of a major social media platform in the U.S. owned by foreign company from an adversarial country and that is only likely to increase US regulation of social media platforms in general.
The media and political scrutiny of Facebook, Twitter, and Youtube will increase further this year with the U.S. presidential election and proliferation of deepfakes. Those companies will grudgingly accept more responsibility for removing hateful and/or falsified content and will roll out more product features that address the problem by hiding it: more controls over the content that is recommended or appears in your newsfeed, more controls over how your content can spread, more controls over who can comment on (or retweet) your posts.
Amid all of this, a shift seems to be underway among many consumers who want to “detox” from broadcast-based social media oriented around sharing content with the world and refocus on private interactions within groups of people who share an interest or who already know each other. This means a focus on building real relationships not followers, creating substantive conversations not viral one-liners. Facebook is adjusting to this by centering its Facebook platform around Groups and existing group-centered platforms like Discord will benefit, but it a fundamentally different approach to social media that could create openings for new platforms.
On public social media platforms, use of aliases and avatars will become much more popular this year as well. Much like the early days of internet forums, this functions as both privacy protection and fun. It is already common among teens to use two accounts on Instagram and other apps, one under their real name and a separate under an alias unknown to parents, employers, or college admissions offices. Privacy from constant monitoring online will be an increasing priority for people, whether for political fears or bullying fears or a desire for the creative freedom of a separate online persona. Look at the robust growth in the VPN market as a sign of consumer privacy concerns and the popularity of socializing within games like Fortnite under an alias (and spending money on digital goods to style one’s avatar).
If my summary of social media seems overly centered on regulation that is because regulation will be the defining force in the industry this year. When new industries arise, they often remain relatively unregulated for a long period until they mature and negative impacts are better understood by policymakers and the broader public. Social media has hit that point, and it’s coinciding with a worldwide political shift toward populist intervention in the economy. In the U.S., both Democrats and Republicans are outspoken in their calls for government to reign in “Big Tech.”
Music
The music industry is racing to crack two new distribution channels for promoting artists: TikTok and video games. The music-centric nature of TikTok makes it an obvious marketing channel for artists releasing new songs. TikTok launched Lil Nas X’s “Old Town Road” into mainstream pop culture last year and the song sat at number one on the Billboard 100 chart for 19 weeks. Record labels and talent managers are working to leverage TikTok influencers to break more songs in 2020.
DJ Marshmello’s concert within Fortnite last February drew 10 million players to attend within the game, sparking the music industry’s realization that video games are social hubs where musicians can promote their music. Look out for constant flow of in-game concerts and marketing collaborations between labels and game publishers this year.
Labels have seen revenue soar over the last two years as paid streaming services gained deeper market penetration but face growing competition over up-and-coming artists from label services companies like Kobalt Music Group and Stem that offer most of the services of a record label without taking ownership of an artist’s copyrights.
The big focus for music streaming platforms this year will again be expansion into emerging markets and, for those with a freemium model like Spotify, improving conversion to paid subscriptions in those markets. This expansion is what predictions of the music industry’s dramatic future growth (by heavily cited Goldman Sachs reports) are anchored on.
Tencent’s purchase of a 10% stake in Universal Music Group (with option to increase to 20%) is finalizing at last. The extent of any strategic collaborations between Tencent’s social platforms and UMG artists will determine the ripple effect in the industry. If Tencent’s involvement remains passive, the impact will be minimal. If there are deep collaborations, it could put pressure on other label groups and distribution platforms to consider tie-ups that bring a degree of vertical integration.
Facebook is negotiating with the three major label groups for the right to host music videos on its services. Music accounts for 20% of all views on YouTube, where many consumers use music videos like an audio-only streaming service that plays in the background. Facebook has failed to find success as a destination for premium video with its Facebook Watch and IGTV efforts thus far; music videos could be a better in-road. Assuming Facebook gets the rights, expect many marketing collaborations this year with new music videos by top artists windowed exclusively on Facebook platforms for a brief period.
On the songwriting side, there’s been a booming market for buying song catalogs over the last few years based on predictions that popular songs will earn more royalties in the future as streaming penetrates more of the world and songs are incorporated into more social media, gaming, and AR/VR experiences. Most industry executives I spoke to over 2019 were skeptical of the valuations placed on catalogs that changed hands, whether bubble talk brings down valuations this year remains to be seen but aggressive acquirers of music catalogs like Hipgnosis and Kobalt Capital haven’t expressed plans to slow down.
The consumer startup opportunities within music remain limited given the dominance of the largest streaming services — Spotify, Apple Music, Amazon Music, YouTube and Deezer. No longer a startup, Soundcloud has found new life with its focus on tools for artists instead of competing as a consumer destination. Also in the artist tools space, Splice is building large businesses as marketplaces for sound effects, and Epidemic Sound continues its growth commissioning songs that fill a library its corporate subscribers can tap into for their commercial needs.
Podcasting
As I wrote in my 2019 review of the podcast industry a few days ago, podcasting will keep booming in 2020 and Hollywood’s entrance into the market 2019 will bear fruit with a wave of shows involving top Hollywood talent (from in front of the camera and behind). Expect more podcasts to accompany IP franchises and more podcast dramas that break into mainstream pop culture. Spotify will shape the market again this year, having made bold acquisitions and product changes last year that made podcasting nearly as central as music in its business.
Apple, still the top consumer destination for podcasts by market share, has been asleep at the wheel as podcasting has surged but will fight back this year with exclusive shows and, hopefully, some product innovation. Watch for Spotify, Apple, and iHeartMedia to acquire more podcasting companies in the months ahead, targeting top content production companies and key infrastructure tools.
Publishing
Within the news and magazine publishing realm — by which I mean mainly digital publishing at this point — 2020 will feature the ongoing creative destruction of many publications that anchored themselves in optimizing for clicks and failed to build a loyal, engaged audience around their brand. The big VC-backed digital publishers that have been struggling are unlikely to find new life in 2020 as they look for exit opportunities — they don’t offer much to large media companies seeking to expand their subscriber base or secure must-have IP.
Media brands that follow a long-established strategy of building a dedicated niche fan base and monetizing them through a combination of community-centric methods like memberships, events, and e-commerce will do well. Across most topic categories, sophisticated readers remain underserved by a media ecosystem that has spent the last 15 years chasing mass audiences. The gap is being filled by niche subscription publishers that provide “tactical insights” to audiences to follow the topic daily and crave insider details over high-level narratives. The Athletic soared toward 1 million subscribers with this approach in American sports and niche B2B publishers remain in strong position.
The growing market of premium newsletters is also filling this void, typically with one author going deep in commentary and/or citation on a specific topic. The newsletter boom will continue in 2020 and that bodes well for companies like Substack on the creation side and Stoop on the consumer side.
Pressure on social media platforms to address the spread of misinformation is resulting in them implementing algorithmic and editorial curation that reward the largest established media organizations like the New York Times, Wall Street Journal and Fox News. Recognizing their position of strength, those media brands have negotiated financial compensation from Facebook as trusted sources. As Facebook and other social platforms submit to public and government demands to deal with misinformation, they will make adjustments like this that strengthen the distribution of larger, incumbent media organizations over smaller upstarts.
Paid subscriptions are the norm across media now but we won’t see as much “subscription fatigue” among consumers as many predict this year. Creating expansive subscription bundles through mergers and through marketing partnerships will be a central focus for media businesses, much as it has consumed the film & TV sector over the last few years. Watch for large subscription publishers like the New York Times Company and the Financial Times to be active acquirers of smaller brands with a devoted subscriber base.
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