1. Microvideo Apps Keep Raking It In
Jeffrey Katzenberg was onto something with Quibi. He just made one huge mistake. The key to success with snackable vertical videos (microvideos) is not to engage top tier talent to create high quality shows. The trick, it seems, is to do the exact opposite.
That is the lesson from ReelShort, the most successful of the enormously successful slew of very short form video apps that are making their mark on the industry and making their Chinese founders as wealthy as many of their typical characters.
To say that the shows on ReelShort are bad would be a massive understatement.
Imagine a Saturday Night Live sketch about a bad telenovela. Now imagine dialing that up to 11.
But that is, at some level, the point.
These micro videos, known in Chinese as duanjus, are aimed at very specific audiences—Millennial women appear to be the sweet spot, and the goal is to get them to move from being “minnows” (light users) or “dolphins” (medium users) to “whales” or heavy users.
Why?
Because the average whale can spend somewhere close to $80/month on the service.
Take that Netflix.
Why It Matters
ReelShort was first launched in 2022 by Crazy Maple Studios, a California-based subsidiary of Beijing-based COL. (COL owns a 49% share.)
It has been on or near the iOS App Store’s top 10 list for entertainment for most of that period, from late 2023 on.
It has launched a slew of competitors too, such as DramaBox, ShortTV, GoodShort and DramaWave, all also fully or partially owned by Chinese companies.
The Chinese Connection
So let’s address that part first: the Chinese connection happened because duanjus have been popular in China for the past 20+ years and the companies were looking to expand their appeal.
It also happened because the Chinese government was cracking down on the companies domestically, claiming large chunks of their catalog was too racy. This is, of course, not an issue in the West.
At least not yet.
Landing The $80/month Whales
ReelShort and the other duanju purveyors also have a fascinating business model.
They use an extremely aggressive freemium model that is based on getting viewers hooked on a series for free and then cutting them off right after a cliffhanger or other significant moment. The shows are shot as movies and then chopped into one- to three-minute clips that play seamlessly, one after the other. (Versus traditional TV series, where each episode has a distinct beginning and ending.)
The payment system is complicated. You can buy coins that you can use to redeem for content. Agree to watch non-skippable ads. Or pay for a weekly or monthly all access pass.
Some of the content is interactive and certain choices (usually the more prurient ones) have charges as well.
The goal of the app is to encourage viewers to become the sort of “whales” who spend upwards of $80 each month on the content.
This is not that hard to achieve given the pricing model: viewers can pay $20/week for the right to view unlimited content. Coin packages are available too, but in fairly sizable sums, such as $11.58 for 1000 coins or $57.28 for 5000 coins. A purchase of $14.99 for 1500 coins is estimated to unlock roughly 60 episodes, or somewhere between one and three hours of viewing.
So it’s easy to see how that all adds up quickly, especially since these are in-app purchases, designed to be made in the moment when the user desperately wants to find out what happens next.
Millennials, Not Zoomers
One of the more surprising things about ReelShort and similar sites is who the audience is: it is not Gen Alpha or Z. Millennials actually make up the bulk of the audience, and as such ads are targeted to women in the 25-44 age demo.
Women, because some stats have the female/male split at around 70/30, others at 60/40—either way, the app skews female, in marked contrast to TikTok, which is evenly split, with some studies showing a very slight male skew.
Hence all the female-oriented advertising.
What You Need To Do About It
If you are the television industry writ large, you need to understand what this is and figure out how you can capitalize on it.
One easy trick is to take your reality TV series—Real Housewives, Love Island et al—and offer them up this way as apps. Maybe you don’t charge, maybe you just get an email and/or make them watch ads.
That’s step one.
Step two is to study why this works and figure out how you can make it work for you in the Global South, where few consumers will have the means to afford a monthly subscription, but will likely be willing to pay on a per-show or per-episode basis, especially if you start them off on some free-with-ads episodes.
Step three is to realize that AI can already write scripts like this. They’re that artless. So prepare yourself for a slew of imitators and competitors, each aimed at another niche segment of the market.
This is where we will first see AI-generated actors too. The audience is not that demanding.
Step four is to revisit Quibi, or the idea behind Quibi anyway, and see if there’s not a market for slightly better quality.
There may not be, but it’s worth checking out.
2. Chat Stumbles And People Notice
Last week, my friend Evan Shapiro posted a story about his travails with ChatGPT, specifically about ChatGPT lying to him about mistakes it had made.
This resonated deeply because I had a similar experience with Chat lying and it made me sad because I thought we’d gotten to the point where Chat could be trusted for basic tasks like summarizing articles or investigating which airlines offered direct flights from Barcelona to London.
Scrolling through various GPT-related subreddits, I learned that MapMan and I were not the only ones having issues, that there was a general belief that Chat had backslid tremendously in the past few months, that it was making errors on basic tasks far more frequently, lying about them and just not being as useful as it had been earlier this year.
Why It Matters
We hear a lot about how AI will be able to do all sorts of media industry related things that humans now do, from writing scripts to writing ads to making programmatic buys.
And yet every time the various GPTs start fucking up like this, people are far less prone to take their hands off the wheels and trust them.
Or, as a Gartner executive noted in a recent Economist article, AI may be falling into what his firm calls the “Trough of Disillusionment” — a key part of the hype cycle for any new technology.
The Economist reports too that many big firms are pulling back from their AI investments as they are not seeing the adoption or the payoffs. At least not yet.
All of which is to say that the reports of our demise may be greatly exaggerated.
Or at least the part where humans feel comfortable taking their hands off the wheel and letting AI drive.
What You Need To Do About It
If you write about the industry in any way, shape or form, you need to realize that it is the job of all the people loudly boosting AI to loudly boost AI. That there’s a lot it can do, but a lot it can’t and the hype cycle is massive.
To wit, while it failed at summarizing a pretty basic (but very long) article for me, it did figure out that the reason my remote garage door opener no longer worked is that one of the sensors was knocked out of place, and lo and behold, once I discovered that said sensors actually existed and restored the left side one to its rightful place, the door began to work again, thus saving me from having to call in a repair person.
But that's pretty much a party trick. The real magic is for it to do business-related tasks that people used to do without any supervision and right now it looks like we are a ways away from there.
So take heart.
You’re not being replaced. At least not yet.
If you’re Sam Altman or a Sam Altman wannabe, remember that every time Chat messes up, it becomes that much harder to convince people to even consider taking their hands off the wheel.
That makes widespread adoption that much tougher and slows down your timeline way more than people saying “thank you.”
Alan Wolk is co-founder and lead analyst at the consulting firm TV[R]EV. He is the author of the best-selling industry primer, Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry. Wolk frequently speaks about changes in the television industry, both at conferences and to anyone who’ll listen.
Week in Review is an opinion column. It does not necessarily represent the opinions of StreamTV Insider.