Mobile Fix: Murdoch’s empire
Following Murdoch’s proposed – and rejected – $80 billion offer for Time Warner, Simon Andrews, founder of Addictive!, examines the reasons behind the move – and wonders whether somebody else will step up to fight him for the deal.
The big deals this week are in old media rather than new. Rupert Murdoch is trying to buy Time Warner to merge it with his Fox business. His $80 billion offer has been rejected but the feeling is that the deal will happen if/when he ups the offer.
Why buy them? He sees that the whole world of content is becoming even more of a hits business. And as digital drives the value of content down through ease of sharing (and piracy) we are seeing a polarisation; most content is worth very little and the small minority that people feel they just have to see shoots up in value.
A quote from VC Chamath Palihapitiya now shapes much of our thinking: “Experience = Social Capital.”
So content that is an experience, and therefore has social capital, is hugely valuable. And Rupert gets this. One analyst said:
“He clearly feels that as other players try to enter the media business, content will be more valuable and he wants to get his hands on as much content as possible.”
It’s worth reading a blog post from the same analyst where he dissects the logic of the deal and outlines the key assets of Time Warner; Harry Potter movies and 80 years of classics – including Friends, The West Wing, Superman, Batman and the rest of DC Comics. And HBO, which some feel is the real reason for the deal.
But if the value is clear to Murdoch, who really only has old media assets to monetise this content through, what would it be worth to GAFA, who need to improve the monetisation of much of their new media assets?
The stories around Apple thinking of buying Disney may have gone away but there is still some logic there. Which is why the story keeps coming back.
Will someone else step up to fight Murdoch for this deal? Maybe, but a little history may dampen down enthusiasm. Time Warner was already bought by a digital giant; AOL bought them for $164 billion back in 2000 and the then CEO subsequently called it “the biggest mistake in corporate history.”
Mark Andreessen is probably right when he says most of the dotcom boom was filled with good ideas that were just too early – but it would be a brave CEO to rerun this move. I still think it’s more likely GAFA will move into content with a big Sports deal.
This is a good thinking on how the value of content assets is changing – and how the tactics of digital are trying to slow this change.
Mobile money
Our piece on mobile and money last week got some good reaction. There is a general feeling that the legacy issues that are holding traditional banks back are being overstated and that workarounds can solve some of the key hurdles.
A new McKinsey report this week makes a similar point about European banking tending to be slow, but sees some reason for optimism. One quote stands out as good sense for every business:
“Increase the focus on business outcomes, not digital activity. Too often, banks manage the progress of their digital transformations by tracking activity metrics, such as the number of app downloads and log-in rates. Such metrics are inadequate proxies for business value. Banks must set clear aspirations for value outcomes, looking at productivity, servicing-unit costs, and lead-conversion rates, and link these explicitly to digital investments.”
A key issue is where the thinking comes from; too often the IT team are seen as a barrier – if not an enemy – and the big System Integrator contracts are complained about by many people we meet. In a world of MVPs and pretotyping having thousands of people in Pune isn’t always helpful.
A conference this week saw someone make the point that anyone can be a player in money now – and we made the point that approximately 90% of all the money held in US mobile wallets is on the Starbucks app.
The news that the Barclays PingIt app now enables users to send money to India, as well as several African countries, using just someone’s phone number, reminds us how fast things are changing.
A little step by Apple is another glimpse of the future. In the US you can now store money in your Passbook app. It’s a little clunky right now in that it involves a visit to an Apple store but we’re sure it will get easier. With around 1 billion credit card relationships, when Apple lets people move money into their Passbook from their cards, they essentially own the payments market. And they create a Money Anchor to stop people switching to Android.
In our conversations with consumers people love the fingerprint tech on the iPhone and it removes much of the worry about security of the phone as a wallet. But of course others have similar ambition.
PayPal’s David Marcus has gone to Facebook to run their messaging service and folding in payments seems an obvious step. And Snapchat – who have Chinese BAT giant Tencent as an investor – seemingly plan to add some of the payment and money services that Chinese messaging services do so well from.
London is a key player on all this with the focus on FinTech here – this is some background on why it’s so important.
This is an edited and abridged version of Mobile Fix – click here to read the full article on Addictive!’s website
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