I want to start a conversation about Decentralised distribution.
Over the past twelve months there has been an accelerated drift towards decentralised distribution of content.
Traditionally content has been sold in what could be described as digital versions of real-world department stores. E-commerce platforms where you would find content from hundreds, if not thousands of different content suppliers — all searchable and organised by genre and type. This was thought to be the ultimate solution to the consumers desire for choice. For access to the consumers using these platforms, content creators were made to pay in the form of a revenue split, sometimes upward of 30%.
Something has changed. With the arrival of Netflix mapping the way forward and providing overwhelming evidence of the benefit of direct relationships with the consumer, most content companies are now considering how they can execute a strategy to get around the ‘platform’ or ‘e-commerce’ channels that traditionally distributed their content.
In the games industry there are several examples. Activision has moved their main revenue generator, Call of Duty PC version to Battlenet (their own company platform) and away from Steam. Zenimax (Bethesda) also abandoned Steam with their upcoming Fallout 76 release and more famously Fortnite rejecting Google play store as a means of distribution.
The Consumer Doesn’t know the source.
One of the core arguments for the establishment of the mega digital department stores is, or was, that the consumer doesn’t necessarily know who the publisher of the content is and therefore wouldn’t know whose publisher direct store or service to visit. The argument made a lot of sense in that consumer just wants access to all the content in one place so as to save time and be able to easily find what they want — and, discover new product in the process, but tech has evolved……..
Search is more intuitive and better serves consumers
Fast forward twenty three years since we first marvelled over the choices that Amazon provides and searching for content has never been easier. Search engines have such deep access to mountains of data about each and every one of us and consequently our individual content preferences. We are far more likely to find what we want or need on a Google search than via a recommendation post in an Amazon store. These results are good now but only going to get better at delivering more exact matches and intuitively experimenting with different genres and suggestions to satisfy even the most independently minded searchers.
When it comes to content distribution, the elephant in the room is the old retail margin model. Content owners over the years have had to share their margins, often large chunks upwards of 30% or more. The justification for this margin had been the cost of the platform, promoting discovery and having the access to users.
But as the search engines became more and more attuned to the likes and dislikes of users the discovery process has shifted from the portals and mega stores to the engines themselves. Clawing back that 30% margin from the platforms was now just one click away. What was considered retail margin is now often better spent with Google and — Google provides more control on conversion and return on investment.
Cost of Distribution
Moore’s law dictates this point. Building distribution platforms are far more accessible to content creators than ever before and each year it gets cheaper.
Own your own consumers
Why not own the relationship with the consumer? Allowing a third party to dictate discovery and promotional offers is no longer desirable for content owners. Through owning the direct relationship with consumers, content creators enjoy higher margin integrity, and dictate their own relationship terms.
Distribution channels have to create content
Distribution channels already see this transition taking place and as a matter of survival are moving toward the creation of content to build value into their relationships with customers. Amazon and Netflix’s move into the content space is well known and documented and clearly a reaction to the changing expectations of the consumer. More will follow.
More often means less
With more content at your fingertips then at any time in history, the multi brand destination is becoming clogged and overwhelmed with consumer choices — often having the opposite effect than intended. Discovery is the largest problem that content makers will now face, and content providers have learnt that outsourcing the discovery process to a channel partner is unreliable and downright inefficient. Its far more efficient and verifiable to conduct that acquisition directly. Performance related acquisition is far more effective at drilling down to prospective customers.
For Developers and content providers, the tools for decentralised distribution and customer acquisition that provides standards and rules that enable cross platform and new platform distribution are lacking for smaller independent content developers. DRM (Digital Rights Management) solutions for decentralised distribution still have some way to go and therefore often seen as a barrier to entry.
For Consumers, decentralised distribution will mean a deeper and more satisfying relationship with the content consumed. However, from the consumer side there is still a desire to organise their content consumption into a form of digital library. Therefore, there is a need to be able to organise decentralised content sources into a single console type application. Whether it’s through widgets on consoles or simple ways of organising links and accesses — a solution is very close.
What’s the timeline?
Decentralised applications like Blockchain are purpose built for the management of stored value assets such as intellectual property and no doubt will have a significant role in the management of IP in a decentralised distribution network. The individual parts are all in place now, we have yet to see anyone map them together in a way that create a complete ecosystem to support decentralised distribution and content consumption.
These are simply related thoughts on the subject, and does not constitute the promotion of any type of solution to delivering a new type of Decentralised distribution concept. I believe there is some merit in the discussion it in more depth — perhaps in coming blog posts.
Really like to hear your thoughts on this.