The background:
In 2006, WatchMojo.com focused on content production.
In 2007, WatchMojo.com focused on improving production and distribution.
In 2008, WatchMojo.com focused on scaling production, increasing distribution and monetizing the videos.
To avoid finding ourselves deeper and deeper in the red, we began to insist on guaranteed revenue in our distribution deals. We did not always get others to go along. Sometimes, we gave in, other times, we balked. Frankly, there is such a thing as diminishing return when it comes to marginal distribution. Traditional media companies don’t want to trade offline dollars for online pennies, but when you are a so-called disruptor with no offline pedigree (as is our case, if we can call ourselves that), well, those online pennies add up quickly.
So net-net, we did manage to eke out revenue commitments more often than not. These deals helped us more than double syndication revenues this year.
Right now:
Content is and will remain king. With the economy slowing down, consumers will have less discretionary income and will turn to low-cost entertainment, namely: free content. I think the Web will only become more ingrained in people’s lives and web video will continue to explode in consumption. With UGC being rejected by marketers and publishers under more pressure to generate revenues, I think WatchMojo.com is uniquely positioned to benefit from the slowdown. But this being said, for sure, we’re not immune to the economy, so as companies hesitate to part with cash, we will lose a few licensing deals, too.
The dilemma:
But this creates a dilemma for us, which frankly, is keeping me up at night.
By holding back on speculative syndication deals (by speculative, I mean with no guaranteed revenue), our growth in streams slows down. We still doubled streams this year, as illustrated by the graph below…
… but our monthly and all-time stream count would no doubt me much higher if we blanketed the Web indiscriminately with no care or concern about revenue.
While VC-backed companies start to batten down the hatches to reduce their burn rate, we don’t have much fat to cut, so we’re charging ahead.
The question then it, should we:
- remain conservative during the downturn and continue to demand guaranteed revenue, even if less and less companies might be willing to part with cash…
OR
- get more aggressive and start to unleash our videos all over the place, knowing full well that much like search queries were eventually monetized, online video streams will too, and those with the most real estate and reach will prevail?
That is not my gut, that is essentially the case study of Google, who used the 2000 to give away their search technology at the expense of licensing revenues. Today, licensing revenue generates less than 1% but their free, ad-supported search powers $17B in annual revenues. Then again, Google did have $25M to subsist on, we don’t have that luxury, so I am not sure how relevant Google would be to our predicament. There are many other nuances in the Google analogy, since with technology, it’s a zero-sum game: you either use Google search technology or their competitors’, whereas with content, consumers want to consume more and more of it…
What would you do: continue to hold back distribution and charge for content OR give it away and make it up - potentially - in volume?
Thoughts?
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