Michael Wolf is the Co-founder and CEO of Activate, the leading strategy and technology consulting firm for media, technology, and entertainment companies worldwide. He is a business strategist whose focus is on helping senior executives exploit growth opportunities and define the future of their businesses – all aimed at helping them win in the dynamic media and tech ecosystem. Previously, Michael was President and COO of MTV Networks and a managing partner at McKinsey & Company. We talk to Michael about Activate’s research on the impact of Covid-19 on media and technology businesses. We dig deep into the recently released Technology & Media Outlook 2021 report and the Rewire to Restart report which came out over the summer.
Tell us about Activate’s Rewire to Restart report which outlines “the post-covid-19 agenda for technology and media companies.” What needs to be rewired and why?
We put this out in June, based on research we did in March, April, and May, and the beginning of June. So many companies keep thinking that things are just going to return and their business can continue to operate the way that it did historically. But it has become evident that things aren’t going to go back to the way that they were. And we’re seeing that practically everybody in technology, internet, media, and entertainment services is finding their world dramatically changed. Things are going to look very different in terms of what consumers will value, where they’ll spend their time, and how they’ll spend their money. We strongly believe that companies are going to need to restart their businesses in a way that’s different, and that means they’re going to have to rewire so many things that they do today in terms of how they acquire customers, their revenue models, how they compete, how they use marketing, etc. Every big company needs an agenda for how it’s going to rewire.
There’s no doubt that we’ve all increased our media consumption over the last six months. Be it gaming or streaming services or using Zoom all day for remote meetings. What does this giant leap forward in the amount of consumption mean for the media and technology industry?
It means a new round of competition that we haven’t seen before. Let’s look at subscription video as an example. We’ve been tracking subscription video-on-demand every year going back to 2015. We started off seeing what we call “subscription stacking” i.e. you’d have one subscription video-on-demand service and you’d subscribed to a second service. Well, that doesn’t seem like it’s so hard to imagine today. But what happened over time was that people started subscribing to more and more services. Last year, the average person had roughly 3.1 subscription video-on-demand services. We forecast that by the end of 2020, the average person who is subscribing will subscribe to over five services. In addition, a large number of those people are also going to borrow somebody else’s password, so they can use another service. And of course, there are free services. So, we’ll see a lot more competition than before.
You forecast $374B in growth dollars by 2024. Where is that money coming from?
Today, overall consumer spending is about $1.4 trillion for the consumer internet and media industries. We believe that over the next three years, we’re going to add $141 billion in revenue and subscriptions and another $46 billion in single transactions. So 3/4th of the growth is going to come from subscriptions.
The Technology & Media Outlook report points to a number of fascinating trends in gaming, VR, sports. What surprised you the most?
In terms of surprises, if we were to look at what happened pre-COVID and what’s happened during shelter-in-place, the role of gaming in people’s lives just radically shifted. 60% of gamers are doing some other activity inside of gaming. Concerts inside of Fortnite, weddings in Animal Crossing! But think about it 00 it wasn’t so long ago that people couldn’t have imagined a wedding or a bar mitzvah or a birthday celebration on Zoom. Another thing that surprised us is that before March everybody viewed online grocery shopping as something that would develop more slowly. One of the reasons was that people really do like to go to a grocery store. They want to see fruit, they want to see vegetables, they want to hold the eggs. We had forecast that about 134 million Americans would be buying their groceries online by 2024. By the middle of this year, we were already at 140 million. It shifted the whole lineup. So it was five years ahead in five months!
You advise technology and media companies to “identify, reach, and super-serve Super Users” in order to drive growth. Who are these super users and why are they so valuable?
Two of our associates, Marlee Melendy and Mark Manley, were doing consumer research when they noted something very interesting — 23% of all users were accounting for the great majority of time spent and of money spent. The average American spends about 12 1/2 hours a day on average consuming technology and media. They’re multitasking. The number of times that you’re doing something while you’re doing something else during the course of a day is extraordinary! So what Mark and Marlee observed through their consumer research was that “super users” were spending, on average, almost 15 hours a day, multi-task time, on media and technology. The remaining 77% spent around 10 hours a day consuming technology and media. When they dug deeper, they found that these super users accounted for a great deal more usage in every single category, in gaming, music, podcasts, messaging, and media. And these tend to be the same people who went to more concerts and bought more via e-commerce.
Less than 25% of all people are “super users.” How can “regular” users be inspired or incentivized to become “super users”?
The question starts with, how do you as a company get more of those super-users? In the US, e are at a point where most major businesses have become saturated. Large percentages of the population are already doing some sort of e-commerce shopping. A very large number, almost 100% of the population one way or the other is paying for some sort of broadband and/or telephone services. So if you don’t have that set of super-users, somebody else has them. The number one task is to find and get your competitor’s super users. For many of our e-commerce clients, the focus has been on going after that segment of super-buyers versus just going after everybody else because they know those people can account for such a large percentage of their sales. As for getting people to consume more, a lot of that comes down to offers, incentives, and triggers to get them to watch more and do more. But the real way to think about this is, if they’re not spending their time with your company, they’re spending their time with another company.