Oil is the ultimate benchmark for sizing the world’s leading industries. In recent years, headlines have quipped that “data is the new oil” or “information is the new oil”. In last week’s The Economist, the gist of the lead story is that entertainment – an industry that has been associated with flailing newspaper subscriptions and, relatedly, a sector struggling given the rise of technology – is in fact, the “new oil” for the contemporary epoch.
The Economist’s cover story substantiated its oil equivalent by showing that the same amount is being invested in entertainment as the oil industry this year: $100 billion. More than investment, entertainment is one of the largest industries in the world in revenue terms, projected to reach $2.5 trillion by 2022 (Statista). Since 2010, just three groups (WarnerMedia, Netflix and The Walt Disney Company) ploughed $250 billion into programming. And last year alone Audible generated $1 billion in revenue for Amazon.
Entertainment is more than newspapers, more than Hollywood, and more than the sum of specific verticals jousting for consumer eyeballs. Entertainment is how we choose to spend our time (and money) and is consumer driven. It’s constant, immersive and happens throughout the day, not just a weekend night movie. With the smartphone, entertainment is basically with us all the time, everywhere.
A Nielsen survey from 2018 shows that U.S adults spend 11 hours daily on consuming some form of media, from watching TV, listening to music, apps or games – that is a whopping two-thirds of their waking-time. Emarketer has pegged that number at over 12 hours for 2019. To no surprise digital video and audio are winners. Social usage is almost entirely spent on mobile.
What, then, is the entertainment industry, exactly? Well, in many ways, in the 21st century it is the convergence of technology and attention. The large investment flows into entertainment fuel advanced in technology to produce, to distribute and monetise content that educates us, relax us, entertains us, and so on.
To answer the question of what it is, we explore the intersection of entertainment and technology. Startup landscapes, while not perfect, are useful as they provide a way for us to define a space/category and the players of that vertical. There are countless landscapes for almost every vertical you can think of, many of them are collected and published in this blog. But, search for “Entertainment Tech”, and you will come back empty handed, despite the ascendance of activities.
Entertainment in 2019 represents a mix of various sectors, each of them an expansive world in its own right: movies & TV, online video, gaming, music, books, sports … and the list goes on, given that we spend so much of our time as creators and consumers of entertainment. Take AR/VR/XR for example. It’s definitely included in Entertainment Tech and is high on the agenda for many entertainment companies, but any Entertainment Tech landscape shouldn’t only include AR/VR companies. That’s not to say that you could not *easily* name 10 exciting AR/VR companies. Its just that AR/VR is very far from constituting Entertainment Tech. Is it only one exciting vertical within the broader umbrella.
As we specialise in Entertainment Tech at Remagine Ventures, we work to better define the constituent parts of the sector. In this post, we share how we conceive of Entertainment Tech.
Wikipedia defines Entertainment Technology as follows:
Entertainment technology is the discipline of using manufactured or created components to enhance or make possible any sort of entertainment experience. Because entertainment categories are so broad, and because entertainment models the world in many ways, the types of implemented technology are derived from a variety of sources.
Source
The graphic below is an approximation of the categories we include. Each category represents a large vertical on its own, which together comprise of Entertainment Tech across content creation, consumption, distribution and monetisation.
Within these categories, we see three trends emerging:
- Change in consumer behaviour: driven by demographic changes, new models of entertainment and consumption are emerging. According to “Global Trends Among Gen Z” report by Snap and GlobalWebIndex, the top 5 interests for Gen Z’s ‘always on’ generation is Music (69%), Movies (61%), Gaming (54%) and Technology (53%)
- New technologies, primarily driven by AI/Automation: here we focus on machine learning, deep learning, NLP and computer vision/image recognition.
- Convergence of disciplines – We find that the most interesting opportunities are at the intersection of trends. A few examples:
- Commerce + Content + 5G
- AI + Video
- eSports and Entertainment
- Retail + Entertainment + Experiences
- Cloud + Gaming
- Data + Consumer Products + Sustainability
Looking at this broadly defined world, one might wonder how some of these categories are connected. Yet when we look at this space a lot of these verticals are already connected or even converging. The two main drivers, AI technology and consumer behaviour, are blurring the lines and we like to focus where these industries and technologies intersect.
Content & Commerce is an obvious example, just take a look at Vice Media’s acquisition of Refinery29, the plethora of DTC startups disrupting traditional brands (see VC Cafe post) or Instragram’s shopping features and look-out for Snap to start monetising more through commerce in the future.
Marketplaces & Classifieds have been part of the newspaper business almost since its inception. When the internet came along, these two pairs were split but the smart newspaper businesses acquired online classified & marketplaces around the world. Examples include Schibsted, which recently spun-out its classified business via an IPO or Axel Springer, which owns a range of online businesses including jobs, real-estate or automotive digital classifieds.
To better understand the breadth & scope think of it this way: the internet has disrupted the TMT sector more than any other industry and shifted revenues away to new players (think facebook, Google, Amazon, Netflix, Apple etc.). Yet more traditional TMT companies still create valuable content and reach millions of consumers daily. They missed the boat on some of the earlier technology driven innovations, but they are trying to catch up. In 2018, CVC investments surged dramatically, surpassing traditional VC investment in the US (see VC Cafe post). Every company that is in the “attention economy” is looking for ways to stand-out, engage and find new ways to monetise. And while all this is happening, new forms of entertainment, e.g. gaming/esports (e.g. Fortnite) or VR & AR (e.g. the Void) coupled with the need and opportunity to consume, watch, click & buy anywhere, anytime on any device compete with Netflix & Co. And when you think about it this way, new technologies are unlocking and driving trends in consumer health, fintech & data privacy.
As the world is witnessing the increasing connectivity of various sectors, we at Remagine Ventures, are excited to invest in startups with cutting-edge technologies that are driving these changes forward.
This post was written jointly with Kevin Baxpehler. Thanks to Larry Aidem, Thomas Ebeling and Robyn Klingler Vidra for their feedback on earlier drafts.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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