What Most People Get Wrong: Streaming
Our Interview with Narendra Nag, CEO, Laminar Global
Welcome to the first edition of a new series we are tentatively calling “What Most People Get Wrong”. We will be interviewing experts in their field with the goal of answering a few core questions: What do most people get wrong about your area of expertise? Why?
Our first guest on What Most People Get Wrong is Narendra Nag, Co-founder and CEO of Laminar Global. Laminar is a no-code video streaming infrastructure platform that helps media companies stream their exclusive content to millions of users. Laminar is also a portfolio company of ours at Garuda (you can read more about our investment here). We connected with Naren to ask a seemingly simple question: what do most people get wrong about streaming?
With streaming services globally currently surpassing 1 billion subscribers and with over 500 million more new subscribers expected by 2026, streaming video is a pretty well-known category without much more innovation to come, right? Think again. As Naren explains, we are only just entering the golden age of streaming, particularly now that the extensive technical and logistical challenges to ensure a high-quality streaming experience for users can be overcome. As Nielsen’s Gauge Report for February shared, TV audiences are preferring streaming platforms to traditional TV. Our streaming future has finally arrived.
Tell us a bit about yourself.
I belong to that first generation of Indian kids who saw TV grow from one channel to many. My life was transformed by computers (and later the internet). I was in the ninth grade when an older cousin came to visit us from Seattle. He told me to learn how to code. So, I found a local “computer center” and learnt how to code … first in C, and then later in Assembly and XBase languages. I ended up working after school for that computer center as a lab assistant and a software developer.
After spending high-school glued to an old CRT monitor, I ended up dropping out of college out of sheer boredom and because the Internet had arrived and I could make money building websites (in classic ASP and dynamic HTML!)
I always saw coding as a way to craft experiences and tell stories.
So, perhaps there was a grand design at work that made me join a newspaper after the dot-com bubble burst. I did well as a journalist in print and TV, working for the India affiliates of CNN and the Wall Street Journal.
I could also see the coming death of the business of journalism as the internet exploded. Nine years in, I decided to quit and start up a digital agency which was acqui-hired a few years later by a Publicis Groupe agency. I spent the next six years building digital-first teams, bouncing around the world, and learning how to sell to and service high-value customers.
My work at Publicis with the Gates Foundation led to a gig with a Norwegian consulting firm that was paid to think about a future where businesses were very different from where they were.
That got me thinking about the media, audiences, data, and distribution. Over drinks with old friends in multiple countries, we decided to take the plunge into streaming, and there’s been no looking back.
What do most people get wrong about streaming?
Streaming is much bigger than most people think and only going to grow from here.
Most people understandably think that streaming is a known and well-trodden category with a few major players, your Netflix, Amazon, Hulu, HBO, that dominate the industry. The big players are just a few of THOUSANDS of streaming platforms available to global audiences.
However, what most don’t realize is that an existential shift is taking place in the industry.
It’s similar to the automobile industry where it’s gasoline powered heart is being replaced by an electric one. But, when Tesla sold its first Roadster in 2008, it took a combination of time and technological development for other competing automobile companies to start rolling out their own EVs. Now, over ten years later, EVs are becoming increasingly commonplace.
Compare that to the shift in the media from cable to streaming.
Before Covid hit, there were a few major streaming services. Now there are more than three and a half thousand in Europe alone according to the EU. What people don’t get is the why behind the seismic shift happening behind the scenes.
The lifeblood of the media flowed through cable. And now it’s fighting its way over a very crowded internet.
Why do most people get that wrong? Why the shift?
The media’s business models were all built on distribution via cable. And this model worked well. Content rights owners get a flat fee and a share of cable revenue from distributors in each market where they became available. Some large rights owners eventually became distributors in key markets. And some even have their own terrestrial channels. The real risk of generating revenue sat with the distributor (“Can I get enough homes to pay for premium cable packages?”)
With distribution shifting to the internet, everything changes. Who makes money, how they make money, and what rules they have to follow to make money is no longer as simple. And guess what? All the millions of dollars invested in buying technology to run their existing businesses are now unusable. Just like the captive audiences that previously subscribed to cable are unusable. There is real competition, not just from other streaming companies, but also from the likes of YouTube, TikTok, and social media more generally. Now, unlike before, each channel / content service, has to win its audiences every day if it’s a pure AVOD service (Advertising-Based Video on Demand), or every month/year depending on what kind of subscription they’ve managed to get users to buy.
Where does the industry look go over the next 5-10 years?
The simple truth of the matter is that the media is being disintermediated. The rent-seekers are being pushed out, and the folks who deliver true value will make more money than ever before. The new world’s business model is ruled by one metric: Average Revenue Per User (ARPU).
And capturing an increasingly savvy user will require an ability to deliver a best in class experience, with sophisticated levers to play with in order to capture as much revenue per user as possible. Netflix has skewed people’s imaginations of this model by offering a pricing system that's a little too simple. In comparison, Hulu has a full pricing page - using their model, we can dive into how rich and varied the ARPU landscape can be. Hulu uses 30+ levers to go after every dollar out there.
For media companies to survive and thrive, their content will need global CDN infrastructure, region-specific compliance, subscription plan, tax, payments management, and more. They will need to handle AVOD models, subscription, live TV and more. And the technology exists to do this - we happen to be building a lot of it at Laminar. So we envision a world with the mega players capturing meaningful market share, but also thousands if not tens of thousands of other streaming platforms with millions of users each, generating hundreds of millions in revenue, competing for audience attention due to the quality of the content, not because they have forced users to pay for a subscription they don’t want or need.
What is needed to make that vision a reality?
A lot of players in the space are (still) solving for bandwidth scarcity. I think that is solving yesterday's problem today. Instead, the media companies and their infrastructure providers need to solve for capturing, growing and retaining attention. It just so happens that we have architected our systems from the ground up to enable this. Building a data first platform with a special focus on audience segmentation and it’s universal applicability, both on and off platform, is going to be critical going forward.
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