It was a headline-grabbing year for technology, from massive IPO failures, congressional testimony on data privacy and ad practices to the much-anticipated streaming wars. Many of these issues as well as unrealistic business practices set the stage for 2020 and the wave of disruption that’s likely to shakeup technology, media and advertising.
Here are my four predictions for what the year has in store for the tech:
1. Netflix will become ad-supported
If you happen to follow my good friend Rich Greenfield from LightShed Partners on Twitter, you likely already know how we joke on this topic - where my belief is that every company that is reaching tens of millions of people will inevitably get into the $600B advertising business, including Netflix.
A lot has been written about this: Disney+ and Amazon are getting stronger, offering loads of quality content that only make it harder for Netflix to keep its subscribers.
Disney is offering a bundle package of it’s streaming services - Disney+, Hulu and ESPN+ for $12.99 and will include the standard ad-supported tier of Hulu. Amazon, already the third-largest advertising company in America with $18B in revenue, has a major advantage with Prime, a service now being used by more than 100M people.
There is a good chance Disney and Amazon are already in most of our homes in some capacity and they will continue to use advertising as a strong bridge to further penetrate into our lives.
As successful as Netflix is, they’re facing a whole new type of competition on all fronts, from the quality of original content, distribution and price. While Netflix says they won’t go the advertising route, I think it is their destiny. And, with their reach, data, technology capabilities and opportunity to reach users, and TV advertising being such a successful vehicle for advertisers, I predict they will become one of the largest advertising companies in the world, and they will never turn back.
2. Apple will have its first failure with iTunes on other (non-Apple) TVs
Apple’s success rests in the hands of the well-respected and visionary Eddy Cue’s ability to make Apple a services company, across music, payments, health, and content. But to succeed in a services strategy, Apple must become ubiquitous and offer it's content/services everywhere, which is something the company has not done successfully to date. As an example, can Apple truly succeed in partnering with Samsung, delivering content through iTunes? I remind you that Spotify’s app on Apple Watch is still just a remote to your phone, but not a standalone app like it is on any other smartwatch. Apple’s biggest conflict is bringing all the magic we all love to use in the Apple kingdom -- outside of their walls -- by partnering with others.
Can Apple partner? 2020 will be the year we’ll need to either see Apple evolve into a whole new company, culturally, under Eddy’s leadership, or fail in this new world-of-services we’re all heading towards.
3. Human (not AI) review of content will lead to a resurgence of truth. More quality is coming
In the wake of fake news, deep fakes and the blurred line between facts and opinions, we’re going to see technology companies going old school. Side-by-side with AI initiatives, they’ll make huge investments in human-driven resources to build ethical practices and policies to better society. It’s going to be our responsibility given how huge of a problem this is, and even the best of AI will never have a gut feeling, suspecting something that looks ok is wrong - where people would. At the same time, we’ll continue to see media companies getting out of categories that are just too explosive and problematic, similar to Twitter banning all political ads.
We’ll see a resurgence of truth and quality online as a result. For those who interact with users online in any way shape or form, it’ll be just as normal to have a human curation team on your staff as it is to have a coffee machine in your kitchen. This “return to humanity” will rebuild trust in the media and support journalism moving forward.
4. Advertising will be driven by real ROI, and loyalty - not growth at all costs
For a while now, investors have prioritized growth over revenue. Recent major hiccups in the public markets signal these days are coming to an end.
The “growth at all costs” mindset is out. Sustainable, profitable, long-term growth is cool again.
For advertising, this means smarter spending. Companies won’t be able to afford unsustainable and inflated Customer Acquisition Costs (CAC).
In the past, growth was all that mattered, so some companies spent more than they could afford or actually made, even when including the lifetime value of the acquisition they’ve made. Now, we’ll see a newfound focus on profitability and ROI.
This will also result in a new KPI of loyalty. CAC’s are rising and strategies like customer retention will grow in importance to make up for rising costs and reinforce a focus on ROI.
Looking ahead, it’s likely to be a year of recalibration across technology, media and advertising. We’ll see course-correcting in 2020, taking a step back from excessive reliance on AI and a short-sighted “growth at all costs” mindset. The emergence of an unexpected new set of companies with advertising ambitions may cause an industry shakeup as well.