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Microsoft and Yahoo Want Their Own House of Cards



The history of marketing and business models is full of those that follow the leader. No where is that more true than when it comes to TV and film content. Someone makes money with a hit and you can be sure there will be copycats and sequels ordered up. Apparently that same model is in play with technology companies these days as news is being reported that both Yahoo and Microsoft are dipping into the original video content market. They follow on the heels of Netflix’s success with House of Cards and other series. And they also follow Amazon which is working on original content of its own.


But the news isn’t really new. Microsoft has been talking about original content for awhile. And Yahoo, before the current era, has a history of trying to be a media company. So, why is this a topic worth caring about? Well, the entertainment industry is in whirlwind of disruption on many fronts. Traditional models are facing competition with content producing, content delivery, and consumer habits that are changing faster than anyone can hope to pin down. It must be tough to know that everyone hates the services that you rely on for profit and that they would be willing to jump to something else at the whiff of something new. But then the history of marketing is filled with those stories too.

This battleground will play out on a number of fronts. The news about tech companies getting into content producing is just one of those and it has two forks. (If not more.) Companies like Microsoft that own a distribution system like the Xbox are in a prime position to deliver their own content to their customers. Companies like Yahoo hope they can  use the web as their means of distribution, or sell or license it to companies that can distribute it. Or both.

You need look no further than Netflix to understand why investing in original content could be a valuable business. But there is always a risky proposition when it comes to creating something the public will want to watch enough that it drives consumers to your channel. No one ever started out to do a bad TV show or film. But the vaults are filled with failed entertainment titles. Many of which show up on Netflix, Amazon Instant Video, Google Play, and Xbox anyway. But that’s the long tail.

The good news for consumers is the more pressure that is put on the traditional players (content producers and content distributors) the better the competition. That should lead to better quality. Or so the theory goes. Show business is filled with folks with money who think they can create magic in a bottle by hiring the right people to create something new following someone else’s model. Those who think they will make some easy money, usually end up spending it quickly and losing it easily. And of course these players are thinking advertising revenues not Golden Globes.

These roiling changes could also, one day, lead to a disruption in the delivery of original content that might benefit consumers with lower prices. Although Comcast seems to be arguing just the reverse in current hearings before the FCC on its proposed acquisition of Time Warner.

Yahoo may be getting ready to pull the trigger on ordering up four TV like comedy series. Microsoft may have already pulled the trigger. Cord cutting from consumers who want different models in their homes apparently continues. And with companies like Apple, Amazon, Google, Roku, and Microsoft elbowing each other out of thew way to claim space on your entertainment center shelves, the disruption that has occurred is obviously going to see a brisker pace in the near future.

But go back to the beginning of this post and focus on Netflix for an instant. Netflix is everywhere. I’m surprised we can’t view it on the seat backs in cabs. It has had early success with its own original content and set the tone and the quality bar. Netflix may be having some difficulty keeping its apparent web clogging traffic flowing, and having to pay more to keep that content streaming. But I would argue it is doing so from a position of strength. Content is and always will be king. As long as there is quality content. Netflix knows that. HBO knows that. Sports teams know that. Microsoft and Yahoo know that too. But, the question will become how much Microsoft and Yahoo will be willing to invest to produce the level of quality content that makes consumers feel it is worth watching.

1 Comment

1 Comment

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