Interview, Fireside Chat, Conference Presentation
a16z Podcast | Verizon Plus AOL -- Why? -- The Short Answer is Mobile
- Mobile video is identified as the primary driver for future tech M&A, justified by projections that millennials spend approximately five hours daily on mobile devices, leading to a gradual disappearance of traditional cable bundles and the unbundling of sports and premium content like HBO.
- Verizon is predicted to shift from a "Dumb Pipe" utility to a content and value-layered entity, potentially overpaying for acquisitions but maintaining strategic alignment to leverage carrier-based user tracking and link phone activity with iPad usage in a landscape where many devices block cookies.
- The industry faces a transformative shift akin to the 1995 digital disruption, where Google and Facebook build internet access while Verizon moves into content and TV, forcing competitors to abandon traditional "lanes" and engage in "musical chairs" to avoid being outflanked.
- Funding and production models are expected to evolve from massive studio efforts to crowdsourced financing by "1,000 fans" and independent showrunners producing content for AOL and Verizon distribution, disrupting the established value chain.
- Regulatory pressures, including the potential banning of net neutrality, may lead carriers to seek workarounds such as zero-rating AOL content or waiving data caps to bypass restrictions and create synergistic interactions between networks and monetization.
- Ad tech M&A waves are projected to follow a sequence of display, social, and mobile, with the current focus shifting to mobile tracking, attribution, and programmatic ad services after previous mobile ad models failed to fully realize ads as a dominant monetization model.
- Competitive dynamics are expected to intensify with ongoing strategic meetings among Verizon's rivals to secure positions in a new environment, while major corporations may initially ignore the venture capital sector until peers cross over or industry "tsunamis" force immediate action.
- The prevailing business model is predicted to transition from the Microsoft core competency approach to an Apple-style model where companies own diverse assets, resulting in intense battles over who funds content, facilitates discovery, and determines consumption devices.
- A "McKinsey PowerPoint" utilizing terms like synergy and programmatic advertising is anticipated to be deployed to rationalize deals, even if the acquisition seems surprising or low on a pre-analysis priority list.
- Regulatory concerns regarding company size required to avoid major oversight and the potential for "massive battles" over content funding and device consumption mirror historical industry shifts, suggesting no entity will remain in its traditional lane.