Michael Seibel, a partner at Y Combinator, wrote in his blog last week on his experience with the new Oculus. Especially, he mentioned the following:
Because VR is so immersive, I can imagine myself spending significant amounts of time (hours) with a headset on, every day. As a result, gaming will not be the only significant Applications for VR. My headset will steal time time from other screens (tv/laptop/phone) and as a result there will be an explosion of VR consumer apps, entertainment apps, developer tools, and more.
Couple this with Ben Thompson’s post on the Great Unbundling this week, and we can see a glimpse of how technology will affect the media industry in the future. I’ll summarize Ben’s takeaways from his post and comment on how VR may play a role in transforming media.
The Old Media Model & the Economics of Bundling
In the pre-Internet era, media companies profited through distribution and then integration. Newspapers bundled editorial and ads to its subscribers; record labels integrated back catalogs and new musics; and cable TV bundled various programming with ads. The economics underlying these models, as Chris Dixon explains in his post, can benefit both distributors and customers if customers like more than one thing.
Internet Brings the Cost of Distribution to ZERO
The Internet gave birth to Google and Facebook, which diminished the distribution-based monopoly that traditional media companies held. Now advertisers could bypass publications and use Google and Facebook to reach end users directly. Spotify and Apple Music gave users access to all their catalog for a monthly fee model. TV, on the other hand, has avoided the Great Unbundling so far. Ben Thompson cites three main reasons why:
- Internet did not mean zero cost distribution until recently. Streaming video takes more bandwidth than print and audio files.
- TV ads delivers superior ROI as it can reach a massive number of potential buyers.
- Cable bundling still provided value to customers and cable providers.
The Jobs TV Does
TV has traditionally played the following roles in our lives:
- Kept us informed (news)
- Provided educational content
- Live sporting events
- Told stories
- Offered escapism
To a certain extent, the Internet replaced the first two roles that TV played. Netflix is actively challenging the “story-telling” category, and Facebook and Snapchat has creeped into the fifth category, allowing individuals to escape reality and find an antidote to their boredom. Ben Thompson then goes into detail about the Facebook Epoch, the Netflix backlash, and the Great Unbundling of TV. But I want to go back to where we began this story with VR. How will VR challenge TV and media?
VR: Can it Dethrone TV?
From Michael Seibel’s quote, we can already see how VR can provide the escapism that Facebook and Snapchat has begun to take away from TV. Instead of scrolling through Facebook feeds or Snap stories, why not immerse yourself in virtual reality, playing games, hanging out with friends, or going on adventures?
The more interesting part that I see VR challenging TV is in the area of live sports/entertainment, which is the last of the “jobs” listed above in which TV maintains the advantage. One of our readers, Taylor Weese commented on a prior post asking when he can “sit at home with a VR headset and switch between a 1st person POV of Kyrie and Lebron on demand.” ESPN, ABC, and FOX currently hold long-term exclusive rights to sports streaming. But imagine how the viewership experience would change if one can indeed experience the game with the players. Will VR cut into cable companies’ dominance in live sports streaming?
This can apply to other areas of entertainment as well. What if you can listen to music as if you’re at a concert? Perhaps artists can bypass venue holders to stream their music directly to customers. We’re still far from VR being mainstream and ubiquitous. But just as we never expected a Netflix or YouTube to dethrone other pillars of TV, we can bet on VR cutting into even the most stable roles that TV plays right now.