SLA

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On April 26, 2018, SLA commented on Pernod Ricard: digitalizing the world of premium drinks :

Love to see a post about the CPG space. The post focused a lot on consumer facing digital initiatives, but I wonder if there is something to be said for digital innovation on the distribution partner side. Using data, either from the creation of smart bottles or owned and operated dispensers (like an OPN for bars), could the company better model demand for its various products? This is also a way to create rich consumer data, which may inform them on future product iterations and even new product launches.

On April 26, 2018, SLA commented on Rethinking the Video Game Business Model :

Thanks, James. I think you smartly laid out the three concerns facing most entertainment companies today – shifting from B2B to B2C, being smarter on content creation, and using data to further refine and monetize the whole ecosystem. An interesting challenge will be its ability to balance its retail relationships with any further investment in in-house distribution, especially since the retail dollars will be much bigger for quite some time. ATVI is not the only company going through this, so I wonder if there are learnings from competitors that could help them through this transition. From a content perspective, I really do like how you suggest the company lean on successful IP to date and flow it throughout the rest of the company. This is a safe way to expand and further exploit monetization of known successful properties, de-risking content spend. The data part is interesting, as I have always been skeptical of using data to inform creative choices. Though I recommend the same in my post on NBCU, I think it’s clear that there are limitations to data-based choices, as seen by Netflix’s rise in show cancellations.

My biggest question here is whether or not Disney should even be in the digital content space? As a company, it has made a strategic choice to pursue the blockbuster approach to content, which means few, (hopefully) high quality, premium offerings every year that are marketed as “events.” I agree that one of the reasons that the Maker acquisition failed was organizational structure, but I wonder if there is something more fundamental that caused it. It could be that Disney should not be in the user-generated content business at all. Not only does Disney not have domain expertise in the world of MCN’s (as you pointed out), it was also unable to take Maker creators and content and professionalize and/or distribute through its traditional premium content outlets. While going D2C is the right move, it’s more of a distribution decision than a content decision. I think one of the reasons why Maker failed in Disney is that their business model is not meant to support the long tail of creators, and that’s okay.

On April 9, 2018, SLA commented on Netflix: Your Data, Your Show, Your Experience :

I think a lot of what is in this post is what Netflix really wants consumers to think. I would, however, point out a few things that show that even Netflix does not use a pure data driven approach. First, when it comes to its recommendation engine, it is clear that Netflix manipulates this beyond pure data analytics. The company will often promote its own shows and downplay shows or movies it has less confidence in (or similar offerings of licensed content) to the detriment of consumers. It’s not purely data based. Second, when it comes to making content, I would argue that Netflix is indeed trying to be everything for everyone. The sheer volume of spend and content indicates that is trying to appeal to everyone, not specific audiences. I liken its content strategy to that of dredging the ocean floor and seeing what pops up and works. For every House of Cards, there are a ton of other shows that we don’t know about because they simply did not work – like all other creative endeavors. Indeed, Netflix is now much quicker to cancel shows, understanding that data-driven creativity does not always work. Despite my pessimism, it is true that in the world of entertainment, Netflix is certainly leading the way in how it uses data.

I think all of the conclusions of this episode are spot on. Specifically, this does show the real risk in pursuing AI and adaptive learning initiatives – the end outcome can become uncontrollable. You have highlighted an very interesting tension at the heart of all of this, which is the amount of restraint needed to keep AI “safe” versus not hindering it so it can best and most quickly learn and adapt. What’s funny about this particular incident is that Microsoft did it really as a PR play (the actual “learning” from Twitter was likely minimal), and it backfired in the most sensational way. Given the sensitivities and challenges of AI-based products, companies should be overly cautious in their rollout. Flippant marketing grabs clearly are not the best place for these.

On April 9, 2018, SLA commented on Winning the Super Data Bowl: Eagles Fly on 4th-Downs :

Thanks for this, Hans. Super insightful. Surprising that more sports teams don’t use data for in-game decisions. My thought here is that there are so many outside factors in a game (momentum, how the team is playing in the moment, injuries, etc.) that pure data plays are not necessarily as useful as in other scenarios. I wonder if there is a way to put these outside variables into the data set to make the decisions and probabilities even more informed? Without these non-tangible factors, it seems that some of the power of the “pure” data might be stunted.

On March 26, 2018, SLA commented on Avocado Oreos? – Crowdsourcing in the CPG World :

What’s interesting about this campaign is that it essentially made public what CPG companies do in private every day. The process of ideating and testing new products with consumers happens through CPG consumer research groups all the time. By bringing this out in the open, the company is attempting to show transparency and create a deeper connection to the product. So, the actual process is not innovative, but the idea to make it public is. As the post points out, the key to success is control. Without it, the company loses the ability to manage the brand.

I think an interesting dilemma for Glassdoor is that companies and users are a bit at odds over the content that’s on the platform. While users want honest feedback on what it’s like to work somewhere, companies want the best light to shine on them. While there is no recourse for companies to get negative comments deleted, there is also no incentive for them to post things that do not put them in a perfect light. I would be curious to see if Glassdoor could incentivize companies to post more honest comments about jobs. Not only would this create a better relationship with users, it would also bring an even higher sense of legitimacy to Glassdoor.

On March 26, 2018, SLA commented on Glossier’s Lip Gloss Empire :

Thanks for the insightful post. Glossier does seem to have successfully engaged its consumers to create more brand passion and better product launches. That being said, I see two challenges for the company. The first is that it has limited itself to one product line, which limits its growth opportunities. Can the company replicate this model for other beauty products, especially ones that are more complicated and expensive? Second, the company appears to be extremely reliant on social media as a way to engage with its fans and market its products. It would be beneficial to them if they could create more direct lines of communication that they own, so as better to secure that user engagement. I could see them doing this by creating events for users to get together and talk about the products, as well as an intranet like community owned and operated by Gossier.

On March 5, 2018, SLA commented on Drone Racing League :

I wonder if the initial success that the league has found is the novelty of the “sport” plus the help of TV networks pushing the league in the hope of creating new, must-see live content. Given the barriers to entry you laid out for the layman to participate and trial the sport, it seems unlikely that the growth can be sustained. Thus far, all of the demand seems to have been pushed from the league and networks, and less pulled from viewers. If I was DRL, I would immediately start showcasing the drone product in cities all over the country so that viewers could try the drones and build an emotional connection to the league.

On March 5, 2018, SLA commented on Seamless: The Cost of Convenience :

Thanks for this post! As a user of the service, I was certainly interested in seeing what you had to say. It seems, at this point in time, that the power sits with Seamless, rather than the restaurants. That being said, I could see this changing quickly. More and more, I believe there will be restaurants that are delivery-only, essentially large kitchens pumping out food to deliver, with no in-restaurant seating, capturing the growing delivery market you mentioned in the post. The market will then become a split, with restaurant dining establishments and delivery only places. If this happens, the number of places willing to deliver could become fewer in number, but higher in individual importance, and thus create some leverage against Seamless.

On March 5, 2018, SLA commented on Twitch: the ESPN of Esports :

Great post. It is hard to disagree with Twitch’s success to date, especially as they really have come to own the gamer market. That being said, the potentially final outcome of going niche is that Twitch reaches a ceiling in terms of the users it can attract. Is their a limit to the gamer market, and if so, is Twitch satisfied with plateauing or does it look elsewhere to capture more growth? In addition, what’s to stop the hardware makers like XBOX and Playstation from creating Twitch-like platforms of their own, and limiting their game content exclusively to those platforms?

On February 1, 2018, SLA commented on Comcast: The (seemingly) biggest loser wins the game? :

I agree that Comcast has smartly pivoted into the the HSI business, which will continue to be the largest growth engine (assuming, as you correctly pointed out, that they can continue to command premium pricing) of the Comcast portion of the business (though they are making a large investment into mobile, which may become the second large revenue stream). However, I think it is premature to say that Comcast is abandoning the NBCU portion of the business, and recent news proves this out. First, Comcast was an aggressive bidder for the Fox assets that eventually went to Disney. Disney paid $65BN for those assets, and one would assume Comcast would have paid similar, no small investment. In addition, Comcast has invested close to, if not more than, $1BN in Snap, Buzzfeed, and Vox. What’s clear about all of these moves is that Comcast recognizes that entertainment is moving away from a B2B relationship toward a B2C relationship, and all of these investments better position them in that environment. The next logical move for Comcast on the NBCU side is to understand what it wants to do with its piece of Hulu ownership, and if they want to launch its own D2C service.

On February 1, 2018, SLA commented on Sad Snaps :

I agree with you that Snap is challenged and would take it one step further and say likely doomed to be a (much cheaper) acquisition from a more successful company in the future. While you have identified a lot of reasons as to why the company is challenged, the largest one, the one that drives its financial pains, is missing. To date, Snap has focused its product innovations on the pieces of business that they can monetize, mainly Snap Stories, Discover, and Filters. Unfortunately, these are the pieces of the business that users spend the least amount of time on. What you do not see on this list is the actual snaps and messaging functions. More and more, users are using Snapchat as a messaging platform, in lieu of traditional texts. Unlike other messaging platforms like WeChat that push other products or games, Snap has done nothing to monetize its messaging function. If the company can figure this out, they may have a chance to survive, but history seems to dictate that this is unlikely.

On February 1, 2018, SLA commented on No Signs of Surrender at This Retail Bank :

Agreed that it is surprising that an incumbent retail bank like BofA is investing so much on the technology side. While they have made communicating and interfacing with users easier, the technology moves to date seem aimed at ensuring current depositors don’t bolt, rather than doing things to attract new and younger depositors. Ease of use has certainly increased, but the motivation to increase deposits still seems stuck somewhat in the old age. They seem to be aiming to capture other forms of financial transactions (e.g., peer to peer payments), but are doing little to address the core of the business as you lay out, traditional checking and savings accounts. Many FinTech startups appear to be focusing on enticing for millennials’ share of wallet, positioning themselves as alternatives to traditional retail banking accounts. BofA should focus its tech group and other tech acquisitions on initiatives that directly address this issue.