Meta Versus Media

Meta vs Media

Journalists, industry analysts and investors alike seem at once enthusiastic and deeply confused by what the metaverse is supposed to be, what it actually is or what it will one day become. 

What is the Metaverse?

The concept of a “metaverse” and it’s potential for disruption of the Media and Entertainment industry has been on the minds of our Editorial team at The Media C-Suite from inception.  In popular usage, the term is somewhat confounding. It is both highbrow and base; technical in nature and common in concept. Its roots are firmly sci-fi yet embedded across media culture, which seems to have ceded its meaning to the “crypto” generation with an emphasis on decentralised economics. It is pliable. And that is what makes it interesting from an industrial perspective. 

Co-opting this industrial interest, Mark Zuckerberg’s Facebook, Inc. famously re-branded to Meta Platforms, Inc. in Q3 2021 to seek outright ownership of the media metaverse as a social and commercial construct. So dedicated to the metaverse has Zuckerberg been as CEO of Meta Platforms, Inc. that the once trillion-dollar company he founded as Facebook in 2004 is reportedly sinking nearly US$1 billion a month into its development.

Some would argue that he does so to the existential detriment of the Company; and its shareholders. 

But what comes next is precisely the point. 

The word “meta” is in fact a simple Greek adjective meaning “what comes next” or “after”. Literacy, and grammar, would dictate that the noun is the thing. But generations of popular culture have coalesced around Aristotle’s treatise on human wisdom being collated after his treatise on Physics; thus being entitled: “meta Physics”.

The term, “metaverse” now rings true as a place within which media and entertainment converge with technology and mass consumerism on an aggregated, communal and universal scale. The metaverse is now a thing; or at least it has become a plausible space with something there, there. 

This transmutation of a verb into a noun has offered a conundrum. So, we at The Media C-Suite offer a proposition for deliberation: 

Is the metaverse, at least as Zuckerberg perceives it, a disruption or a distraction for those seeking access to nearly US$3 trillion in annual revenues projected for Media & Entertainment by 2026?

We argue for the latter. 

Strategy

In the 5th century, B.C., Sun Tzu described deception as the basis for all strategy in warfare. 

Over the centuries, deception and misdirection have been adapted from armed conflict to suit most human endeavours, including entertainment. Distraction, as it turns out, is good business strategy. More recently, trade and commerce have been described as an analogue to conflict with a simple statement: Business is war. 

So, in the rarefied atmosphere of modern Media and Entertainment industry C-suites, it makes sense to expect commercial slight-of-hand as competition for subscribers, advertisers and creators intensifies internationally.

But how far would senior management go to support, or at least encourage, a deception? The answer may depend on the stakes. 

“… IP is all. When content delivery systems [ … ] outpace production, then IP […] becomes the single-most important strategic advantage on the M&E battlefield.” 

The Media & Entertainment industry is reported to be worth over US$2.3 trillion in annual revenues last year. That’s nearly four times more annual revenue than the Arms Industry selling weapons and military services.

The global audit and accounting firm, PwC, has been tracking Media & Entertainment industry (“M&E”) revenue statistics for over 22 years. According to its annual Global Entertainment & Media Outlook 2022-2026, M&E industry revenues are set to rise to a projected US$2.93 trillion annually by 2026. 

Within M&E, the distribution and delivery of entertainment content generates money; lots of money. It is an industry that must carefully balance an open, necessarily entertaining persona with the cold realities of competitive business. 

Where the Money Is

Money is generated within M&E through two primary revenue streams: consumer spend on access to content and advertising spend on access to consumers. This revenue model holds true across all four major modes of entertainment: social media, gaming, music and scripted content.

The common element within all of M&E is the content itself or, put more accurately, intellectual property rights to it. And while the glitz and glamor of the entertainment industry focuses on displaying the celebrity of actors, musicians and producers through film festivals, awards ceremonies and lifestyle exposés, the business of M&E has always been focused on the more mundane aspects of option contracts, assignment clauses and license agreements. The power of M&E is focused on control of intellectual property rights and who can charge money for delivery of content to consumer audiences.

Ownership of intellectual property rights provides the asset that underpins balance sheets within the largest media conglomerates. Intellectual property (“IP”) is the basis for all content libraries that are now the single-most important strategic asset for a competitive social media platform, gaming publisher, music studio or video-on-demand streaming platform. All revenue within M&E is a function of legal agreements providing a right to develop, produce, distribute and/or exhibit content commercially. 

“… the metaverse is to be the battle ground upon which social media, gaming, music and scripted content will continue to compete for everyone’s attention, and wallets; to the benefit of whoever holds the legal rights to deliver it to the consumer audience.”

At a time of increasing competition for audiences, the legally enforceable rights to charge money for content is all. IP is all. When content delivery systems allow for consumption to outpace production, then IP ownership of content becomes the single-most important strategic advantage on the M&E battlefield. Without control over the content within streaming libraries, there is no control of subscriber acquisition or retention.

For the larger media companies, particularly those that are publicly listed companies, competition to attract and retain the attention of an audience is more intense than ever.  That intensity is expected to grow. Subscribers want ever more content. Advertisers want ever more data. The acquisition of content, proprietary content, is key.

In such environments, strategy becomes vital. 

Disruption is the Distraction

This moment within M&E has been coming for some time. 

Netflix arguably started it. But Netflix was merely exploiting the power of emerging infrastructure as it sought to build its content library at a time when few others saw the potential. Most natural competitors were distracted by growing box office and television capacity. But the disruption Netflix visited upon traditional M&E was painfully obvious. Global digital infrastructure in the form of broadband internet access has since been enthusiastically extended across international media markets, both old and new, by the telecommunications companies that benefit most from M&E. 

Any media company with distribution and delivery components, meaning every Studio Major and all media conglomerates, spent the past ten years transforming themselves from physical and analogue businesses into a digital Netflix killer.

For the most part, the expansion of telecommunications infrastructure allowing penetration of broadband internet across all major media markets has been completed. Every media company capable of distribution and delivery of content over broadband internet must now make use of it on a global, multi-national scale. Acquiring the IP rights to quality, attractive content, and denying content to your competitors, is now a fundamental business objective.

The costs of not doing so are likely to be ruinous. 

Digital transformation of this end of the industry has created circumstances, and the infrastructure, for social media, gaming, music and scripted content to be simultaneously accessible over any internet-connected device in every media market on the planet. The days of each type of content being enjoyed only through separate apparatus by separate demographics within separate markets are well behind us all. Every smart phone, tablet and (to a lesser extent) most television screens provide common focus for the time and wallets that social media, gaming, music and scripted content must compete for. 

And compete they do. The question strategically is, how? 

“The ‘next big thing’ is arguably not a thing at all; nor is it new.”

During the heat of battle, having time to think, plan and execute becomes increasingly valuable. In any C-suite, one term would come to the mind of every strategist in the room: diversionary tactics.

With increasingly sophisticated marketing capabilities, audiences that are easily exposed to persuasive argument and with increasing corporate sensitivity to public opinion, the ingredients for misdirection within M&E could not be more ripe.  This rings particularly true as consumer and regulatory pressures increase against the predatory sale of consumer data as a primary driving force behind the megalithic revenues of Meta Platforms, Google’s Alphabet, Inc. and Amazon, Inc.

The Next Big Thing

There is little doubt that the development of Web3.0, seemingly synonymous with the concept of a metaverse, has the potential to transform the way we interact, engage in commerce and consume content over the internet. 

The convergence of social media, gaming, music and scripted content has long been prophesized. Examples abound. Music has a highly successful cross-over rate into other media. Convergence can be experienced within certain gaming environments, such as when music concerts interrupt virtual battles and sweep social media trend-lines as player avatars representing film franchise characters lay down weapons to dance and prance. Film and television shows converge with all, and increasingly expand the potential for content derivatives and increasingly diverse revenues.

Convergence seems obvious. Creating content within content seems obvious. The social and commercial value of virtual assets seems obvious. And, as a new generation of entrepreneurs, firmly in the grip of Silicon Valley VC and global Private Equity, see convergence with Hollywood within grasp, distractive hyperbole seems obvious. 

For a new generation of crypto-weaned consumers, changing the status quo to a more “democratic”, decentralised economy is compelling. With enough enthusiasm, perhaps, GenZ and their successors can build a new marketplace that isn’t so capitalistic, so corporate. So … old fashioned. It can be self-supporting, where community is all. Compelling. The future of entertainment may be a new place where everything and everyone, everywhere, simply fits together seamlessly; virtually. All it needs is to be cultivated. Nurtured. Invested into.

So very shiny. So very … meta.

Wouldn’t it be useful if the many upstart, tech-centric competitors to traditional M&E were diverting their focus to invest time and money into what is so obviously the “next big thing”? Wouldn’t it be useful if the creators of content were simultaneously optimistic and placed in an even worse bargaining position under the shadow of the “next big thing”? 

And that just may be the trick. The “next big thing” is arguably not a thing at all; nor is it new.

The metaverse is not a What; it is a Where, and it already exists. It is the screen of an already ubiquitous internet-connected device upon which competition for the attention of consumers is already playing out by the IP owners of content. Those owners would have their prospective peers focus attention, time and money on something new and shiny. Let them spend money on the virtual. Let the lowly content creators feel attention slip further away, lower expectations and weaken bargaining positions. Let everyone else chase expanding ripples of marketing and PR about technological and social convergence. Let them contemplate and discuss a new disruption coming tantalising soon; but not quite yet. 

Sounds familiar. Sounds real. 

But not as real as the legal rights to generate money. Let them be distracted while content alliances are forged and contracts are signed.

That is strategy.

(A previous version of this Editorial was published on August 8, 2022).

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