Welcome to the Monetization Show podcast, where we talk to the greatest minds in media, tech, and telecommunications. This show explores strategies and lessons for driving profitable growth with direct-to-consumer business models. I’m your host, Vijay Sajja, founder and CEO of AirVirgent. My goal is to bring you specific and proven strategies straight from industry layers that will help you solve your greatest challenges at the intersection of direct-to-consumer business models, evolving user preferences, market and competitive pressures. Welcome. Today, I’m delighted to welcome Simon Crownshaw, Worldwide Lead for media and entertainment at Microsoft. He has 20 years of experience in the media industry. He has led technical strategies at Walt Disney Company, and he’s now driving AI and cloud innovation at Microsoft. He’s at the forefront of using cutting-edge technologies to reshape content creation to distribution, the whole flow. So welcome, Simon, and maybe you can share a bit about your background to the audience here.
Thanks Vijay. It’s great to be with you. I think these are always really fun and fascinating conversations and I appreciate the very kind introduction. Yeah, so after the last four years of leading the M&E vertical inside Microsoft, and you’re exactly right, it really is a very interesting vertical because everyone talks about media and entertainment. What does that really mean? It’s advertising, studios work, broadcasting, publishing to some degree, and all the other elements in between. And there is really no one size fits all. And I think, you know, the topic of our conversation around monetization, a huge element for the industry overall in terms of the lifeblood of where that needs to help the industry survive and thrive to some degree. And so from my perspective, having all of the years of experience at the Walt Disney Company and seeing that firsthand has been really helpful, but now steering the ship at Microsoft in terms of how do we support those organizations, those customers and the industry in this space is fascinating. And you’re exactly right. The world has changed a lot in the last two years, especially with the AI really becoming front and center.
Thank you. Thank you. And we both met and we started working together in helping a joint customer, NBA. Let me start with the topic of plan engagement and content personalization. So the importance of both of those areas in terms of using AI and data analytics to transform and helping these services grow. So maybe you can comment on some of the strategies we have seen board and also the importance of these two areas.
Well, you’re exactly right. I think it’s a credit to both our organizations for the work that we did around the MBA. I think just looking at the progress that they’ve made across their platform over the past two years has been phenomenal. The sheer number of views, clicks, number of hours that are spent on the platform has been phenomenal. And really seeing three, four, five times the amount of engagement that they had seen previously. We shouldn’t be short-sighted enough to say that all the credit goes to Microsoft and Evergent. I think the MBA team did an amazing amount of work too. They have a great culture of innovation over there. But I think together we inspired some amazing innovation that really came together, which is to think about the importance of understanding the data behind the way the fan engages. What do they want to see? How do they want to see it? The implementation of vertical video on a phone, for example, and understanding the algorithms that provide the right content at the right time, meaning that they’re always there getting what they want to see. And I think it’s providing those users with something that they were not getting prior to that service. And I think whether it’s the Microsoft infrastructure or the Evergent model engine, which helps kind of understand the user and where they should be providing the right services or products to them, I think we can say that it’s been a phenomenal success. And it is a testament to how important the data is behind the scenes at those streaming platforms and organizations.
Yeah, I know you’re absolutely right. The team there, NBA team, is phenomenal. The transformation they did, first they saw the need for the transformation to bring growth into their business. As we both know that it’s a worldwide service, not just US. 180 countries, billions of users across the globe, two-thirds of them outside the US. And what they’ve done is pretty phenomenal in terms of really knowing the user, their favorite team, what their preferences are, and user experience, like you mentioned, based on the phone track, based on the device. And really, they accomplished what they wanted to accomplish in terms of really growing the business. You know, I think the first year, they didn’t want to give it that much significant growth they’ve experienced. So in terms of using AI and cloud data analytics, so we both know the importance of that. And is there any particular strategy that you recall that they employed? That really helped to bring growth?
That’s a good question. I think it was not one strategy. It was many. I think one was probably aggregating the data differently than they’d ever done before. Obviously, many organizations that you and I both work for have to think about how we aggregate the data that’s coming in from multiple sources. I was really impressed by the work that we did with them to bring it into one place so they can really understand from one environment. Enriching that with potentially first and third party data where they had it to understand in a different way. Helping them define the product set and the solutions and capabilities that the application would actually even have to support what people are asking for. Short form clips, longer clips, finding content. A lot of the applications that we have seen when we were working on that, it was just hard to find content. It was hard. And I wouldn’t get that personalized feed that I was asking for. So understanding and tailoring that content specifically to a user, you, me, or anybody else was always really fundamental because the minute you get something wrong, they leave the platform, they go somewhere else. But the goal really was to keep those people on the platform as long as they possibly could. Stickiness to some degree. And I think they deployed a strategy of leveraging the data in real time, augmenting it with their own data from the games themselves. The metadata became incredibly important. Actually, to be honest, what I would say is that even on the subscriber side, understanding where they were, what they were getting, the performance of the application, because it’s everything. It’s all the things you don’t see that make those things really run. And I think what they can say is that they really provide that personalized experience. And then there’s another strategy, which I would say they’re also getting towards, which is I don’t like to use the word gamification anymore. I think it’s been overused, but I would say that when I play and I watch, I’m exponentially more valuable to any streaming platform, whatever as a customer. And what I’m seeing is that they’re able to involve and infused the ability for people to interact, not just watch. And that also is a huge strategy for them and interacting in a different way, using some of the AI features that we’ve now bought to the application, where you can ask questions, pull up clips, customize the content that you see in a way that you couldn’t before taking sir to the next level. So those are things that I personally seen and I’ve been impressed by the way that they continue to innovate.
Yeah, I agree. Recently, I have seen, or you probably saw the same thing too, is really the push to path to profitability. Everybody is talking about building a sustainable business. So in your view, what distinguishes successful media companies? Maximize ROI. So really on the tech investments. And then maybe a general comment on this push to profitability and some of the best practices you’ve seen.
I think it is really the quintessential question of our time in this space. I think monetization and profitability really are the lifebloods of where we land. The industry itself is worth about $3 trillion. You compare that to financial services, which is in the north of $100 trillion. It’s sort of enormous in size, but profitability does really matter. And I think in some cases, I look at what I’ve seen across industry and profitability hasn’t been top of mind. It’s been there, but it’s what I would classify the last five years to some degree as I’m winning it. I’m going to win it. But that winning at all costs has not led to profitability. It’s led to massive costs. Streaming platforms haven’t been profitable and so on. I’m going to attribute that to a couple of things. One, media companies’ inability to play offense. They are straddled with legacy technology or, hey, I’ve acquired this company, but I’ve never fully merged them into my organization. So therefore, I’ve got duplicate processes all over the place. It’s hard for me to streamline those. Even with the cloud, it was hard, BJ, to really rationalize. I had to keep the lights on for everything else that I was already running. You add in a streaming platform over the top and all of a sudden, I’ve got to make that run and then I’ve got to monetize that on top of that. And so therefore, my agile system that I might have had is no longer agile. And now I have to figure that out. And so from a path to profitability perspective, look, there’s obviously a couple of things. There’s differentiating technology, cloud, AI, others to automate, to duplicate processes, to understand my data better. What decisions am I going to be making? What platforms should I be building and which regions should they be in? Can I use different processes to take costs out wherever I can? Localization of content, for example, where I might have had to pay small vendors to do it. Now, can I just use different services because AI has got so much better? And how am I thinking about running my ad platform, for example? What does that look like? And how am I making sure that I’m serving the inventory that I’m creating in the right way and really getting the biggest bang for my buck in terms of where those things go? But what I’m seeing is a tech intensity that needs to exist. A fundamental look at the ecosystem of which I’m delivering my content and making sure that I’m looking at the pipeline in the right way to understand where I can take costs out and make it more efficient. How do I bring the right content to the screen at the right time? Personalizing that so people want to stay, making my platform incredibly valuable. And then I would say the last shift that I’m also seeing towards profitability is the realization that content needs to be connected to commerce at some point. Retail media. How do I sell more? On my platform, making sure that I’m connecting those pieces together, because those are real value drivers. And they can connect to a park, to a restaurant, to a store, whatever else it might be. And it gives me an additional value driver. Look at what organizations, Vijay, are doing around new business models for expand. They’re using those new business models. You can look at Disney and the work they do with cruise ships or maybe some of the stuff they’re doing around next generation experience with the gaming, for example. But those new business models are being leveraged to showcase how it could be done differently with a different tech intensity. As an example.
That’s a great point. So really, what you’re bringing up is leveraging their offline assets. How do you combine them to reduce churn, create more value for the consumer, frankly? And we are seeing some of that with the work we are doing with the new service that’s launched in New York, Gotham. It’s a combination of the MSG and Yes Network, and they have stadiums. How do you bring this concept of a membership concept? So once you become a member, you have access to these various products and services, and you get benefit from being a member. And some of these media companies, actually many of them, for them going direct to consumer is new, like streaming. And they have never done it before. Do you think that led to some of their initially, hey, growth at all costs, and now they are rethinking, hey, are we doing the right thing in terms of… How much of that do you think played into how they got started and where they are now?
Well, to go back to what you’re saying about membership, I also think that kind of feeds into loyalty, because we as humans and community love to be loyal to certain things. But if you think about the true nature of where media is going, the one thing that’s really been lost is the concept of community. And so talk about being a member. Why would I want to be part of something? They want to be members. They want to be part of something. So that is really a key point. I think talking about all of those organizations that have ventured into streaming without limited experience, whatever. I do think it is a little bit of like, I can’t be left behind. And maybe being sold things by vendors or others that didn’t really have the experience to deliver what they wanted to. And now you find it’s really hard to unravel where those things need to go, because there are what I would say is fast channels, for example. Those are really easy to monetize, also really easy to automate in terms of the content that’s there. So what I’m seeing is that the issues or the technical infrastructure. Well, the processes that were developed over the past five years have now led to best practices that for those that might have waited can really take advantage. And for those that have got very cumbersome tech stacks, now very difficult to innovate in the way they would like and to move things around. So I think what we’re seeing is a time where all of the things that we have learned over the past five years are now coming to a fore. And we’re going to see faster innovation changes in terms of where we’re going and the ability to monetize differently across all of those different elements is going to be better, in my opinion.
Yeah, makes sense. And paraphrase what you’re saying is really like, okay, they did what they did. Some of it out of necessity. Lots of lessons learned. There is a better path forward. So there’s a scope for innovation and it’s all good is what I’m hearing. So the next topic is a lot of these companies, they’ve made huge investments. They continue to make huge investments in technology. They often have the dialogue of how much do I want to build and how much do I want to buy? And it’s an age-old dilemma. And how should they be thinking about this whole build versus buy concept? And maybe we tie that into the need for partnerships, et cetera. But maybe let’s focus on the dynamic of build versus buy and how that’s evolving.
Yeah, I mean, maybe it’s even good to pose back to you a little bit. You’re working day in and day out with customers too. And you probably hear directly from customers in terms of what does it mean? And there’s many factors to consider. I’d love to get your perspective too. Like I almost put you on the front line in terms of, hey, I want to take your product, but I don’t have anyone to maintain it. Or I’ve got a team that wants to customize over here, but how do I deal with that long term? I almost want to react to what you’ve got to say. What are you seeing in this space around build versus buy? Because I think you’ve got some fascinating pieces to share.
Yeah, I think what we have seen is that we have several customers that initially run on the build. For various reasons, they started to go in the direction of build. For example, Sony is an example we have in India. Great customer. Some of them, they thought it was just a hobby. And this was, I’m talking 11, 10 years ago. They thought, okay, it’s a hobby. We have this big broadcast business. They’re second largest broadcaster in India. And then they started to piece together and launch something. And then they realized, man, this is serious business. Users are actually coming and watching this thing. And they’re increasing hundreds of thousands and millions. We need partners. And so they came to us and we migrated them off of their homegrown system. In our particular area, identity and product catalog and monetization billing. And then since then, they have grown 30x since that time. So they beat Netflix in terms of paying subscribers in India. So one reason why they went to the build direction was they didn’t even know how big this would be. I call it not planning for success because it’s such a new area.
To complement what you just said in terms of the build versus buy and what you’re seeing and almost plan for success to some degree, I think from a Microsoft perspective, the SaaS model works really well for all of the partners that we work with, primarily because to build over time, unless you’ve got an amazing technical staff, you can do all the integrations, you can handle all the complexity. It’s very difficult to maintain that. And I think taking advantage of the innovation that the partners bring is really key. It goes to another part that people have their pipelines, their workflows, all of these different things, and they’re hard to change. And so the partner piece becomes so crucial. And the partner ecosystem, so media and entertainment specifically, is always very fragmented. There’s millions of partners. From the tiny little thing to the large distribution network, everything across the board. So it’s everywhere. But to me, what I’m seeing now is, you know, it’s certainly a buy mentality in terms of what’s there. I want to buy from a marketplace. I want to have that software as a service. I want to make sure that I can use that in the right way. I will take advantage of that scale. Hey, I see Avergent’s got the latest tools from Azure OpenAI. I can leverage those as part of my workflow. And it’s native to that process. That is the key part that I am seeing. Because by partnering with the best, I get to take advantage of the technical development and innovation that only they would focus on their business, not the other way around.
Now, that’s a great point that a company like ours, a product cloud-based platform that’s working with customers across the globe, we bring all of that experience and benefit of innovation, and we’re only focused in this area. And we recently started working with another customer, again, global service, and they actually went much farther along in terms of the in-house build. And really, they can never come to a pure player company that’s focusing in this area and then working with multiple customers. All that innovation happens. We have been fortunate with initial success in Latin America, Asia, Europe, and US, for the last market we entered. The benefit we bring to the people, to our customers, is that in a lot of these countries, the business models vary. When you’re helping customers grow their service, nobody would even think about a one-day subscription, or a nine-day subscription, or a one-week subscription from the years, and things like that, and innovation. So that’s how we share with our prospect.
Yeah, it makes perfect sense because, inside even Microsoft, when we have those conversations, it’s like, well, media in the US is nowhere near the same as it is in Asia. The customers are different, the technology is different, even the partners are different in terms of what works over there. And you’re exactly right. No one would consider a one or three-day subscription in the US, but that is the norm for people who want to pay as you go for certain subscriptions and other things in those places, and it’s just a different model. And that’s what I said earlier in the conversation. There is really no one size that fits all, right? It’s a very interesting model. You could almost say the media is different, Vijay, to some degree. Media is just different in some ways, but it’s just the way it goes.
I think we talked enough about build versus buy. And the next topic is really about partnerships. How media companies can leverage partnerships with technology companies or even companies coming together as partners in solving a problem, difficult problem for the industry. Maybe you can comment on what you’re seeing in the industry today and the importance for a lot of these companies that are launching the direct-to-consumer streaming services.
Yeah, I think the partnerships that we see, and obviously we probably see more than most, just being one of the largest companies in the world and the questions that we get, obviously leveraging our technology could be to streamline operations, understanding to what we talked about earlier, personalizing user experiences and data, new revenue streams, maybe even improving scalability to some degree. Those are the kind of key elements we see from a partnership perspective. How do we help our customers grow and do things they’ve never done? And so what I’m seeing, especially now, is like the AI-powered automation that we can bring, which might be operational efficiency and cost optimization, leveraging the cloud, or even maybe even simulating the cloud with some of our HCI Azure Stack Edge technology, where going all in on the cloud is hard. You can do it at the edge is another way to do it. And we talk about data and the partnerships that we can bring. But again, some of that is also around predictive analytics, optimizing schedules and waste. And how do we do those things and to streamline those examples? Monetization, of course, is critical integrating e-commerce platforms to enable shovel content and seamless merchandising. But overall, I think what I’m seeing when I think about the role that we play in partnerships and stitching different things together, is that scalable infrastructure and global reach. So for those streaming platforms that don’t necessarily have the scale infrastructure that they need or the global reach that they would like to have, how do they expand their business and the business models to do more? And I think what they really want is also security and compliance. Making sure that they’re there. And so in the same way that we just talked about why build versus buy, I think there’s also elements of why you partner with a large tech company or how we put all these different partners together, because you can really faster innovation through those partnerships. And you can do things you couldn’t necessarily do and take advantage of the scale that they have to make it even go faster. And I’ll say one other thing. On the Microsoft side, we don’t really compete with any of those platforms. We don’t have a competing platform. So we’re very neutral in terms of how we do it. And we like to think about ourselves in that way. And I think that’s another important part, too. We don’t compete with their business models. So I don’t know if you have any thoughts for that, because I’d be interested in your perspective, too. I think you see a lot of it as well in your position.
Yeah, yeah. No, I think it’s definitely the distinction you just made. That’s an important one. As their business is being disrupted, some of the tech platforms also have direct-to-consumer services. And definitely people are paying attention to those aspects as well. As a company, we partner with several video platform providers. And the way we think about these partnerships is that by working together with some of the best players in the industry, having some of the pre-integrations done, it really helps them with speed to market. And as they’re thinking about launching a service, look, we are already integrated with these partners. And we integrate with many of the leading platforms. So the partnerships there, in our case… …can help them with speed to market. And also when they want to make changes to the service, whether it is significant or insignificant. Since we already have relationships with a lot of these companies, we can figure out a way much quicker. This is how you can do this change. And so that’s, again, our customers also appreciate the partnerships. And in the work we are doing, that MBA is a good example. You and US and MediaKind together.
Yeah, that density, Vijay, of all those customers coming together. It helps to find product roadmaps and integrations in a way that would not be possible if you were just to do it by yourself. It’s just kind of game changing. I look at the stuff that we’re working on with the MBA as well. It’s a good use case and reference in terms of even the work that Microsoft is today doing around Copilot, for example, and how to figure out how to use which models or what service and how do we define that. And to your point, they want you to figure out those things for them. Like, hey, you’ve already done the pre-integrations with Azure, for example. Or you’ve already figured out which model you’re going to deploy over here to Copilot, for example. Those things are key. And I think that sometimes gets lost on the efficiency that can be gained just through that kind of partnership.
And so the AI, AI is everywhere. Everybody’s talking about AI. How much of it is hype and how our customers should think about it? So some of them are actually asking some of these things out loud. Hey, how much is this hype and how much of it is real? How the industry should be thinking about AI? And maybe you can talk to some of the leading companies around the globe. What are your thoughts on this?
Having spent the last two years really working with customers hand in hand and also giving thought leadership discussions about how to leverage generative AI, my take would be it’s not hype. I think it is the greatest force multiplier we’ve ever had at our fingertips, whether it’s enabling us to do new automation, new personal productivity, the ability to launch new products and services, different ways to have customer engagements. I think we’ve never had anything quite like this, right? I think it may be different for every organization that’s working through it, whether it’s cost savings or time in having AI without human interaction. So the humans that have to be at the center of this whole thing and dictating how we can do it. But it’s almost like having the best agent or assistant that you’ve ever had to do things you couldn’t do. And we’re seeing it deployed right from really crazy use cases like text to video or video to video, but translations or editorial or A B testing. Understanding. Data better than we’ve ever done. And so figuring out those things. And to me, we’re still early. It’s still maturing in terms of what’s there. I think the number of models that are coming out now, even on our platform is significant. And I think the models themselves, Vijay, will become commodities down the road. I think what we’re going to see is that the things around the models and the AI will be the most impactful thing that we’re going to see. How do we make those things really come to life and really get the benefit of those workflows? So obviously there’s always a little bit of hype with all of these new things that come through. I think we’re in a different phase now where we’re seeing actual outcomes and results with those AI components. And I think we’re going to see the real benefits gained in terms of the things we couldn’t do before that we can do now. But also done. I think you would agree with this in a very responsible way. And if I could share one other thing with the listeners, which is it’s going to come back to data. It really is the importance of data, customer data, first-party data, IP based data. How do you use that? With the models, keeping it secure and safe in your own environment to make sure that it’s enriched. But I think that data will become the lifeblood more so than I’ve asked me. Because if I say one thing in our industry, media and entertainment, it was not looked after very well for a very long period of time. And now organizations are realizing the importance of their data, what it means and how they’re going to leverage it against the AI world that we’re now in.
Yeah, no, I completely agree with you that fundamentally it’s not hype. It’s this time around, it’s real. It’s going to change. It creates new opportunities. And the way we are approaching this is really think about real world business use cases where we can actually use it to solve a business problem, to generate more revenue or in some cases actually prevent revenue from leaking out, et cetera. I do agree that data is the key. And even combining the data that’s siloed in these organizations into different places and even again, partnerships make a lot of sense here too. For example, we partnered with the video technology company. We have a lot of data on the user. They have a lot of data on the consumption side and like on the streaming side. And there’s a hiccup on how do you combine that to bring some prediction and taking some proactive steps to create value for the consumer. So I think I agree fundamentally it’s different and you use the word using it responsibly it’s really to me, that means that, hey, let’s pick some real world use cases and bring business value to our customer. So yeah, I think with that, thank you so much for being part of this Monetization Show, Simon and any final words for the listeners?
I think it’s going to be a really interesting year ahead. I think we’re going to see a lot more acceleration. And I think platforms like yourselves, all the great work that you’ve done, I think will continue to be at the bleeding edge of all of the great work around monetization and continue to be really impactful and effective in terms of driving that for customers. I think from a Microsoft standpoint, we love to partner. And I think that’s really what I would share is that the amazing partnerships that organizations like ours can do together is phenomenal. And they’re going to only be more needed.
Yeah, absolutely. I look forward to helping more customers together in the coming years.
Yeah, that’d be great.
Thank you. Thank you for tuning into the Monetization Show. I hope you found today’s episode insightful and that it inspired you with ideas that could power your next big move. If you would like to share your thoughts or questions about the ideas we discussed today, do drop a comment on LinkedIn or wherever you found us on social media. Until next time, this is Vijay Sajja wishing you continued success in your monetization journey.