In The Know: July
- Growth Strategy
- Strategic Start-up Engagement
- Delivery Capability
- Accelerator Programme
- New Revenue Line & Venture Building
- Retail industry
- Financial Services
- Travel & Hospitality
What’s fresh and what can I do next?
Our ‘In The Know’ articles keep you up to date with the latest news, trends and happenings in the world of innovation – and tell you what you should do about it. Go on, have a browse.
The attention games
Netflix is venturing into gaming, a move that is hardly surprising given that Netflix CEO Reed Hastings has said before that he believes Fortnite is a much bigger competitor than HBO. And yet the way Netflix goes about it is rather unusual: Netflix subscribers don’t have to pay extra for any gaming experiences, and their primary focus will be on mobile – this is about retention and getting people engaged in a different type of experience. The streaming wars have left their mark on the company and Netflix realises they can’t win on content only.
So what? Netflix is great at understanding what their customers want: they are in a brutal competition for attention and recognize that a younger generation loves gaming more than watching Friends for the 100th time. Meanwhile, they’re in a unique position to create games out of their original content and, beyond that, aim to be a platform for other game developers to give access to a 200m+ audience. But here’s the problem: Netflix itself relies on vertically integrated competitor platforms to access their audience (e.g. Apple TV) and ultimately doesnt control the end-user experience – this could be a problem when you do more than just watching a movie. Meanwhile, their other attention competitor, Fortnite, has just signed their first car partnership with Ferrari, their first non-entertainment brand partnership. Are Netflix competitors already ahead of the game?
It’s a creators world
Facebook plans to pay a total of $1billion to creators who will use their tools and publish original content on their platforms, do livestreams and hit specific milestones. Everyone wants a piece of the creator economy pie: Amazon launched an ecommerce live streaming service last year (an internet version of QVC, a model that is hugely successful in China but remains nascent in the West) and VCs have invested north of $2bn into more than 50 creator economy start ups this year alone.
So what? The creator economy is growing up and slowly starting to consider moving out of their childhood platforms that gave them access to an audience for free. But living rent-free is not enough anymore: they’ll only stay if they’re allowed to set up their own small businesses in their childhood bedrooms. Meanwhile, VCs bet that creators will eventually get their own places, something that just fits better, with more like minded people around (aka let the great unbundling begin). The big winner? Creators who’ll be able to make a living from the content they create, and hosts that give them the capabilities to grow and be themselves. Consumer brands should think about renting out their basements to creators in their space.
TikTok goes the clock
Tiktok’s parent company Bytedance started licensing their AI technology and recommendation algorithms to third parties. Anyone who’s fallen down a TikTok rabbit hole knows how powerful these algorithms have become: after all, they’re trained by 65m users in the US alone and still expected to grow by double digits. The question is: what compromises will you make to keep customers engaged on your platforms and who do you want to empower with your customer data to make that next sale (or get that next view)?
So what? China’s crackdowns on DiDi, Alibaba and Tencent – and Trump’s past efforts to curtail Bytedance – suggest that, while Western companies should stay close to the latest innovation from China, they’re well advised to source their secret sauce elsewhere. The question is where: China is becoming the leading AI nation, with the most funding for AI start ups and more scientists, patents and research coming out of China than the US. Adding a huge domestic market that helps train their superior algorithms and an ‘innovate, than regulate’ mindset, China’s lead in AI will likely grow in the next few years. But if the FANGs start offering their services, that’s no solution either – fortunately, there’s a raft of well-funded start-ups focused on this market!
Of course it’s sustainable…it doesn’t exist!
Digital is the source of fashions sustainability gains – and its woes. On one hand, ultra-fast platforms like Shein are responding to whats happening on TikTok and putting Zaras fast fashion to shame: where Zara drops a mere 24 new collections a year (450 million items), Shein releases a staggering 700-1,000 new styles DAILY. On the other hand, digital fashion (aka outfits that dont exist) is seeing a rise in both traction and funding: DressX a marketplace selling 100% virtual items just raised $2 million, The Fabricant has partnered with Adidas, Buffalo and Tommy Hilfiger, and everyone from Virgil Abloh and D&G to Coca Cola (yes, you read that right) want a piece.
So what? Whilst digital fashion stands in complete opposition to its fast-fashion counterparts, those lauding digital as sustainable should think twice (…at least). The ETH network currently consumes as much energy as Ecuador, and the game engines needing to render 3D designs still guzzle colossal amounts of energy. Whilst there are improvements underway, brands lauding themselves for plugging game-design into their supply chains, or bringing goods on-chain to make them more transparent (or lucrative), should understand that theyre going from red to amber, and theyll be waiting for a while at least before they turn fully green. As well as making the tech more energy-efficient, making fashion sustainable involves thinking more about how often clothes are bought and used, where materials come from, how they’re manufactured and what happens when you don’t wear them anymore. Theres no one-size-fits-all, or plug and play, solution.