Get off the hype train: What TV can learn from Airbnb & Uber

Tech companies often have similar journeys; starting in their early days and years which are characterised by a frenzy of hype, mania and unicorn evaluations. This is then followed by a process of de-hyping, which then can lead to a company being seen at some point as a ‘normal’ business, when the usual rules apply without rose-coloured glasses.

This has been a familiar story over the various stages of the internet revolution - the dot com boom, the rise of social and its associated advertising businesses, all underpinned by seemingly endless amounts of cheap money and a focus on finding that needle in a haystack; an endlessly scalable business that can drive exponential growth from a low cost base. And now again there is a new phase, thanks to the changes still being felt post-pandemic plus of course the increase in the cost of capital.

It has been common to adopt the positioning of being high growth tech companies, rather than being part of an established market with existing business models and economic constraints. As well as deploying these marketing narratives, companies often then deployed similar playbooks; where investment capital was used to offer subsidised services to users, with the goal of undercutting competitors.

WeWork is a well-known example of this strategy, where it was framed as a high growth tech company, a world apart from the mature real estate office leasing sector that critics said in reality was where it was operating. This narrative underpinned valuation multiples that were much higher than those traditionally applied to commercial real estate businesses.

Obviously, in the case of WeWork, things all came tumbling down, however, this journey of hype to de-hype is something that we can see applying to all sorts of other tech companies, and where many go on to be normal, successful mature businesses even after they shed the hyped positioning of their earlier phase. And if you want a rollicking good run through of the WeWork business, then Scott Galloway’s piece below from 2019 certainly delivers:

• WeWTF

Why is this relevant to the TV and content production markets?

Well, I think we are still in the phase of hype for many of the tech companies in the content, monetisation and distribution arenas. And the faster we can de-hype and get to the point of treating these businesses as ‘normal’, the better for all of us in being able to make sensible, and informed decisions about our futures. Indeed, this same rallying cry is appearing elsewhere, where technologists are appealing for AI to be treated as a ‘normal’ technology as quickly as possible.

There are all sorts of instances where normal business rules are being applied to tech companies. To give a few examples:

• Wade Major’s deep dive into Netflix’s financials, where he demonstrates the difference between a higher tech company valuation multiplier versus a traditional studio like Disney

• Ian Whittaker’s questions about the profitability and operating costs of YouTube (and wondering why they aren’t clear in Google’s financial reporting)

• Entertainment Strategy Guy highlighting the costs (and potential ramp up of costs) for AI usage

• ex-CEO of Pact John McVay attempting to stir up a conversation about the future of the TV industry and the business models of the tech platforms

• Arvind Narayanan and Sayash Kapoor’s argument that AI is - and should be treated - as normal technology.

However, at the moment, it feels like these are exceptions rather than the rule. Instead, often conversations about companies, platforms, technology and the future have many of the hallmarks of the hyped framing common to tech discourse, and we are yet to progress along that de-hyping normalisation journey.

As a result, industry discussions can end up dominated by several sentiments, which aren’t helping us achieve clarity or build an informed shared understanding of our market:

• The PR talking points of individual companies or technologies become adopted and disseminated (often probably unwittingly)

• Any question marks or criticism is seen as either Luddism, dinosaurism or the protection of established vested interests (and interestingly this doesn’t apply in reverse despite many people having a lot riding on the success of particular companies or new technologies)

• The highlighting of individual success stories as proof that the new tech company’s model is universally superior

• The focus on vanity metrics over revenues and profitability

• The general sense and foreboding that if you don’t get on the train, then you will be left behind (if you haven’t been already).

And so this post is really about the importance of consciously acknowledging the role of hype and PR, and then collectively pushing ourselves along this process from hype to normality.

Why I think this is so important is that a whole host of companies and individuals - big and small - are making all sorts of decisions about the future, however it often is in a culture steeped in tech disruption and hype narratives.

So read on beyond the paywall where I explain what we can learn from companies like Airbnb and Uber, how to consider YouTube, Netflix and AI within this context of hype, and then outline what is good for YouTube doesn’t necessarily translate to being good for creators or producers…

My logic is that by applying the same level of critical thought to these new technologies, companies and markets that we apply to all the other established entertainment and content businesses, the better decisions we can all make.