The Year(s) Ahead in Media — Virtualization

The Hope for New Media Modalities and Tying it All Together

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DALL-E 3, prompt “a human transitioning from physical to virtual”

Note: This is the fourth and last post in a four-part series that discusses four tectonic trends (fragmentation, disintermediation, concentration and virtualization) that will determine the flow of value along the media value chain in coming years. Here are part 1, part 2 and part 3.

Tl;dr:

• This concluding post discusses the fourth and last trend, virtualization, and ties the four trends together.
• Virtualization refers to the steadily blurring lines between the physical and the virtual. This is the most hopeful trend for media overall, but also the most uncertain and furthest out.
• As noted at the beginning of this series, value in media is stagnant and zero sum because time spent has plateaued.
• The promise of virtualization is that as our lives become more virtual (and more digital), there will be new ways on interacting with media — new modalities — that increase time spent with media and/or the value consumers place on these experiences.
• Associated technologies include those that enable new immersive experiences (XR and virtual worlds); more engaging experiences (fan creation and ownership); and new leisure time (AI efficiency gains and autonomous vehicles).
• The most tangible of these is the Apple Vision Pro, which could eventually herald a new media software upgrade cycle, and, even further out, Level 4 self-driving, which could free up some commute time. But neither is likely to have a material effect for years.

• The goal of this series was to look past the daily headlines and noise and explore the fundamental trends that will dictate how value is created and flows in media over the long term. Synthesizing them, we’re left with an industry in which value is stagnant over at least the near term, but the distribution of that value is not.
• These dynamics are good for the most successful creators, who will have more bargaining power than ever, but not creators as a class. Both the good and the bad news is that the continued democratization of the content creation “stack” will make everyone a potential creator. The greatest hope for creators lies in better monetization tools and business models, not more equal popularity distributions.
• For traditional intermediaries, all of these trends are just…bad. They will likely continue to lose consumption share, cede bargaining leverage to top talent, contend with stronger competitors and face riskier and less profitable businesses. A few technological lifelines are worth watching, but uncertain. They still have unique assets (audiences, IP, brands and, in some cases, data) and capabilities (like marketing prowess), but while the current is stronger in some media than others, almost all are swimming upstream.
• The “new” intermediaries win, barring effective regulatory intervention (less likely) or technological disintermediation (crypto)/intermediation (AI agents). The prize, however, may be relatively small.
• Consumers also win, with more choices than ever and, probably, lower prices. But they will pay in the form of potentially less “high quality” content and more decision fatigue, FOMO and dissatisfaction with the choices they make.
• This is all fatalistic, but not nihilistic. The challenge for everyone in the value chain is to acknowledge the structural challenges and move ahead with purpose and optimism anyway.

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