Invisible Universe and the Future State of Video
What Business Model Emerges from the Video Wreckage?
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The future is already here.
-William Gibson (maybe)
Let’s say the quiet part out loud. The video business model is in trouble.
The video ecosystem was disrupted over the last 15 years as the cost to distribute content plummeted, which reduced barriers to entry, enabling new competitors and compressing aggregate profits. Most of the current problems in the industry today can be traced back to the fact that there’s now less money to go around. The advent of GenAI will reduce the costs of content creation, threatening to erode another critical moat and disrupt the industry again. Things will likely get harder, not easier, especially for pure-play video companies.
Over the last year or so, I’ve had umpteen conversations with people who are trying to figure out what emerges on the other side of these disruptions. As entry barriers fall, what will be the business model of professional video creation in, say, five years?
In many of those conversations, I’ve pointed to a small animation studio called Invisible Universe. There are dozens or hundreds of independent animation studios, so many have not heard of it. What makes it interesting is that its business model is built around the likely future state of the video business.
Tl;dr:
- Invisible Universe (IU) is an internet-first animation studio that develops animation franchises and distributes chiefly on YouTube and TikTok.
- Instead of the traditional model of creating content and then distributing it, IU employs a highly iterative content development process, continuously engaging with its fan base and quickly turning new content. Fans play an active role in plot and character development. This shift — from creating content and then building community to building community and then creating content — is much less risky.
- Recognizing that falling entry barriers generally mean lower margins, IU doesn’t view video as a profit center. Video is a mechanism for creating franchises that are monetized through other channels.
- Contrary to the perception that GenAI is currently a hobbyist tool, IU has fully transitioned to AI-enabled content generation. Over the last year, it has created its own fine-tuned models, trained on its IP, and developed a custom workflow. As a result, it has reduced development time on its videos from weeks to hours and reduced content development costs by over 90%.
- It intends to productize its workflow as a IU Studio that enables fans to create content using its IP.
- Will IU eventually become the “Pixar of the Internet,” its stated ambition? Maybe, maybe not. But if you’re in or around the TV business, you should be paying attention. Its business model may foreshadow where video is headed.
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