I’ve been reading a lot of Mark Suster lately. Very smart dude, an early investor in Maker Studios, one of those rich dudes that shares his insights with the whole world and, thus, has managed to get himself pretty influential in a lot of different arenas while also getting wealthier. I like this model much more than the “INFORMATION IS POWER! IT MUST BE CONTROLLED AND CONTAINED” brand of venture capitalism.
One of those arenas he’s become influential in is online video, where he argues tirelessly (and probably correctly) that YouTube is ripe for disrupting television in the same way that blogs disrupted newspapers.
Here’s a quick outline of how disruptive innovation functions:
- New ways of doing an old thing make doing the old thing cheaper
- The people making things in those new ways provide the product at a substantially lower cost
- The legacy industry scoffs and says “but the stuff they make sucks.”
- New markets and ecosystems are created around the people doing it the new way until their stuff stops sucking so much.
- Everything equalizes at a new, lower price, with the legacy industry all but destroyed because it cannot support its previous weight.
It’s called deflationary economics because, in the end, the same things are being created (and presumably purchased) at a much lower costs. This also often means that more people can afford the thing in question (or to create the thing in question) which creates entire new (and surprising) industries and opportunities.
The idea that the internet is going to disrupt the shit out of television, I will not argue with that. That’s happening right now, with Hulu and Netflix and Vudu (and bittorrent) and yes, to some extent, YouTube.
But online video, which I define as active, lean-forward, engagement-focused content, is not exactly disruptive in this way.
Suster will cite the fact that online video content costs far FAR less to make than television, and since the cost is so much lower, it’s deflationary. But what no one in the traditional industry seems to get is that lean-forward online video does not directly compete with television.
Maker Studios is not competing for TV viewers, it’s satisfying a completely different need, need that was not being satisfied at all five years ago.
It’s like saying cars disrupted walking. Walking and driving are, at the root, the same thing…going from one place to another. But walking serves a whole different set of purposes… exercise, pleasure, dog poops…driving is for getting somewhere when you need to be there (online video) while walking is chillin’ out and relaxing with your dog (tv.)
I’m not saying that YouTube won’t take away from TV, but it does not create the same product at a lower price, it creates an entirely new product that scratches an entirely different itch.
I’m also not saying that TV is safe…it totally isn’t, lots of people in TV will lose their jobs…Netflix and Vudu and Roku and Hulu and (why do all of these words sound the same) yes even portions of YouTube will continue to erode viewership until traditional TV is fundamentally different with far less money to spread around. But HBO will keep delivering high budget content through different pipes. People will still watch football. Evenings with the boob tube will never go away.
And online video, that new thing that even people who consume it religiously don’t quite grok, will grow. I’m sure it will cut into TV time as well…but not by fulfilling the same need more cheaply…by fulfilling an entirely different need.
And, from my perspective that’s really fantastic, because creating new markets is SO MUCH MORE FUN than disrupting old ones.