When we launched WatchMojo.com in January 2006, I went out of my way not to target men, what with my non-compete from AskMen being in effect until 2007. But invariably, over time, there are only so many women’s topics you can cover, so we now have quite a lot of content targeting men.
Not surprisingly, we ended up arming Glam with a lot of their video content on Brash.com, the men’s site they launched today. This move is just the latest site we provide premium video content to.
As a former executive in men’s content, I think they have a shot at becoming a player in the space. Time will tell. Glam has been launching a dizzying array of products of late; yet it is laying off some people in anticipation of hard economic times. As a result, it might be challenging to pull it all off… so we shall see if Brash.com ends up in the hits column or lands in the recycle bin.
The company has brought in a former Fox Interactive Media executive, John Trimble, to handle Brash’s advertising, and magazine industry veteran Richard Perez-Feria to oversee the editorial content. Trimble ran properties that included IGN, Gamespy and AskMen, 3 of the top sites in the coveted men’s 18-34 demographic. Disclosure: I ran sales for AskMen until 2005.
One thing I do like: the name. But we all know you need more than a cool URL to become a hit on the internet.
Say it ain’t so Hef! Apparently, Playboy is having some trouble.
Tycoon Hugh Hefner has been advised to cut back on staff at his multi-million dollar glamour empire as it struggles to cope during the global economic turmoil.
The 83-year-old has been told to lay off some of his staff at his Los Angeles and New York offices as soon as this month or go bankrupt.
The company has recently seen shares fall from £6.20 to £1.55.
An insider at the company told the Daily Star that bosses had been aware of the worsening situation for “a while”.
“Only the top brass has known for a while how bad things have been for Hef recently.”
I am not sure what will happen to Playboy, clearly, it remains one of the strongest brands in all of business, let alone media. I don’t understand why Playboy does not open up its amazing content (not the pictures, I swear) to online audiences. Playboy has conducted and published some of the best interviews ever, they also have a lot of comic strips etc., why on earth hasn’t Playboy had a free, ad-supported “clean” site (no nudity, basically) with pictures of somewhat dressed attractive women to go along a paid racy site with nudity, I do not know?
As well, Playboy sure could have been more aggressive on the M&A front. For example, why Playboy never approached to buy my old company AskMen remains one of the better mysteries in the world. There remain other sites today that Playboy can buy…
This got me thinking to the broader question, do advertisers embrace or shun racy content?
There are two trends, one being a general one in society and one being related to advertising:
- things that were once taboo are less so.
- advertisers are continuously behind trends.
Examples:
When I was at AskMen running ad sales, we began to move away from poker clients, for example… then lo and behold, poker became a pop culture phenomenon… everywhere on mainstream media and even advertisers (Degree for example being just one, who seems to have) began to jump on the bandwagon.
Then, I realized porn was becoming more and more mainstream. For example, we always knew we did not want adult content on the site… we even struggled with the decision to simply interview Jenna Jameson (I did the interview) - but before we knew it, Jenna was all over the mainstream media… and you see that slipping into mainstream media today, what with Britney Spears and Lindsay Lohan’s (and sadly, Chris Crocker’s, too) crotch popping up on cover pages of magazines.
I think the next, latest trend is extreme violence… look at mixed martial arts, the fastest growing sport in the US. Not to pass judgment (at all), but why is this becoming mainstream? Why? Because society is accepting this even though it’s simply shock value… which sells. Think Chris Crocker.
Connecting my two trends: advertisers are always behind the 8-ball. Another example?
Blogs blew up in 2003-2004. 2003 due to mainstream media not caring to cover the Iraq war and then 2004 because of the US presidential elections… yet the next year, a number of advertisers began to implement blogs in their campaign. One example? Captain Morgan, whose agency Real Branding did a “The Captain’s Blog” initiative…
I think society is [sadly] far more eager and willing to consume racy content and you will see more and more of it in years to come. Note, as well, that as European markets outgrow US growth… the US’ threshold for what is accepted will resemble that of Europe, not vice versa…
If I were looking for media assets, maybe I’d consider buying Playboy and making it far more Web centric.
the company has a market cap of $130M, with an enterprise value of $210M… but the crazy part is the company did $350M in revenues and $12M in net income. Not sure about the company going bankrupt, but maybe a takeover target?
Would Hef sell? Not sure, but his daughter Christine is running operations… judging by the largest holders, maybe Playboy might become in play.
One of the main objections WatchMojo.com’s strategy used to it the fact that we create content across many categories (auto, health, travel, video games, etc.). It’s was a fair criticism; but it’s proven to be moot.
I don’t need to take 1,000 words to explain why. The marketplace has validated that strategy.
In the same vein, when I launched the site, I was careful not to dive into too much content for either men or women. So we now produce content catering both genders.
As such, it’s worth looking at the existing differences between video consumption between men and women.
Right now, all factors being equal, women watch less video than men. From BizReport:
Women, it seems, use the internet to get things done, not for entertainment, and are less likely to visit video sites, such as YouTube. This may explain the disparity between the numbers of women viewing video – just 66 percent of women will watch online video this year, says the report, compared with 78 percent of men.
Let’s back up and ask why that is? My feeling is that the type of video content that is out there right now is not what women like. Men are more likely to consume the low quality, low-brow user-generated content that is largely out there.
Looks like we have confirmation of that gut feeling. From Promo Magazine:
But 27% of males in that range viewed clips on a consumer-generated media (CGM) Web site such as YouTube, MySpace Video, Veoh or Break.com during the month; Only 12% of women in the demographic reported doing the same.
If, however, women were offered quality programming, then my gut says that they will watch it and given that there are more women than men online, my gut also says that over time women will consume more video content, too. Looks like this is the mid-term trend:
The indications are that young women will help drive an upward trend of female video viewers. Williamson predicts that by 2011 nearly 85 percent of women online will watch video, almost matching the male audience which is predicted to reach 88 percent.
What makes this interesting, in fact, is that who reads print media? Women.
Yet studies show that women are not consuming as much video. So what do print media companies do? They are not as aggressive with online video as they should be… this might prove a fatal mistake.
Time will tell.
Mania TV adds $5M to their $17M in funding, bringing the total to $22M. Ripe TV remains “king of the hill” funding-wise with $32M… followed by Heavy.com’s $25M but I am not sure if they really fall in video creators anymore…
These amounts are just a “tad” more than the money we’ve invested in WatchMojo.com, of course. I reiterate that you are better off not being funded up the wazoo until you know what your business model will look like and it actually pans out. I’m not alone in thinking that, take it from a pro like Fred Wilson: the following is the most accurate thing I’ve ever read about why VC-backed firms fail (our commentary here and here).
Last year I predicted that VCs would finally get it right and start to fund content companies. Howard Lindzon rightfully (at the time) said I was wrong. I think my timing was off. It did not really happen in 2007 but it is certainly happening in 2008.
Mind you, some VCs have been funding content creators for some time now which is why some companies are behind the proverbial the 8-ball, playing catch-up and trying to align their business realities with the prospects and theory that led their initial funding rounds.
Regardless, you are seeing an acceleration of all of this in 2008, though it’s not always VCs alone; as talent agencies (ICM, CAA, WMA) and media heavyweights (Jon Miller, Ross Levinsohn, Terry Semel, etc.) and strategic investors (AT&T, etc.) are all getting in the act.
In fact, Mania TV was one of the first video content producers out there. They emailed me at my old gig looking for a biz dev opportunity and I was intrigued with the idea of producing video for the Web. This was in 2005: broadband users weren’t as prevalent as they are now, hosting costs were much higher. Most importantly, hyper-distribution was in its infancy. What is hyper-syndication:
- The Democratization of Content and the Commoditization of Distribution
- The Commoditization of Distribution and Scalability of Content
Ultimately, I’d love nothing more than seeing Ripe, Heavy and Mania TV have monster exits, but at those funding levels already - and with video advertising still in an embryonic stage (to grow from $1B in 2008 to $7.1B in next four years) - I fear that some of these companies will have a hard time finding buyers right now… especialy in the context of 2008 being the year of micro deals with new media firms.
Obviously that’s where the additional funding comes in: to take them to an exit. Invariably, some of these companies funds (be it from financing or operations) will also be spent on acquisitions: the IGN method of consolidating a space and then exiting at a much higher range (in IGN’s case, $650M to News Corp.).
Interestingly, Mania TV was one of the original sources of inspiration for WatchMojo.com in the context of made-for-web video programming (sans Dave Navarro et al., of course). In all honesty, last year I lost faith in them when they jumped on the UGC bandwa-bong but thankfully, they came to their senses and went back to their roots with original programming.
Anyway, combined with Generate’s $6M round, we’re updating our video funding table, below:
A couple of months ago, Felix Publishing unloaded Maxim, Stuff and Blender for some $250M to Quadrangle. The company’s fundamentals were eroding as print advertisers fled online, pursuing readers. Men don’t read magazines, I learned pretty quickly once I entered the media business. I hate to say it, but apart from the odd flight or think tank reading material, magazines are so out amongst men.
Anyway, when I competed against Maxim in the early 2000s as a member of the executive of an online lad mag, I thought it was a matter of time before Felix Dennis made us an offer we could not refuse. For whatever reason, he never called. Neither did his bankers. Over time the fundamentals of print got too shaky, and their corresponding online business was not developed enough, so they sold, instead. While Felix had hoped his assets would fetch $750M, they got but a third of that, $250M or so, in a sale that was handled by Allen & Co.
Now, it’s Emap’s turn. Emap has a lot more than lad mags, but they do one one of the grand daddies of men’s magazine: FHM. Word comes that they too want to unload some of their assets, and waiting in the wings is APAX, another private equity firm.
Really odd thing about the private equity blokes is that they buy magazines to run them as magazines. I’d do quite an overhaul and position them more robustly online. But, no one is giving me a blank check to do that… so who cares.
Bottom line, we sold our company for a mere $13.5M. Had either Emap or Dennis Publishing paid a penny more, they would have positioned themselves to reach men online. Instead, they music is slowing down and they’re finding that finding a mating partner ain’t as easy as the articles in their lad mags suggest.
Much of the discussion pertaining to TV content seems to focus on piracy and copyright. This begs the question, even if media companies could be in control of their content online, will they really want it out there? Let’s see.
Just a couple of months ago, I ran some numbers based on revenue growth forecasts for a) global advertising, b) TV advertising and c) online advertising and asked whether or not Online Ads Would Surpass TV Advertising by 2021?
This week, Understanding & Solutions came out and pegged online video advertising at $10B by 2011, with total global TV advertising growing from $160B in 2006 to $190B in 2011.
Last year, Fortune penned an overview of News Corp.’s business and pegged the US TV advertising market at $57B in 2005 with a potential to be a $73B by 2009, with filmed entertainment and licensing pushing the total revenue derived from TV in the US at $230B by 2009, up from 2005 sales of $185B.
As the president of a media company, I want to see all ad markets grow: TV, web, even print and radio. I am still trying to wrap my arms around VC Josh Kopelman’s excitement over companies that shrink markets, but slowly but surely, I think I am starting to understanding the logic.
Let’s apply it to something I certainly understand: marketing to men in general and advertising specifically. Using TV, marketers have to spend a lot of money to reach the elusive 18-34 men. As such, the objective to reach a male consumer becomes very expensive. Alternatively, using the Web, it is becomes that much more efficient and effective.
As more and more consumers get on the Web, then slowly the audiences that the Web offers to marketers relative to TV become one and the same. But because the cost of indexing, aggregating, publishing and producing content is cheaper online than offline, I think that online media companies can always offer better rates than offline ones. Over time, as every single request for proposals (RFP) comes in, more and more of these call for Web components to the point of them all eventually being web-based campaigns. Since there will always be one media company that will be able to offer a better rate (because inventory is infinite online, but finite offline) then the cost of advertising goes down.
In other words, I am not sure if total advertising will grow, neither will TV. I think it is very, very reasonable to think that much the same way that print companies like Washington Post are having a hard time converting online audiences to revenues that match their offline businesses, TV media firms will experience an even greater challenge because despite what some think, the challenge of converting a 22 minute show, 48 minute program or 90 minute film into something that Web audiences want to see is far greater than the challenge that print companies faced… and look at how poorly they fared.
I think that is one major, major reason why NBC and News Corp.’s NewCo/NewSite product has been slow to launch. It’s not just a question of taking content, creating a user interface and coming up with a name (well, 2 out of 3 anyway in NBC/News Corp.’s case). There are very deep and serious business implications for TV companies to get online: the faster they do so, the quicker they kill their businesses. This is why I understand the angst and envy that TV execs have.
I’m very bias in this debate: as a web content producer, I produce and publish online, but then I syndicate on the Web, on wireless, in out of home networks and soon, on TV. TV companies have to protect their content because the TV market is where the money is at, but the TV market is too expensive for marketers to support long term.
Right now, when you read all of this, it’s hard to buy this theory, but if you study history and consider the economics outlined above, and mainly, the multiples that online companies command relative to their offline peers, there is very little incentive for TV companies to get online. I ran some numbers and at the multiples that online media companies get, the online ad market can create $150B in market cap by 2010. But the total advertising revenue, even on the most bullish scenario, will be 1/7 of what TV advertising will be! See that analysis in depth here.
In fact, when it comes to TV content, their web strategy can be summed up by Must Not Watch Online TV… because if consumers do, then TV companies’ shelf life will be shorter than a low rated sitcom in its first season.
As readers of this blog know, from 2000-05 I worked in the men’s space…
Anyway, today I came across a couple of interesting, albeit ironic stories:
- Rodale - publisher of men’s health - might raise $100M to roll out its online properties.
- Emap - publisher of FHM - looking at breaking up its assets.
To think that these companies could have bought my old employer for $13.51M and been relevant online… for months and years we tried to strike a deal with these firms, and they were still in their shell. Oddly, an online media company, IGN Entertainment, bought us, and they strenghtened their hand online, ultimately selling for $650M to News Corp.
I wish execs at these firms were on hand tonight, my father in law, my wife and I were in a room. She was reading a magazine, he was watching TV, I was online. I’m 29. He’s not. Follow the audience, don’t wait too long.
Sounds simple enough, no?
PLAY
