10 Predictions for the Future of Entertainment
Plus, telemedicine's boom, the coronavirus influencers, and AI's limitations
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10 Predictions for Entertainment in 2030
For most of us, there are two dominant pastimes in our lives: work and leisure. On Monday, I shared some thoughts on the future of work, including how collaboration tools and the “consumerization of the enterprise” are enabling remote work. Today, I’m going to tackle the other major bucket of our time: leisure, or entertainment time.
The average person in the U.S. spends 4.5 hours on digital entertainment every day, split across TV, streaming, gaming, music, and social media. I’ve written about gaming and streaming before, and hope to cover them again in-depth soon. Given how massive “future of entertainment” is as a topic, I’m going to stay more high-level by offering 10 predictions for entertainment in the year 2030.
TikTok and YouTube will emerge as the two dominant video-sharing platforms
In 2030, there will be two giants in online video-sharing. YouTube will own long-form video, while TikTok will own short-form. Both will have vast networks of online creators (the term “influencer” will die out and be replaced by “creator”) whose full-time jobs are to create and monetize content.
Instagram will compete more with Amazon and Shopify than with TikTok or YouTube
Instagram will subtly add more and more shopping features until it begins to be thought of as an e-commerce company, rather than a social media company. Anyone will be able to easily open their own online store on Instagram (the paragon of Business-in-a-Box). IGTV will never catch on, and Instagram Live will still be a thing but will be much smaller than…
People will spend hours a day livestreaming and watching livestreams of their favorite online creators. It will be a normal Friday night activity to join your favorite celebrity’s livestream and to just hang out. New categories, beyond gaming, will emerge: concerts, cooking, fashion. Livestreamers will monetize primarily through donations and subscriptions, rather than through ads.
Gaming will be a full-blown social network—and will merge with virtual worlds.
Quick quiz: which had the bigger opening weekend—the blockbuster movie Avengers: Infinity War, or a game called Red Dead Redemption 2? The answer is the latter—Avengers grossed $640 million to Red Dead’s $725 million haul. The gaming industry is already 3x larger than the global box office industry and 4x larger than the global music industry. By 2030, those multiples will be 10x.
Gaming is also fast becoming a social network: 75% of 9-16 year-olds in the U.S. have played Roblox; teenagers spend over a billion hours a month in Fortnite. And those teens aren’t “playing” Fortnite—rather, they’re hanging out with friends in a virtual world. The next gaming giants will be platforms upon which developers can build their own games—like Roblox, Manticore Games, or Epic Games Publishing. And the games won’t be games that are “played” for an end-goal: they will be virtual worlds to hang out in. Gaming will be the first industry to popularize AR / VR (as it’s begun to do with games like Pokémon Go, shown below).
AR / VR will be the next major consumer platform after mobile.
People say that mainstream adoption of AR / VR is 2-3 years away; the problem is, people have been saying that for the past 5 years. By 2030, though, AR / VR will have reimagined entertainment. Offline entertainment—theme parks, for example—will use technology to create fantastic experiences. At Disneyworld, you’ll enter an enormous empty room. You’ll put on AR glasses, and voila, you’ll be in outer space—stormtroopers and spacecraft from Star Wars will appear all around you (startups like Ubiquity6 are building technology that will enable this). Companies like Sandbox VR (shown below) will create popular destinations where you can experience a 20-minute VR experience.
The streaming wars will be over, with Netflix and Disney the big winners.
The streaming wars will come full circle, with Netflix ending up largely where it began: as the home base for licensed content. Emerging competitors like Peacock and Quibi will flounder, ultimately selling their content back to Netflix, which will produce its own content in addition to being the industry’s aggregator. (Having a centralized hub for content is in the best economic interest of both the consumer and the content producers.)
Disney+ will flourish but primarily as an ecosystem play: its success will be in keeping customers entrenched in the highly-lucrative Disney flywheel of parks, cruises, hotels, films, and merchandise. HBO Max will succeed as a niche offering, but will largely destroy HBO’s brand value. Amazon and Apple will offer some original content, but will largely dominate “transaction video on demand” (TVOD)—one-off rentals and purchases of films and shows.
There will still be movie theaters, but theater windows will be compressed.
People will still go to theaters to watch movies, but only ~2 times a year. These will be the big experiences: the blockbuster “tentpole” films with huge pent-up demand (Avengers, Star Wars, etc.). There will only be a 2-3 week “exclusive” period in theaters and then the films will hit the streaming services. Dramas, comedies, indie movies—those will all go straight to streaming services.
The traditional TV bundle will devolve into a live news and live sports bundle
The economics of the TV bundle are untenable and cord-cutting is rampant among younger generations. Ultimately, TV will only be for news and sports—live coverage that doesn’t translate well to streaming services. There will be fewer pay-TV households, they will pay about the same prices, and those consumers will still get high utility from the offerings (news junkies, ESPN fans, and so on).
Voice and audio content will be big, but will be overshadowed by video
Podcasting is booming: in the U.S., there are 700,000 free podcasts and 144 million listeners, with the average listener consuming 6 hours of podcast content each week. Podcasting will continue to grow (and more people will launch their own podcasts), but the economics will largely flow to Spotify. Spotify will be the one-stop-shop for audio content. There will also be winners in niches like mental health (Calm), fitness (Aaptiv), and religion (Hallow). Amazon, Google, and Apple will own audio distribution channels. Most crucially, though, the audio boom will be overshadowed by video: driverless cars, for example, will be a boon for video content at the expense of audio.
Music will shift power to the artist and record labels will suffer as a result
Artists receive about 12% of the music industry’s revenue—and the vast majority of that is from live events. An artist needs about 400,000 streams on Spotify every month to earn minimum wage. This won’t last: technology is creating a fundamental shift of power to the creator. This decade, Spotify will offer better terms directly to artists—cutting out the record label middlemen—and sites like Patreon (and it’s newly-launched Patreon Capital) will enable artists to thrive with niche but passionate fan bases. In 2030, the majority of music revenue will go to the artist.
Sources & Additional Reading — here are the pieces that inspired and informed this content; check them out for further reading on this subject:
Investing in the Podcast Ecosystem in 2019 (Li Jin, Avery Segal, Bennett Carroccio, a16z)
Digital Theme Park Platforms (Matthew Ball)
The Rise of Lifestyle Streamers (Jonathan Lai & Andrew Chen, a16z)
Chart of the Week
And this one made me feel old: Jurassic Park, The Lion King, and Forrest Gump came out in theaters closer to the moon landing than today (!).
Two beauty things:
Platforms like Instagram and YouTube have enabled huge beauty brands. Kylie Jenner rode Instagram to over $300 million in first-year sales for Kylie Cosmetics. Jeffrey Starr rode YouTube to $100 million in sales for Jeffree Starr Cosmetics. Huda Kattan rode both to $250 million in 2018 sales for Huda Beauty. Now, the trend is trickling downstream to TikTok and Gen Z creators.
In four weeks, 22 million Americans have lost their jobs. The boom in unemployment is causing people to turn to social selling gigs for income—what many would call multi-level-marketing, or MLMs.
And two fitness things:
Under shelter-in-place, at-home fitness is spiking. Peloton extended its free trial to 90 days to reach a broader audience; Mirror’s sales have doubled; Tonal sales in March 2020 were up 5x over March 2019. Since these companies often break even on hardware sales and make all their profit from high-margin monthly software subscriptions, it will be interesting to see if new buyers stick with subscriptions after quarantine is over. (For what it’s worth, I think that they will and that this will be prove a turning point for at-home fitness.)
Aaptiv is a Netflix-style app that connects people to trainer-led fitness sessions that they can do on their own, usually without any equipment. It’s booming during COVID-19. The CEO says that organic traffic is up 100% in the last month and engagement with content is up 200%. Aaptiv has now passed 30 million classes (up from 22 million in May 2019).
For the first time, there’s a global health crisis in a time when misinformation is rampant on social media. All of a sudden, thousands of people are aspiring public health experts. Some are exploiting the crisis to gain an online following: the YouTuber Jordan Sather has told his followers that they can protect themselves from COVID-19 by drinking chlorine dioxide—the oxidizing agent used in bleach. Others aren’t malicious, but are inadvertently spreading dangerously wrong facts.
The Impact of COVID-19 on Movie Theaters (Matthew Ball)
Even before the virus, movie theaters were struggling. For close to 20 years, attendance has declined a consistent 2% per year. Movies are increasingly going straight to streaming, and only the biggest blockbusters are showing a return on investment from the box office. Studios are taking more of the pie—in 2000, a studio might take 55% of theater revenue; in 2019, Disney commanded 65% of revenue. Given these secular shifts, is COVID-19 the death knell for theaters?
Apart from Tiger King, Animal Crossing is the biggest pop culture phenomenon of quarantine. Animal Crossing is a simple game that casts you as the mayor of a small town full of animals. People seem to like it because it gives the player a sense of control; as one player reflects:
“The game throws you into an unfamiliar world where you have no money, no friends, and have no idea how anything works. But the more you play the game, the uncertainty of that goes away. It’s a version of life in which everything works out.”
For years, telemedicine struggled to gain traction. But the pandemic is catalyzing regulatory and consumer behavior shifts that are breathing new life into the industry. Before the virus, video appointments made up only 1% of the U.K.’s 340 million annual doctor visit. Now, telemedicine companies are seeing 100% weekly growth rates. Medicare in the U.S. has expanded telemedicine coverage, and Britain’s health service has fast-tracked regulatory approval.
If you ask artificial intelligence, “What color is this object?”, it will get it right more than 90% of the time. But if you ask, “What caused the ball to collide with the cube?”, AI answers correctly only 10% of the time. Deep-learning models are improving at an astounding rate, but are still struggling with simple cause and effect questions.
Under COVID-19, strip clubs are moving to Instagram. A pro basketball player and P. Diddy’s son are teaming up to host virtual pop-up strip clubs on Instagram Live. Dancers have found it quite lucrative:
The amount of money Alexis has been able to earn through the internet far outpaces what she was previously earning at her job at the club, and for far less effort. “If I’m in the club, I’m there for eight hours,” she said. “On Instagram Live, it’s five minutes. Five minutes compared to eight hours of work.”
Weeks after stepping down as CEO, Disney’s Bob Iger is reasserting authority to save his company. A few weeks ago, Iger was putting the final touches on a storied career at Disney: 15 years at the helm, a 500% increase in the stock price, and acquisitions of Pixar, Marvel, Lucasfilm, BAMTech (this one is underrated!), and Fox. Now, Disney is finding itself uniquely vulnerable to COVID-19. Iger is stepping back in to right the ship.
Despite COVID-19, people are booking cruises for next year in record numbers. Months after cruises were in the headlines for being coronavirus hotspots, people are clamoring to book their next cruise. One cruise marketplace has seen a 40% increase in bookings for 2021 compared with 2019. And no, I don’t understand this.
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