Cloud Hosting To Augment Drupal Implementation
1. What significant changes did ‘Media & Entertainment’ segment witness in 2013? What did these changes mean to vendors and customers?
There was a wave of media industry consolidation in 2013. The most significant activity occurred in the local media ownership segment, where there was almost $7 billion in mergers and acquisitions among companies such as Sinclair Broadcasting, Gannett, and Tribune. These companies now face the challenge of standardizing their growing digital portfolios on to new platforms from their distinct and various legacy content management systems (CMSs). Such CMSs were designed for the specific needs of TV stations and do not address the complexity of what a consumer expects from a digital media experience that brings together social media, video and interactive content, mobile access, and more.
In 2013, we also saw the proliferation of new media brands. In cable, new channels launched -- including Fusion, El Rey, Pivot, and Revolt -- with a special focus on minority and millennial consumers. In order to grow and monetize the new audience for these networks, the brands must offer engaging digital media experiences, representing another opportunity for CMS vendors.
Finally, digitally focused media upstarts gained tremendous audiences in 2013. Upworthy, Vox, Gawker, and BuzzFeed developed socially oriented and viral content attracting huge audiences (55 million monthly uniques for Upworthy, 41 million monthly uniques for Vox, 97.5 million for Gawker and some 85 million for BuzzFeed). One of these new viral content types -- the “listicle,” an article presented as a top 10 list -- was pushed into the media landscape by Buzzfeed, while Upworthy’s key to success are videos that have social sharing integrations. Combined, the audience for these four sites have an audience northward of 250 million monthly unique visitors, while all U.S. newspaper websites pull in about 141 million online monthly uniques. The attention that these upstart sites attract has also drawn capital to these companies. Vice Media received a $70 million investment from News Corp, while Vox Media raised $34 million in investment dollars, and Buzzfeed raised an additional $19 million. These companies will use the capital to create new content offerings, which, in turn, will drive more digital development.
With all this in mind, it’s an exciting time for Acquia; there is tremendous opportunity to transform traditional media companies’ digital experiences as they consolidate, and enable the development of new media brands.
2.What are some of the changes you anticipated would happen in 2013 but did not happen?
While 2013 was the year of consolidation and new media offerings, new technologies did not seem to transform content delivery this past year. Twitter launched Vine, Instagram added video, and Snapchat video messaging became popular. However, none of these new digital media apps seemed to transform the way media is presented to consumers. Facebook, Twitter, and YouTube are important digital marketing platforms for media companies, but branded web sites remain the fourth most trusted source of information by consumers, according to Nielsen. Therefore, branded digital experiences continue to be the focal point of media companies’ digital marketing efforts, which, of course, drives business for Acquia as we enable these experiences through our cloud platform, developer tools, support, professional services, and products related to Drupal.
There could be some exciting opportunities to present media content over Google Glass, but this technology has not hit the mainstream enough that content producers are experimenting with how to create content for the medium. And 3D Television has not yet taken off. While Microsoft and Sony rolled out dueling new game platforms late in 2013, neither will transform the delivery or content of gaming. iPhone and Android operating systems remained very much the same.
So while we anticipated that technology would transform media in 2013, there was no killer app or platform rolling out that would demand changes in content production or the nature of media content.
3. Can you paint us the picture of how the landscape for this industry segment will change in 2014? What are some of the broader trends you are closely watching?
More Direct to Consumer Offerings via Applications: Content owners are finding new ways to package their offerings and sell direct to consumers in subscription offerings. For instance, Sony just announced PlayStation Now, a cloud hosted, game streaming offering. Viacom launched a new app for MTV and MTV2 on iPhone and iPad, and the company plans to roll out similar ones for its other music-related channels. Through these MTV apps, consumers can get access to video extras, browse photos, answer trivia, and loop in social commentary, all with on-demand streaming of shows on their devices. And AMC Networks launched YeahTV.com this year, offering consumers a way to view its library of cult movies online, with friends anywhere in the world, answer trivia, and comment on the films while the movie plays in real-time. We expect every media brand in 2014 to find new ways to sell direct to consumers, and stand apart from streaming services like Netflix, or your cable providers channel package.
Growth of Video and “Hacking the Audience”:More content is being consumed, but it is not necessarily on branded entertainment sites. For instance, YouTube networks, companies that aggregate and manage YouTube channels, have huge audiences. Here is a chart of July 2013 unique video viewer numbers of the top 5 YouTube networks as ranked by comScore (left) against some of the top 50 U.S. web sites (right) comparable to the YouTube networks in terms of unique site visitor numbers.
What’s the difference between a unique site visitor and a unique viewer? In a video driven world, there may not be one. If you equate “Unique Visitors” to “Unique Viewers” you see that the YouTube networks have as much of a digital audience as the major media and entertainment companies.
For instance, according to comScore, Vevo’s network of music video channels had almost as many unique viewers of video as The Weather Channel had in terms of unique site visitors for July 2013. The New York Times’ network of digital properties -- including NYTimes.com -- racked up 32 million site visitors for the month of July. The same month, Fullscreen -- the number two YouTube network in terms of viewers -- netted over 34 million unique viewers.
We heard one Chief Digital Officer at a media company call this trend “hacking the audience,” adding that “you don’t have to have a great home page to have a great digital media brand.” Along with YouTube Networks, Buzzfeed and Upworthy are other examples of hacking the audience. Because the majority of their content is socially shared, not much of the content is directly consumed on their own sites.
Media companies will continue to find new ways in 2014 to “hack the audience” and have consumers discover and consume their content wherever they are on the Internet.
Building Better Digital Experiences: The complexity of media and entertainment sites has increased exponentially over the past five years. Many companies have moved to Drupal because the platform can handle integrations with the myriad of technologies in use on media sites, including user login systems, video players, ad servers, audience analytic tools, social media plug ins, and commenting systems. These tools allow media companies to better grow, engage, and monetize audiences.
We talked a bit about how more media content is being consumed apart from a branded media site, because minutes spent on the web are increasingly being consumed by Facebook, Twitter, and YouTube. Therefore, with greater competition for attention on the web, design is more important than ever -- and sleek is better. Responsive web design that allows sites to display properly on mobile or tablet devices is extremely important. We have seen media and entertainment brands rebuild major digital properties to address the complexity on the back-end and the design on the front-end. Two nice examples of sites that undertook major redesigns using Drupal in 2013 are AETV.com and MSNBC.com. We expect to see more sites rebuilt in 2014 to address both the demands of technology complexity and better design. This will be another key driver for Acquia’s business as we enable media and entertainment companies to rebuild and manage highly trafficked sites.
Consolidation and Upstarts:We expect to see more consolidation in media this year in segments beyond the $7 billion in local media consolidation we saw in 2013. Additionally, emerging media brands should launch and scale as quickly as Upworthy did, which got to 10 million unique visitors just six months after launch, making it the fastest growing media site of all time.
4. How would customer spends change in 2014 (for Media & Entertainment)? What makes you think customers will be buying more/ less?
Consumer entertainment spending should increase 4.8 percent each year through 2017, according to the PricewaterhouseCoopersLLC Media and Entertainment forecast, but currently, digital sales only account for a third of the overall consumer spend. There is so much room for growth in digital sales, so by 2017, we should see the tipping point where more content is consumed digitally than any other method. The numbers point toward increasing purchasing of content, but the ways we’ll consume and pay for content will shift. Consumers are moving from purchasing media toward buying monthly subscription services, where they can gain access to catalogs of film, TV, music, and gaming content in the cloud. One example is Ultraviolet, which has been making a big push this year. The service allows consumers to purchase individual movie titles and add them to a cloud content locker accessible by any device.
And a core group of eight markets -- China, Brazil, India, Russia, Middle East and North Africa, Mexico, Indonesia, and Argentina -- will see the most growth. These territories will account for 22 percent of total global media and entertainment revenues by 2017. So we are focused on developing Acquia’s presence in these regions.
5. What's in store for your company in 2014?
We are excited about Acquia Cloud Site Factory; it’s a great fit for the media and entertainment industry. Acquia Cloud Site Factory is a platform as a service (PaaS) built on Drupal. Warner Music has launched hundreds of sites on the platform, including sites for Cody Simpson, T.I., B.o.B, Portugal. The Man, Iron & Wine and Surfer Blood. Universal Music Group’s Interscope division had an initial launch of more than two-dozen sites on Acquia Cloud Site Factory last year, which included Lady Gaga, Nelly Furtado, Candice Glover, and Timbaland. Because music labels often represent hundreds of artists and are constantly adding new ones to their rosters, they continually need to launch new brand web sites. All of them must have the functionality that fans expect, and these sites must be able to handle large, unpredictable spikes in traffic when an artist has a popular new release or a video goes viral. We see local media companies that own hundreds of radio or television stations also leveraging Acquia Cloud Site Factory to grow and manage their large digital portfolios.
Several large media and entertainment companies previously had a deep technology focus and built their own proprietary CMSs and hosting solutions. These systems were expensive to maintain and could not keep pace with the technological complexity of today’s web. In 2014, these brands will move away from a focus on building and managing technology systems, and shift toward producing content for their digital platforms. These new platforms will help introduce new levels of personalization and data optimization. Major brands will move their properties away from their own proprietary systems in the year ahead and will leverage Acquia’s Cloud hosting and professional services team to launch successful large scale Drupal implementations