Back to Blog

Growing a Media company by 500%

Markus Reinmund

Rumors are heating up that Tesla may soon release its own smart phone - the Tesla Pi phone (or Tesla model Pi). While Tesla hasn't made an official announcement yet, I doubt many people would be surprised if Tesla indeed decided to branch out into the smart phone space. We're used to seeing innovative companies like Tesla entering new markets. Tesla started with cars, and is now in the business of solar power, energy storage, charging networks, space technology and neurotechnology. Why not enter an industry as mundane as telecommunications?

A similar willingness and ability to expand beyond core products/markets can be seen in the growth of other innovators:

Amazon: first launched by selling books, then sold "everything", then entered cloud computing, distribution and delivery services, content creation and distribution, security products, robotics, ...

Google: first launched a search engine, then added map services, browser technology, ad services, productivity software, a smart phone operating system, smart phones, ...

Facebook: first launched a social network, then added analytics, ad services, messaging services, virtual reality products

Launching any business is hard - but it's a lot easier when you can leverage pre-existing consumer relationships.  If millions of people already trust your general approach to product and service quality, why wouldn't they consider your latest product or service in a new market? Apple makes awesome computers, tablets and phones, so yes, millions of consumers won't hesitate to buy an Apple iCar if/when it becomes available. Direct-to-consumer relationships and trust are the conduit for new business and growth.

In this context, it appears that the media industry may be missing out on their tremendous, nascent potential for business expansion. Consider this rough timeline of communication tools/platforms:

1920s: radio

1930s: black & white TV

1960s: color TV

1990s: internet

2000s: social media, smart phones

2010s: democratized content (Youtube, Instagram, ...)

Platform choice has expanded over the last 100 years but the media business model has changed very little. For the longest time, media's implied contract with audiences used to be: We give you entertainment and news, you give us your time (ie. eyes on ads). Only recently did this model get tweaked through the introduction of streaming services. Today, consumers have the choice of two currencies to "pay" for content consumption: time and/or money. Peacock/Hulu/etc accept payment in time or money, Netflix/Amazon/HBO accept payment in money only, Youtube/Instagram/etc accept payment in time only. That's a convenience and efficiency improvement within the media industry but the service offered (entertainment and news) has remained the same. There's no big Telsa, Amazon, Google story to be found here.

So why don't most media companies branch out into new products or services? Why are we not hearing about a Disney smart phone, Comcast cloud computing services, ViacomCBS energy storage, Fox electronics, etc? One important reason is this: Media companies have spent decades building trust around content, but NOT trust around direct-to-consumer relationships. Most local or national broadcasters know their markets, demographics and viewers preferences, but they don't know the first name, last name or phone number of their viewers. That makes it rather hard to transition from one existing market to a new, bigger market.

Consider Disney vs Amazon. Both companies have strong brand awareness in virtually every household across the U.S. Yet, the fantastically successful Disney media company has a market value of $250 billion while the consumer-relationship focused Amazon has a $1.4 trillion market value. The market for goods and services is much larger than the market for content - by multiples.

What's the best way for a media company to grow by 500% over the next 10 years:

1) Leadership focus: Pursue direct-to-consumer relationships

2) Data & Analytics: Get to know your viewers individually

3) Share of Viewer Wallet: Start selling physical goods and services.

Knocking was built to equip media companies to pursue exponential growth and a deeper share of consumer wallets.