The big deals this week are in old media rather than new. Rupert Murdoch is trying to buy Time Warner to merge it with his Fox business. His $80bn offer has been rejected but the feeling is that the deal will happen if/when he ups the offer.
Why buy them? He sees that the whole world of content is becoming even more of a hits business. And as digital drives the value of content down through ease of sharing (and piracy) we are seeing a polarization; most content is worth very little and the small minority that people feel they have to see shoots up in value.
A quote from VC Chamath Palihapitiya now shapes much of our thinking;
Experience = Social Capital
So content that is an experience, and therefore has social capital, is hugely valuable. And Rupert gets this – an analyst said
It’s worth reading a blog post from the same analyst where he dissects the logic of the deal and outlines the key assets of Time Warner; Harry Potter movies and 80 years of classic films, Friends, West Wing and other TV classics, Superman and Batman and the rest of DC Comics. And HBO, which some feel is the real reason for the deal.
But if the value is clear to Murdoch who really only has old media assets to monetise this content through what would it be worth to GAFA who need to improve the monetization of much of their new media assets?
The stories around Apple thinking of buying Disney may have gone away but there is still some logic there. Which is why the story keeps coming back.
Will someone else step up to fight Murdoch for this deal? Maybe, but a little history may dampen down enthusiasm. Time Warner was already bought by a digital giant; AOL bought them for $164bn back in 2000 and the then CEO subsequently called it “the biggest mistake in corporate history”
Mark Andreessen is probably right when he says most of the dotcom boom were actually good ideas – just too early – but it would be a brave CEO to rerun this move. We still think its more likely GAFA will move into content with a big Sports deal.
This is a good thinking on how the value of content assets is changing – and how the tactics of digital are trying to slow this change.
Our piece on mobile and money last week got some good reaction. There is a general feeling that the legacy issues that are holding traditional banks back, are being overstated and that workarounds can solve some of the key hurdles.
A new McKinsey report this week makes a similar point about European banking tending to be slow, but sees some reason for optimism. One quote stands out as good sense for every business;
Increase the focus on business outcomes, not digital activity. Too often, banks manage the progress of their digital transformations by tracking activity metrics, such as the number of app downloads and log-in rates. Such metrics are inadequate proxies for business value. Banks must set clear aspirations for value outcomes, looking at productivity, servicing-unit costs, and lead-conversion rates, and link these explicitly to digital investments.
A key issue is where the thinking comes from – too often the IT team are seen as a barrier – if not an enemy – and the big System Integrator contracts are complained about by many people we meet. In a world of MVPs and pretotyping having thousands of people in Pune isn’t always helpful.
A conference this week saw someone make the point that anyone can be a player on money now – and we made the point that c90% of all the money held in US mobile wallets is on the Starbucks app.
The news that the Barclays PingIt app now enables users to send money to India, as well as several African countries, using just someone’s phone number reminds us how fast things are changing.
A little step by Apple is another glimpse of the future. In the US you can now store money in your Passbook app. It’s a little clunky right now in that it involve a visit to an Apple store but we’re sure it will get easier. With around 1 billion credit card relationships, when Apple lets people move money into their Passbook from their cards, they essentially own the payments market. And they create a Money Anchor to stop people switching to Android.
In our conversations with consumers people love the fingerprint tech on the iPhone and it removes much of the worry about security of the phone as a wallet.
But of course others have similar ambition. PayPals David Marcus has gone to Facebook to run their messaging service and folding in payments seems an obvious step. And Snapchat – who have Chinese BAT giant Tencent as an investor – seemingly plan to add some of the payment and money services that Chinese messaging services do so well from.
London is a key player on all this with the focus on FinTech here – this is some background on why it’s so important
Fashion Luxury & tech
One of the hottest areas for VC investment at the moment is Fashion. Startups like NastyGal, Farfetch and Lyst have all been backed by major VCs as the combination of high margins, ecommerce and a fragmented market attract disrupters.
This event in Paris recently had Seth Godin posing the question is digital the end of luxury brands but feels the effect is one of democratization. Godins point echoes the one we made earlier – as social status and social capital become more important what is the role for luxury brands? And the answer is smart luxury brands will deliver an experience; just ask anyone who has had NetAPorter delivered to their office and you will see what we mean.
But tech is adding more than the efficiency of ecommerce. There is lots of R&D looking at what tech can add to the fashion experience. Tools around sizing are a big focus and so is discovery. The holy grail is how tech can enable shopping from print magazine and TV and film – and there is a way to go yet. But the opportunity to make content shoppable is huge.
UK Fashion colossus ASOS was started with just that idea –you could buy a pair of Sunglasses or a dress As Seen On Screen and a Shazam for vision is getting closer
London is a big centre for fashion tech and both ASAP54 and SnapFashion are London startups leading the quest for a tool that takes an image and shows you clothes that match. Pinterest are also interested in the space and bought Visual Graph.
We think that the most likely winner could be GAFA – Google bought the visual recognition app Words Lens. And they already had Google Goggles. With their machine learning focus they have solved how to read the numbers on houses.
Firefly on the new Amazon phone also has smart visual recognition – and developers can use this tech.
We always talk about Brand Cathedrals as the epitome of the High Street – retail stores that are so good fans go to worship the brand. Apple stores are clearly Brand Cathedrals and so are some of the Nike stores – especially 1948. Luxury brands are over represented; Dover Street Market, Corso Como in Florence and Seoul are great examples.
Ron Johnson was the man behind the first generation of Apple stores and this interview is a good read – especially as he tells how Steve Jobs let him define what the stores should be.
Samsung have concept stores in some major cities – the London ones and the New York ones are quite interesting – and have now developed a new retail concept for a BestBuy store in Chicago. Built by digital agency Barbarian the use of technology sounds interesting and the video is a must watch. Perhaps not a Brand Cathedral but a good example of what can be done with tech in retail. This Guardian article goes into a bit more depth on how brand are embracing retail and concept stores.
IBM and Apple may seem odd bedfellows to those who remember the PC wars but they are now partnering to focus on getting entereprise mobile. Worth watching.
Microsoft are firing 18000 people – many who joined in the Nokia deal. In better news they are thought to be ahead of Yahoo in ad revenue for the first time ever.
Finally – it’s going to be hot in London today, so you may want to take a look at a great weather app that is built in HTML5 so runs in the browser. We would love to think the name Forecast.io is some sort of homage to the Fast Show and Scorchio.
And if you want to escape London, check out the new EasyCarClub iPhone app. Backed by Brent Hoberman and Stelios, this is the AirBnB of cars and we worked with our friends at Ocasta as Architect/Builders on the app.
We are escaping London for a little while, so no Fix until August. Enjoy the sunshine.