Hey folks! Welcome back to Edition #48 of The SEG3 Report!

Today’s piece looks at why legacy media businesses like Channel 4 are seeing success in shifting their content to Youtube, Meta’s $50m bet to try and incentivise creators to build on Horizon & Aston Villa’s digital collectibles launch alongside Socios.

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Right, let’s dive in…

Contents: Edition #48

• How Channel 4 are Growing Revenues & Audience through Youtube

• Meta announces $50m Creator Fund for Horizon

• Aston Villa & Socios launch digital collectibles to celebrate 150th anniversary

How Channel 4 are Growing Revenues & Audience through Youtube

Hollywood studios and TV networks alike are increasingly embracing YouTube as a platform for long-form content, fuelling the platforms growth as the most-watched streaming service on TVs in the U.S.

Companies like ITV, Fremantle, Warner Bros. Discovery, Nickelodeon & Channel 4 (who we’ll mostly focus on today) are all uploading full-length episodes and producing original content for the platform.

Why You Should Care

TL;DR: There’s a lot of talk about attention spans. Channel 4, with their Fast Forward strategy, are proving it’s more about accessibility, and that by changing the delivery mechanism, their content can and is still resonating with youth audiences. With today's audience so fragmented, giving older content from the library a new lease of life (that are free from rights agreements) or producing new content for channels like Youtube that have eyeballs is a smart way to get more mileage out of your content, grow your audience and unlock new advertising revenue.

In full: Is it TV vs Youtube, or TV + Youtube? Will one cannibalise the other, or can they work in harmony?

For Channel 4, and a swathe of other broadcasters & production companies, like ITV & Fremantle, they’ve doubled down on the combination of the two.

Channel 4, who moved towards their Fast Forward strategy in 2024, are repurposing their business for today’s world by focusing on three key pillars:

• Digital Growth & Transformation i.e. shifting investment & production to suit streaming & social
  

• Diversifying New Businesses i.e. owning more IP and growing subscription services like Channel4+
  

• Restructuring for Digital i.e. closing linear channels that no longer made commercial sense

And the shift towards social is paying off.

• More than 2.3 billion views across its social output in 2024 (up 5.5% year on year)
  

• Views of full episodes on Youtube up 169% year-on-year
  

• Channel 4.0, their digital-first youth brand that focuses on original content, growing almost 100% year on year.

So the pivot is working, but what’s the driver?

It’s all about diversification and future-proofing.

The consumption habits of Millennials downwards have immeasurably changed.

And with Gen Z being the first generation to grow up in the social era, and it being all that Gen A have ever known, utilising the large social video platforms to distribute your content and find new audiences will be essential for long-term success.

But finding new channels to increase distribution has been a mainstay for media for many a year - so what are the real changes for the likes of Channel 4?

I think it boils down to two themes; content production & financing, and new revenue models.

Content Production & Financing

As above, Channel 4 have begun restructuring for digital, closing down some of their linear channels, and reallocating budgets to produce more social-first original content that they can own the IP to.

Moving to producing original content on Youtube likely requires collaboration with new creators, producers and brands that are native to the space, which can help to make the content more suited to the platform, whilst working with talent who have their own communities can also give new programs a boost from the start.

An interesting consideration here is around the financing & IP ownership. Many platforms, such as Tubi, have launched initiatives like Stubios, where they are aiming to uncover new content by financing creatives to produce for their platform. Media businesses, given their production capabilities, could almost certainly have a similar approach to social video platforms, which would allow them to:

1. Increase the relevance of the content/formats they produce for the social platforms

2. Increase the amount of content they can produce

3. Maintain ownership of the IP to these shows

IP ownership can be a complicated topic, but Simon Pulman of Pryor Cashman does a great job on breaking down ownership of IP in entertainment.

The TL;DR - ownership of the IP sits with the financier.

So whilst broadcasters have the opportunity to work with a variety of new stakeholders to develop new concepts for social, old school rules still apply in some sense, where they’ll need to finance the production to ensure they have ownership and can capture the full commercial value.

Which brings me onto the next point:

New Revenue Models

Most media businesses are secure with their commercial models around cable, broadcast & streaming - but social platforms offer a new way of monetising, which is generally around sharing ad revenue.

This means that legacy media businesses must be comfortable with foregoing licensing & audience revenue, which is new, unchartered territory.

However, given the monumental shifts we’re seeing in audience consumption habits, it feels essential that legacy media businesses are hedging their bets to try and find new commercial & distribution models so that if/when cable and broadcast revenues drop below sustainable levels, these other avenues can pick up the slack.

The other side to the commercial conversation is acquisition; using social platforms as a way to build fandom around your content, and then upselling them to subscribe to other paid offerings, like Channel 4+. 

It is certainly a balancing act, and perfecting what the proposition is that makes it attractive to audiences will be trial and error, but with creators producing content for free on a daily basis, it is imperative that legacy media businesses are visible and showcasing their content credentials on social as a way to hook audiences and drive them into their funnel.

Closing thoughts: Sacha Khari, Channel 4’s head of digital commissioning, said:

And within those 2 years, they’re now reportedly generating 8 figures from their publishing across Youtube and other social channels, which is certainly not an inconsequential number for any business.

It shows that big change can be made in a short amount of time, and should be a case study for other media businesses of how to future-proof your business and content for the next-generation of fans.

Meta announces $50m Creator Fund for Horizon

Meta has announced a $50 million Creator Fund to support developers building for Meta Horizon Worlds on mobile and mixed reality platforms. Alongside this, Meta has released advanced tools, including the Meta Horizon Worlds desktop editor, now in early access, to streamline the development process for creators.

Why you should care?

TL;DR: The new fund has a focus on mobile, which is smart. Meta has invested heavily in VR, but the uptake of headsets, like Meta Quest, is still fairly low across the globe. The shift to mobile, and the improvement of the tools that the desktop editor offers to creators could help to broaden their ecosystem. Creators will be rewarded based on players time spent in their games/experiences, retention of those players and in-world purchases. It remains to be seen whether they can retain developers and audiences after the fund dries up.

In full: Are incentives the way for Meta to build more of an active developer community for Horizon?

They’ll be hoping so.

To date, Meta’s Horizon Worlds has been somewhat struggling to gain traction despite their enormous investment into the platform, with an independent Youtuber finding only 900 daily users in 2023.

Other UGC platforms have built creator funds and incentives for developers (like Roblox’s, which we covered in Edition #2), and have seen success, but there is certainly more interest, and ease of access for players, to UGC games than Meta’s Horizon.

So can the Creator Fund help change course for Horizon?

There are a few positive signals, like:

• A focus on mobile
  
  The reality is that headsets are just not gaining traction as quickly as the big tech giants would like. It is likely a mixture of inhibitive costs (like Apple’s Vision Pro) combined with a general distaste from consumers to wear clunky hardware to access experiences.
  
  The focus on mobile would give the experiences far more accessibility, and would present a more attractive proposition for developers to potentially engage with Meta’s ecosystem.

• Improved creator tooling
  
  The desktop editor has got an upgrade, now supporting mobile optimisation tools & GenAI tools to help speed up development.

For successful developers, they will be paying out bonuses from the Creator Fund to games that have high time spent, retain players and encourage in-world purchases.

But is it enough of an incentive to warrant developers time?

I’m skeptical.

Despite the huge numbers across the Meta ecosystem (namely Facebook), the numbers just don’t seem to stack up for the Horizon ecosystem as of yet.

But the focus on mobile content is certainly a step in the right direction - it offers more accessibility for users, and I’m of the opinion that the use of AR for example to help enhance physical experiences is where we’re likely to see the most uptake from mainstream consumers for the foreseeable future.

Closing thoughts: The fund is likely to provide a short-term uptick in developer interest, as well as consumer engagement through mobile, but the proof in the pudding will be whether either of these communities stick around once the incentives dry out.

Aston Villa & Socios launch digital collectibles to celebrate 150th anniversary

Aston Villa have introduced AV150 Digital Collectibles as part of their 150th-anniversary celebrations alongside their crypto partner, Socios. Fans can obtain the collectibles by purchasing matchday programmes, which include a QR code to redeem the collectible for that specific game.

19 collectibles are available in total, with 14 available now and 5 remaining between now (24th February) and 31st May at every home game. Redemption of the collectible also gives fans the chance to win prizes such as training ground experiences, signed shirts, Champions League tickets & more.

Why you should care

TL;DR: Fans are rewarded with a digital collectible for a purchase of a matchday programme. There are 19 available, with the remaining 5 to be drip-fed over Aston Villa’s remaining home games of the season to try to prolong the engagement.

In full: Aston Villa & Socios have been partnered since 2021, where they introduced a fan token - but since then, there hasn’t been too much activity.

That was until this latest launch, which offers 19 exclusive digital collectibles for fans to redeem for Aston Villa’s 150th anniversary.

The free collectibles strategy has been one that many football clubs have followed to try and onboard their fanbases, with the intention of offering paid collectibles later down the line.

The one thing to highlight from this launch that is slightly different is that the onboarding mechanism is via QR code in the matchday program, so although the collectibles are free, they’re indirectly monetising through fans purchasing the program to get access (although I assume it is a small percentage who are purchasing solely to get the collectible).

Away from the potential commercial benefit, there is perhaps a more interesting behavioural and data play which POAPs/collectibles can offer, which we covered more in Edition #45.

Closing thoughts: Despite having 100+ partners, Socios and many of their partner clubs have found themselves unable (or unwilling) to activate the partnership in a big way over the past few years as they navigated a combination of fan pushback and regulatory uncertainty, so it’ll be interesting to see how this is received, and whether a similar strategy will be rolled out across the rest of their portfolio.

In other news this week…

• MrBeast loses ‘tens of millions’ on Amazon’s ‘Beast Games’: read here.

• Niantic reportedly close to selling Pokemon GO to Scopely for $3.5 billion: read here.

• Manchester City announce Publicis Sapient as ‘Digital Business Transformation’ partner: read here.

• Lewis Hamilton becomes lululemon ambassador: read here.

• PSG launches PSG Labs, an innovation hub: read here.

• PGA Tour to debut at Cosm: read here.

• Pokemon launches collection of Romago watches: read here.

• Teenage Mutant Ninja Turtles come to Call of Duty: read here.

• CM acquires GUTS Tickets: read here.

• Yuga Labs & MSquared break world record for largest online shooter battle: read here.

• New Avatar: The Last Airbender animated series greenlit: read here.

• DoorDash & Twitch team up for ‘Battle of the Brands’ on Fortnite: read here.

• Paramount launch Spongebob Tower Defence on Roblox: see here.

• IOC announces TCL as Top Partner through to Brisbane 2032: read here.

• IOC also announced ABinBev as Top Partner through to Brisbane 2032: read here.

• Disney & Crocs partner up for Monsters Inc line: read here.

Working on anything cool, or have a press release you would like us to cover? Send it in for the chance for it to be covered in next week’s edition!

That’s all for now folks - thanks again for reading the latest edition of The SEG3 Report and we’ll see you next Tuesday for more on the intersection of culture & emerging technology!