Media News 2/24/17

Photoillustration of a hand holding a phone with Media News on it.

This is part of a series of briefings made internally by our staff researcher Dakota Sky Bloom and released on our blog.

Theme: The Trough of Disillusionment is a bad place to be.

If you are unfamiliar with the phrase, it is part of Gartner’s classic hype cycle. After an innovation is announced and the hype around the idea/technology/business reaches its initial peak, it usually falls as the innovation is not quite as cool or advanced as the hype made it out to be. That fall in enthusiasm is the Trough of Disillusionment. The following three entries are hitting that phase right now.

VR

Gabe Newell, who as founder of Valve runs both one of the VR industry’s largest stores and is a major player in developing new VR/AR technology, has a lot of stake in VR/AR’s success. He spent more time covering shortcomings in the industry than trumpeting successes.

His main points were:

  • Only 30 VR games on the Steam VR Store (again, the largest store for VR content) have made more than $250K in sales.
  • The visual standards are, in his opinion, not so far above current TV offerings to entice most consumers to invest in new systems and integrate those into their media diet, and VR might not be good enough for a few more years.
  • Because there are not enough customers for VR right now

Valve is still committed to virtual reality – they have three games in development for VR – but Gabe Newell is asking for more time. To get the hardware right, to get the consumers trained, to get the price down. Other companies’ have decided against doing so – Best Buy is closing down its Oculus demo stations for lack of consumer interest, after all. How long it remains in the trough is anyone’s guess, but when a dominant player in a market is bearish, I would pay attention.

Messaging Bots

Facebook has decided to scale back its ambitions in the messaging AI bot space after learning its bots had a 70% failure rate. Failure rate means that the bots could only 30% of problems without human help. As a result, Facebook will limit how many tasks it will train the Messenger bots to do. Messaging has been important over the last few years and will remain so even if more complex machine learning driven bots have troubles. The upshot is that there shouldn’t be quite the rush to more complicated messaging ideas quite yet, especially for content companies.

For example, PersonaBots.com created a Christian Grey Messenger bot to sext with in order to promote Fifty Shades Darker; it has limitations around understanding words like “no” (according to some users). As a result, the bot tends to fail as people react negatively to its sexualized content. That might be a problem for a franchise that has had past controversies around consent.

Snapchat

In the light of Facebook’s rampant copying of features from Snapchat, the climate around the latter’s IPO has grown noticeably chilly. One interesting thing to come out of Snap’s IPO filing is that Snap may have misrepresented the rate of decline of TV. While it is true TV is in a decline, Snap only used numbers from watching on a traditional TV set. It did not include “VOD, video game consoles, over-the-top devices, on laptops, desktops, tablets and other mobile devices if they are not attached to television sets”.  With that taken into account, the amount of television content is probably close to flat. That is also interesting – if Snap is hoping TV ad dollars will flow to them as traditional TV declines, they would do well to remember that Facebook and YouTube are working on their own OTT services. Given that there appears to be a somewhat direct replacement of traditional TV with other TV-like digital services, and the fact that it has a much less capable ad platform, Snapchat doesn’t appear to be in a very strong position to capture those TV ad dollars.

As another jab, a Harvard Business Review paper on Snap’s strategy also notes that if it tries to become a “camera”/product company (as it says in its IPO filing) it will never achieve its potential as a Facebook rival. Overall, Snapchat is definitely in the trough of disillusionment.

Other News

Facebook’s Latest Targets

Facebook is marching on – as soon as another company has an idea, Facebook always seems to bring out a matching one. This week it announced it will livestream MLB games, which might take the wind out of Twitter’s sails. The length of sports content might help condition users to spend more time on Facebook products, which is crucial because of Facebook’s stated goals of encouraging longer forms of content (and the ad revenue that brings).

Facebook has also added a Snapchat-like Status function to WhatsApp, one of its other popular messaging apps. This might help curtail Snapchat’s ability to expand in countries like India, where WhatsApp has 200 million users.

Wikipedia Bot Edit Wars

A last, quick one. Wikipedia has poorly written and uncontrolled bots operating under the radar, fighting long campaigns of editing and reverting its pages. The article goes into how the bots interact in ways their creators never foresaw, cause long term changes in the World’s Encyclopedia, and behave differently in different cultures. German bots are the politest, for instance, while Filipino bots are the most aggressive. These unintended consequences are a good example of what will happen once bots are refined and more broadly available.