One Touch Intelligence’s new podcast series focuses on innovation in the video, broadband, and wireless industries, with some of the more video-centric conversations featured here in partnership with StreamTV Insider.
In the third episode of OTIcast, OTI SVP & Lead Analyst Michael Grebb interviews Needham & Co. Senior Media Analyst Laura Martin about whether content or technology will rule the media ecosystem in the coming years – and what the ultimate outcome will mean for streamers and studios as they navigate an increasingly chaotic media ecosystem.
Meanwhile, advances in artificial intelligence could shift the very nature of how people consume content. Is even Apple’s mighty iPhone at risk?
Watch the full interview here and check out an edited Q&A transcript excerpt from the conversation below. Want to check out previous OTIcasts? Find them here.
Q&A: A Conversation with Needham & Co.’s LM
Michael Grebb
What’s the biggest threat to media companies today?
Laura Martin
The biggest threat, I think, is whether this notion that we have that content is king is wrong. I think it might be that the tech stack is king, or technology is king as evidenced by Internet distribution. So distribution is basically a tech backbone globally. And now we're getting generative AI. So, the question is whether tech is going to rush forward and whether tech is actually king of the land, and content takes a backseat to that. I think that's the biggest question facing the industry today.
MG
What do you think the answer is? What's your hunch?
LM
I think it might be tech. I mean, content matters as storytelling, but to the extent generative AI gets better and better, it's sort of mirroring emotions already. They're doing research showing that if someone's suicidal, it's better to allow an agentic AI to deal with that person…which means we’re getting to the point where they’re so well trained on the right words and formulas depending on the person’s response, that the agentic AI comes back and says something more soothing that saves their life more often. That’s a high-stakes situation. That implies that we're going to get to that point in storytelling, eventually, which is a more complicated, long-form version than just Q&A with someone on the phone.
MG
Do you mean customized video that's going to understand people's emotions and actually be able to create the video and the content that fits them-
LM
Maybe, and I'm thinking three to five years. I am not thinking a year. I think this is the biggest question Wall Street is dealing with when we think about forward year cash flows. You know, what’s the interaction between content is king - which has been a long assumption… is that changing? If not, no problem. Then everything's valued properly. But if that's changing and it's moving to something else, we need to be careful because that means these stocks are overvalued.
MG
What about content spending? Everyone has generally brought it down a bit except for Netflix. Do you see that continuing or is it leveling off? And is there too much content?
LM
Yes, we're at peak content. I would expect to see content come down. As an industry overall, I would expect content spending to fall five percent a year… in part because we're getting more and more back-office stuff done by generative AI tools, or AI tools. So that will be spending as part of that, the back office and the infrastructure as part of the spending budget.
MG
Will AI enable the same amount of content more cheaply or just result in less content being produced?
LM
I think it might be more content made more cheaply, actually. Maybe not long-form originally; maybe it's going to be three minutes, five minutes, but if you and I think that consumer time is what's valuable, then user-generated content has to enter into our conversation. And the minute you talk about that, a lot of these user-generated content people… are going to use generative AI to… increase their ability to come to market with new content.
MG
If you look three to five years out, what do you think is going to be the biggest thing that will surprise people about how things shake out with these big media companies?
LM
What I'm most excited about when I think of a five-year frame is what's happening today in 2025… $313 billion this year [to be spent collectively by Amazon, Google, Microsoft and Meta] on generative AI backbone. Next year, I'm going to say the same. So, we're going to spend a trillion dollars in America on something that basically sets up a backbone layer, because none of this is consumer facing. It is enterprise facing. And then what happens next, let's say a year from now, is that kids start dropping out of Harvard and creating the next Google search or Facebook or TikTok.
So, the Apple iPhone is in threat of being replaced because Apple charges 30 percent of revenue share on its device. Every other competitor wants that revenue stream, and they want to displace the smartphone. So, Meta and Google have said, we think it's glasses. We think you're going to talk to your glasses, but that means we're no more apps. We're not doing apps anymore.
After we have this backbone layer [that] will charge 10 percent… and we completely retool the American economy, basically put Google search out of business, which is already happening. We put Meta out of business. We all get a whole new layer in five years of how we go through the world, and it will be more efficient, and it will be 30 percent lower costs. And then we take over the world because Europe is not allowing LLMs to come into Europe… Today, America is five percent of the global population and 25 percent of GDP. I think post-generative AI revolution it will be five percent of the world's population and 30 percent of GDP at a lower cost… so higher returns on capital. I'm so excited about what comes next.
Michael Grebb is Senior Vice President and Lead Analyst for One Touch Intelligence, which provides market intelligence and industry analysis services for leading companies in the media and telecommunications space.
The OTIcast podcast is a complimentary service offering industry professionals insights and context around developments in the digital media sphere and may sometimes feature companies that are also One Touch Intelligence clients. If you are a media or telecommunications company with an innovation story that you’d like to share, please reach out to us at [email protected]
The contents of OTIcast and excerpted Q&A do not necessarily represent the opinions of StreamTV Insider.