Media is dead, long live GAFAs!

Business Development & Strategy Director
Valtech France

April 27, 2017

It is not breaking news that the media world is undergoing a massive transformation, driven by constant evolutions in tech, uses and content. Yet these past few weeks have been especially symptomatic of this not-so-painless transition, notably through the way GAFAs are changing the deal.

“Old school” journalism is failing to adapt – the Pewdiepie example

A few weeks back, the violence of this transition was highlighted by the confrontation between YouTube superstar Pewdiepie and The Wall Street Journal. The journal made direct attacks at the broadcaster, throwing serious, groundless accusations in an attempt to create drama and attract readers.

This initiative ended up backfiring as Pewdiepie singled out the editors and denounced the heinous plot, which led to an online vendetta against WSJ writer Ben Fritz through the hashtag #hypofritz. According to the Youtuber[1], this story marks the frustration and resistance to change from “old media” towards “new media”, especially since both abide by the same metrics. Meanwhile, Facebook launched the Journalism Project, a formation cycle rewarded by an official certificate[2]…

Murdoch Group vs. Facebook & Google

Rupert Murdoch is going to war with Facebook and Google, which he accuses of having a “deliberate bias against professional journalism”[3], meaning the algorithms favour free content over more qualitative, paid articles. However Murdoch’s position is not unanimous among his peers. For the New York Times’ CEO, Mark Thompson, the newspaper industry is failing at coming up with a strategy to thrive in the digital era – a statement made harder to refute by the New York Times’ unique growth and upcoming initiatives that include a differentiated approach for Snapchat presence[4].

Can anybody stop Netflix?

As far as entertainment goes, Netflix has been striking hard. With 100 million subscribers worldwide and about 30% growth against the previous year, the company CEO Reed Hastings recently said their biggest competition isn’t Amazon or Youtube; it is... sleep![5] According to L2 founder Scott Galloway, Netflix could very well be the next $300 billion company[6], hence sitting comfortably with the big 4 GAFA. Galloway puts things into perspective: when HBO spends $2.5 billion this year in new content, Netflix is at $6.5 billion!

Amazon Studios, sports and firing power

If Netflix is indeed performing beautifully, Reed Hastings might be speaking too fast when he says he doesn’t see any real competition. In the past few years, Amazon has shown incredible velocity in developing new markets and disrupting business models with ambitious service approaches. In comparison to Netflix’ $6.5 billion spend in new content, Amazon is already investing $5 billion to get started on video streaming. Jeff Bezos’ company might make a break in entertainment through sports, having just bought the rights to stream NFL’s Thursday Night games for an estimated $50 million[7]. Ultimately, Amazon’s biggest advantage in its race with Netflix will be its firing power, as its content strategy could be that of a loss leader – to generate more Prime subscriptions.

War of the ecosystems – the long game

For GAFAs, media is a battlefield among others in a long, silent war. Apple, Amazon, Google and Facebook are all fighting to build ecosystems paved with rich consumer touchpoints. To that regard, artificial intelligence might be the most salient ambition to secure leadership. 








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