How media leaders view the industry’s future


Advertising, e-commerce and structural trends


Vast changes in technology have created an environment of disruption and uncertainty in the media industry. Yesterday’s disruptors are now among the largest companies in the world – today, TikTok, Roku and free ad-supported streaming TV (FAST) channels are changing the industry.


These changes and their impact on the current business climate and future direction of the media business were discussed in a recent live Grant Thornton-hosted conversation, moderated by Howard Homonoff, Senior Advisor, U.S. Media & Entertainment at Grant Thornton, which featured insights from Tom Rogers, executive chairman of Engine Gaming and Media and a CNBC commentator; Deb Schwartz, Chief Financial Officer of Cameo; and Mike Sid, Chief Strategy Officer of Whip Media. Below are some highlights of that discussion.


Where are we in media today?


HOWARD HOMONOFF: You’re all looking at the media and entertainment business from different places now and from different journeys. From 10,000 feet or whatever level you want to go to, Tom, I’ll start with you. How are you seeing the business climate today for media and entertainment?


TOM ROGERS: Well, it’s not a lot different than what it was when a broadcast company needed to become a cable company and the transition of one to the other was difficult, painful. But many of the media companies successfully made that transition.


Today, they’re going through a similar transition of cable broadcast companies talking about the mega-media companies who are transitioning to another world. I’m a little more skeptical of the ability to make this transition, having fought the fight to transition the network to cable. It was not easy, internally, to align to get that done, but it was clear we were moving to a better model, one that had dual revenue streams rather than a single revenue stream – something that you could point to by way of expanding revenue, expanding margins and how to monetize from a smaller audience without having to worry about maintaining a mass audience.


Today, you have media companies transforming from, maybe, the best media model known to man to a much tougher model with streaming, one that has all kinds of headwinds associated with it, not the least of which is managing the transition itself from linear to streaming. So those companies have been through it before. I think it’s a tougher go this time.


HOWARD HOMONOFF: And, Deb, you’re coming at this marketplace as a relatively new entrant in occupying almost a space you’ve created. How are you finding it in trying to convince financiers, advertisers, etc., people that work with what you do and your value in the marketplace?


DEB SCHWARTZ: So as Howard would say, Cameo is a marketplace connecting fans with talent that they love, and this is actually a really exciting time given most of the trends that we’re seeing. Which is today, from a social and talent standpoint, there are more famous people than ever before, and famous people are staying famous longer. But the gap between fame and monetization is widening. Outside of the top 5% of any given subsector of media, whether it’s sports or entertainment, music, the gap between fame and monetization is growing. And as such, what you’re seeing is talent figuring out more and more ways for direct-to-fan monetization.


Over the last 10 or 15 years, you saw talent like the Kardashians become brands in and of themselves and now that’s becoming much more ubiquitous with start-ups like Cameo, as well as many others in that indie ecosystem. So, as an example, Brian Baumgartner, who played Kevin from The Office, one of the top talents on Cameo, he’s now doing a podcast. He’s selling merch. He’s doing a book. He’s becoming a brand. Mr. Beast is one of the biggest YouTubers. He’s now doing the sneaker drop. And so that, for us, is an angle where there’s a lot of growth, a lot of ambition in a broader space.


HOWARD HOMONOFF: Mike, I want to get you picking up on both points to an extent. You guys are a huge source of data about, and for, the streaming business and major media companies trying to play in that space. What’s your reaction to the Netflix news on missing sub growth expectations and what that is telling us, or not telling us, about where streaming’s going?


MIKE SID: Well, I just came back from NAB (National Association of Broadcasters). For those who don’t know, it’s a large conference for representatives in the broadcasting industry. But pretty much now the media people and the streamers are there, and Netflix is there – all the studios, all the streamers as well – all the broadcasters are also streamers. And basically, everybody around the world are now all streamers, apparently.


To give you, basically, a guy that says, “You’re a Wall Street analyst: A, B and then C, and then you know the value of our company,” which, of course, is never increasing. So, in a way they’re a slight victim of that, because they didn’t meet expectations, and those are things that happen. I think that a broader thing was that the networks all were big competition, but now that every studio is a streamer, Netflix has competition like they’ve never had before.


Streaming is where the viewing is occurring, and it is the wave of the future. But there are other things, too. I did see another piece of data that showed that, interestingly though, there’s a lot of people who have five to nine to 10 different services. The number of people that have zero (services) has bottomed out, and is actually increasing slightly.


Now, the market got a hit a little bit because Amazon stumbled as well after hours, so everything’s kind of stumbled. But that’s the future. Roku, FAST channels which, to bring things around again, is funny in terms of “what’s old is new again.” You are probably familiar with FAST channels, basically free linear channels where you sit back and there’s one show after another and there’s channels and you don’t pay for it … which maybe to some people it sounds familiar? We’ve basically come full circle now, back to pre-cable days, in a sense. 

How vital is advertising’s role in media’s future?


HOWARD HOMONOFF: Deb, how important is advertising to Cameo? Netflix is just discovering – oops – “What do you mean we have to have advertising?” It’s not quite that simple, but certainly the market is looking for them to tweak that model. For you, working both directly with consumers and with your clients, where does advertising fit for you in your business model going forward?


DEB SCHWARTZ: Cameo is a pure marketplace model, so consumers come to Cameo, buy Cameos for talent and we execute a transaction. Where we are increasingly starting to play within the broader ecosystem is that there’s a growing trend within the advertising landscape where, over the last 10 years or so, advertising performance has been driven and differentiated by data. And for a lot of the changes that Apple has made over the last year in terms of the increasing privacy and limiting tracking, costs for acquisition on platforms like Facebook is becoming more and more expensive. For Cameo, we generate 5% of our traffic from paid, so it’s not that big of an issue. But for most consumer companies I’m talking to now, customer acquisition costs on Facebook are becoming prohibitively high and really impacting their economics.


The pendulum shift that’s starting to happen in the advertising landscape is differentiation among creatives – having better creatives. So that’s where Cameo, which is feeding a supply of talent to brands to make more authentic, more interesting ad campaigns that are better connected to their fans, is in an area that we see becoming really exciting. At Cameo we have an opportunity to create an ad product that’s more authentic to their platform and drive a differentiated and potentially long engagement experience.


TOM ROGERS: I’m not convinced that Netflix, at least in the United States, should introduce advertising. Every analyst that showed up on CNBC before their earnings was begging them, “Please do advertising here. We’re going to change our model. We’ll upgrade you. You’ve got to do this.” And then, when the results were so bad and they got hammered, I felt it was “calling an audible” on the analyst call and said, “Yes, we’re considering advertising here.”


But they had such success, really, driving price and there’s no doubt that if you introduce a cheaper advertising theory, you’re going to get a real downgrade in a significant number of subscribers relative to their subscription fees. It also is going to increase the likelihood of churn, which has been enviably low for Netflix because people find a viewing experience with advertising less satisfactory. What happens is it becomes like heroin. Once you start advertising and you have a shortfall, you put more ads in there and you start out saying, “Oh, we (advertise) 30 seconds an hour” and five years later there’s 10 minutes an hour, and it really degrades the viewing experience.


Advertising outside of the U.S. and Europe is really a tough, tough go. I don’t think it really is something that is going to boost their model substantially outside of Western Europe and the U.S. So maybe Western Europe where we’re talking about $90 to $100 monthly cable fees, against that Netflix – at $15 – is still really a hell of a buy to get that level of content.


When you’re talking about Western Europe they may hit a ceiling there, even though they have 75 million homes in Europe, they may hit a ceiling there where introducing a cheaper tier becomes necessary (to achieve) fuller penetration.


MIKE SID: Yeah, for Netflix, and also for the rest of the streamers who are doing hybrid models, that it’s almost an excuse to sell it cheaper here. So, it seems to be able to have a $4.99 or $5.99 tier and make that justifiable.


HOWARD HOMONOFF: Please let us sell you ads.


MIKE SID: Exactly, please let us sell your ads where we can tell the analysts, “Do we have a separate tier?” If it’s a lower one, then maybe we’ll get more people in, but I don’t think it’s particularly satisfying when you’re already paying some money for it to see these additional ads when you could have it fully for free. It’s kind of like if you had the HBO experience in old-fashioned cable TV and there was an added purchase, it just would not be the same.


But I think the purely free, the FAST channels that are out there and they are a different story. Because then you have a complete value exchange where you’re saying, “OK, well it’s 100% free, you have to pay for it somehow, so why not ads? So that has worked out reasonably well, I think much better in the U.S. than any other country.


TOM ROGERS: It’s interesting when you looked at the Google numbers with YouTube, and YouTube really being the dominant advertising force when it comes to video, and in the AVOD world they are clearly the leaders. You have all this talk of HBO Max, of Disney Plus, of Netflix introducing advertising tiers just as YouTube, by virtue of its results, has shown that the advertising market is getting covered now. And so, introducing all that inventory into a tougher advertising market is going to also be something that creates more downward pressure on advertising. I think the downward crasher on AVOD inventory as more and more is introduced in a bad advertising environment might actually force some of that to become far better at targeting in order to drive price.

Will e-commerce be a meaningful contributor to the media industry?


HOWARD HOMONOFF: Tom, you’ll know this well, because I was involved in making deals for interactive television 25 years ago at NBC, it’s always been this promise of – people being familiar with the Jennifer Aniston, you’re watching Friends and you want Jennifer Aniston’s sweater – and you can, on your remote, go buy the sweater. I’m interested in the Cameo perspective, Deb, on what we would now call e-commerce, and maybe even call it “i-commerce” – people buying directly adjacent to content. Where do you see that in terms of your future and the world interacting more easily with video content, and buying from that?


DEB SCHWARTZ: I think a lot of i-commerce has gone in fits and starts over the last couple of years. In theory it sounds great. The marriage of content and commerce – they shouldn’t be “free acquisition channel” on the commerce side. It’s not the greatest customer experience today. We believe in having all the experiences live on a profile page for talent, whereby they’re selling ways for them to interact digitally with fans, merch, business activities, and still having that demand aggregation channel or platform for talent specifically for which they sell directly to the area. We’re seeing much more success in that blending of content and commerce.


TOM ROGERS: I think what’s interesting about what Cameo represents, and the future of advertising and e-commerce, is the greater community influencer marketing. We’re seeing how targeted advertising is moving to influencers who you can develop a different form of targeting. That can also garner a degree of passion in terms of where they’re hanging out that has benefits beyond traditional digital targeting based on other forms of data. I think Cameo – where, obviously, celebrities are the biggest form of influencer – has a way of being able to exploit not only talent personality, but ultimately have a major role in how influencer marketing relates to the celebrity unit.


MIKE SID: I think it’s fantastic how talent creators have really been able to take charge of their own destiny and have their own independent channels. You don’t have to hang onto your agent trying to get you the next gig. Now you’re involved and you have your own audience, if you’re an influencer, you have your YouTube revenue. You have your own sponsor. You have Cameo. You have all of these mechanisms to create “you” and who represent you.


TOM ROGERS: If e-commerce is going to come to television, though, to your point, Howard, that people have been talking about interactive TV and selling things for years, and if it’s going to happen, it’s going to be Amazon. They’ve become the third largest advertising company in the world. They have data and targeting capability beyond anybody else, and to the extent you’re really going to think about how you take that e-commerce engine and combine their advertising capability and their television production capability, you’ve got to think it leads to on demand e-commerce sales in television.

What does the future structure of the media business look like? 


HOWARD HOMONOFF: How do you see the structure of the business changing? We are just after the merger of Warner Bros., WarnerMedia and Discovery. Are we done with those big deals within the media community? And on the other end of the spectrum, we’ve got, in the Roku store, I think 14,000 apps that you can choose from. There are a lot of people putting content out one way or another, which seems difficult to sustain. What do you think about, from an M&A perspective, from a structural perspective, what the industry is going to look like?


TOM ROGERS: Well, people keep doing these major mega-deals with media companies, and there isn’t a great track record that they turn out well. AOL-Time Warner was not a hit, and AT&T-Time Warner was not a hit and Direct TV-AT&T was certainly not a hit. And for Comcast-NBC, Comcast gets the family pressure from investors: “Why are you polluting this great program with this media stuff and the satellite in the UK?” The Viacom-CBS deal, which may be saved Viacom in some ways, has certainly not been a resounding success. Somebody’s going to have to prove one of these things work, I think, before it turns into a blueprint for much further activity along those lines.


MIKE SID: I’m going to agree with some of that, but one other interesting one of course, is that the Amazon and MGM deal has closed. So that’s a very different occurrence, it was single-digit billions in terms of acquisition. But if you look at the rest of the folks still out there, I mean they’re in that price range.


DEB SCHWARTZ: Outside of large-scale mergers like what you’re seeing now is a rationalization on valuations in the last few years. It’s starting to become a lot more rational, over-correcting in some places, and then you have several areas within like the broader ecosystem that are still overcrowded. I would expect to see, where market multiples are now, a greater shift toward consolidation, which I’d be excited about.


HOWARD HOMONOFF: We could talk for about three more hours, from my perspective, but I do want to throw it open. If there’s anybody in the audience here who wants to ask our panelists a question, or throw another topic into the mix that we haven’t talked about, I’m happy to do that. 

Audience question: What does the future of the Metaverse look like?


DEB SCHWARTZ: We at Cameo did our first NFT launch back in February. And we were doing it to learn about the ecosystem. I think the thing that we’re still figuring out is whether or not there’s actual value of this living on the blockchain versus traditional loyalty programs.


MIKE SID: I think we can all agree that in order for the Metaverse to be a commercial success we do need some sort of currency. And that has an antecedent, in the “proto-Metaverses” of the Xbox universe or the Sony PlayStation, especially Xbox universe. Xbox used Xbox money. There was an exchange rate that was posted when you bought things in terms of with Xbox coins. So they did that, I think, 10 years ago. But gaming these virtual experiences – it does seem like this is the Metaverse, right?


TOM ROGERS: Yeah, I would tend to agree with that. I don’t think interactivity in the entertainment world has really been a success anywhere but gaming. And I can see gaming to continue to build on that in more and more immersive experiences into something that, who knows what the business model will be, but as it consumes more and more gamers will become something that can be exploited from a financial point of view. Where interactivity has always had a successful evolution is where it comes to connectivity between people when communications function. And I can see Metaverse experiences, which are intended to enhance connectivity between people - –I can see applications for that outside of media entertainment that have a catalyst for growth.

About the panelists


Tom Rogers, Executive Chairman of Engine Gaming and Media and a CNBC commentator: Tom Rogers is a media/technology executive who has shaped many corners of the communications industry.


Deb Schwartz, Chief Financial Officer, Cameo: Deb is a senior-level financial leader, business builder, published writer, and accomplished public speaker.


Mike Sid, Chief Strategy Officer, Whip Media: Mike Sid is a renowned media expert who has been at the forefront of the most radical changes in the Industry over the last 20 years




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