Hackernoon logoMedia Products vs The Rest: The High Leverage Phenomenon In Media Products by@sindamnataraj

Media Products vs The Rest: The High Leverage Phenomenon In Media Products

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Product & Engineering @Microsoft Azure | On Deck Fellow | Built "End 2 End" & "The Dosa Shop"

Hulu purchased the rights of Seinfeld in 2015 for $150 Million. For the same deal after 4 years Netflix wrote a check of $400 Million. During these 4 years, neither Larry David nor Jerry Seinfeld (creators of Seinfeld) has done any new work for the show.

There are no new episodes, there is no change in background music, there is no change in the screenplay & there is no change in the people who are getting paid too.

The show moved from one streaming service to another. So with zero changes, the show moved from one streaming service to another, by increasing its value by 400%.

Media products which include TV shows, movies, documentaries, songs, radio shows, podcasts, games & even TikTok videos, are all subjects to this phenomenon.

These products could increase in value without any change to the product. To fully appreciate this phenomenon, consider products that are not media products. A car or soap or a table or a chair. Would any of these product value increase 400% with no effort in 4 years?

Therein lie the power and differentiation of Media products!

Media products can cast infinite shadows. They uniquely differ from products in general in the following ways:

Re-Consume & Zero Marginal Cost of Replication

Physical products make money by scaling production, media products make money by scaling consumption.

A given media product is not created or produced for each consumer to consume. It is created once and consumed infinite times with zero cost of replication. Almost zero in most cases.

A physical product like an automobile, a brand like Gm or Tesla reduces the cost of replication by scaling production in the form of factories. In the case of Tesla, even the cost of distribution is removed because of going direct to the consumer. But Tesla still has to manufacture a second car for a second customer. Elon Musk cannot sell the same Cyber-truck with broken glass to all the Tesla fans.

Of Course, the glass is fixed but it would still not work. Tesla still needs an assembly line, a collaboration of robot and human arms, and an unrealistic timeline to create Cyber Trucks. One each for every customer that has ordered one.

While considering the movie “The Social network” directed by David Fincher. From the time of a limited audience premier show, the same movie is shown/consumed by the worldwide audience. Fincher did not create a Social network movie for every individual audience across the world.

Recreate & Re-Monetize

As humans evolved, their storytelling capacities improved. And with them evolved the tools that are needed to tell stories.

First, there were writings in the caves, then there were rock tables and slates, and then came the paper. Eventually, as technology advanced radio, TV, computers, and mobile came along. In three decades, human knowledge went from being entirely stored in books to being stored in data centers and distributed through a web browser.

As new mediums emerged, the same old stories are told again in the new medium, adapting to the medium itself.

Shakespeare wrote his work to be part of theater plays. But if he had lived long enough he would have had the option of recreating it for new mediums in the form of a TV series or a film. The role of an immortal Shakespeare has taken over by his admirers and many TV and film adaptations of his works have been produced across the world. As new mediums come along, the old stories get a new life.

Stan Lee first created the story of Spiderman for the most popular medium then, comic books. And in 2002 Tobey Maguire got to play the role. The story & concept remained the same as the comic book. But the new method of moving pictures allowed it to be monetized with recreation in the form of a movie.

Unlike Shakespeare, Stan Lee got to reap the benefits of recreating his works for new mediums of storytelling.

It is also a certainty that there will be another installment of Spiderman made by new and improved Toby McGuire, made for a new medium, most probably an AR/3D medium. And Sony Pictures will be around to pick up the profits of the venture too.

As new mediums come along, media product makers recreate & remonetize their stories.

Redistribute to Reach an Ever-Growing Audience

Seinfeld the TV series was originally aired in 1987 and the last episode aired in 1998. In 2015 it was licensed to distribute on Hulu for $150 Million. In 2019 it was again licensed by Netflix to globally distribute the series. When the last episode aired in 1998, it was almost unimaginable that a TV series made for an American Audience would get a $450 Million deal to distribute on some internet-based Application.

But here we are.

Before TV came along as the new distribution form, movies had only theaters. As TV came along media content in the theaters and live performances both were repurposed and monetized on Television through the creation of Broadcasts Channels, Cassette Tapes, and Live Sports Telecasts.

The games didn’t change, the movies that were produced didn’t change. But they were newly distributed on a new Platform that was otherwise not possible. Customers paid for this new way to access media content. At the same time, it expanded the movie watching audience and the time they had to watch the movies and other media.

A similar phenomenon is now repeated with the oncoming of OTT platforms like Netflix, Hulu & Showtime, etc., As new media distribution platforms emerge media products will be able to monetize them with almost no new costs. The biggest winners in the era of streaming apps are not the new tv series but the old ones like Seinfeld, friends & The Office. It is a certain future that media makers would redistribute their content for audiences to experience them in self-driving cars as and when they come along.

In the realm of possibility, media products cast long shadows of value next to software. Software out shadows media products because of its evolutionary and self-corrective nature. But that is a topic for another post.


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