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When the going gets tough, the tough get going. Or in the case of Big Tech, they look at revenue diversification.
If last week’s earnings calls are any indication, the “good times” are apparently over for the silicon valley giants. Now, these tech companies are looking at different revenue models to sustain growth through the bleak times.
Netflix and Apple are just some of the companies sending shockwaves through the industry with their bold moves in order to amplify revenue. YouTube, Meta and Twitter, have also been looking at innovative ways to stem the steady decline in revenues.
In this deep dive, Anand and Rohan explore some of the strategic moves made by these tech giants and whether revenue diversification will be the gamechanger for the brands, the fans, and the industry at large.
In an attempt to tackle “subscription fatigue,” YouTube has launched ‘Primetime Channels,’ a feature that lets subscribers buy and watch over 30 channels directly on YouTube. The streaming video platform has rolled out an early-bird version for its US audience. Commenting on the release of this new feature, Jeff Shultz, Chief Strategy Officer and Business Development Officer of Paramount Streaming, said, “we are excited to expand our partnership with YouTube to offer customers of Paramount+ another way to stream the content they love. This new feature gives us the opportunity to expand our presence on YouTube, broadening our reach and giving consumers even more choice when it comes to streaming the best in entertainment.”
While YouTube is clearly trying to become the only platform to watch any kind of video content, what will be interesting to see is how the partner channels benefit from this collaboration. This will depend on how much control lies with the channels and how much of it lies with YouTube.
For the bigger streaming platforms, this partnership brings with it certain risks, like how the recommendations work. For example, on Netflix, they autoplay the next series or film you could watch based on your preferences. They even have a ‘surprise me’ option that makes recommendations. But on YouTube, you can easily switch from watching one kind of content on a particular channel to another series on some other channel. So, who decides what gets recommended to the viewer?
The second question is how much control YouTube gives other streaming platforms over their own data. If you’re a content channel with insufficient tech in distribution, this is a great way to put content on a global platform. You might hold more power in this revenue-shared deal if you’re a large content platform.
YouTube has been the king of revenue diversification. They’ve had ad-supported models, subscription models, and transactions where you can pay for individual shows, episodes, or movies. They have a tip jar, and now they are also monetising YouTube shorts. So this might be a step in an interesting direction that’ll impact the OTT subscription game significantly.
Meta announced a new feature that will allow creators to mint and sell NFTs. While initially, it will be available to select users in the US, this feature will be extended to other countries soon. With this feature, creators can create their own digital collectibles on Instagram and sell them to their followers on and off the platform.
Instagram recently announced that it would let content creators create and sell their own NFT on Instagram. This is yet another step in the direction of revenue diversification. In fact, over the last year, Instagram and Meta together have taken a few steps in this direction. This is one of the many tools they have given creators to let them make a little more money from their followers. The fact that they are allowing and enabling NFTs to be bought within the app is going to be a gamechanger. If Insta does this right, this will be in line with Meta’s ambitions.
Twitter and Elon Musk started their own meme storm when they announced a fee for the blue check mark. While the monthly fee of $7.99 was initially intended to identify authentic accounts of global leaders and influencers, in an update to Apple iOS devices, Twitter announced that users who “sign up now” to its premium “Twitter Blue” service would get a blue tick. This feature is available in the UK, US, Canada, Australia and New Zealand for now.
One news that created a storm was Twitter charging $8 to get a verified account, and there are people on both sides of the fence debating this. At the end of the day, we need to see who the takers are. Two types of people would be interested in buying the ‘blue tick’. One is the content creator and influencers who rely on platforms like Twitter to earn revenue and gain followers. Second, are celebrities and brands who need verified accounts. A blue tick is not a dealbreaker for individuals who consume content on Twitter but do not publish any. But the biggest question is whether they will loosen the standards for who can purchase a blue tick. One thing is clear.
Musk is doing this as a way to pay bills. But a few questions need to be answered before everyone on Twitter checks blue.