In Part 1, I laid out a simple framework for thinking about non-rational consumer behavior. Which is my favorite type.
But my key interest is how digital tools are changing consumer behavior. Especially when it comes to Share of the Consumer Mind as a competitive advantage.
And entertainment and video are really the epicenter of that question. Entertainment, video and social media have been changing really quickly. For example:
- Why is social media so much more powerful than traditional television?
- What is TikTok so addictive?
Digital Keeps Transforming Entertainment
Think about all the ways digital has been changing entertainment.
- Dramatically decreased production costs.
- Democratized production
- Platform business models.
- More interactive entertainment. Especially two-way communication between creators and viewers.
- Interest graphs and social graphs replacing top-down programming.
- Machine learning for content matching replacing interest graphs.
- Dopamine hits supplanting story telling.
- Increasing gamification across everything.
- Increasing communities and social behavior.
And now we are looking at virtual and augmented reality. And generative AI as a new form of content creation. It just keeps changing.
5 Video Content Types (i.e., Jobs to Be Done)
When it comes to YouTube and other types of videos, my standard list of content types is:
- Education
- Story telling
- Mindless entertainment. Including things like comedy.
- News / Politics
- Sports
For example, YouTube is very good at education and news but not at story telling. Netflix is good at story-telling and mindless entertainment, but not sports. And all of these can have emotional components. Comedy makes you laugh. Horror makes you scared. The news makes you outraged.
Note: I’m not sure where I got this list. It’s not mine, but I can’t really remember who came up with it.
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Ok. So here are 5 lessons I think about in the history of all this transformation.
Lesson 1: High Frequency Video MTV Was More Powerful Than Long-Form TV Stories
I recently listened to the All-In interview with NYU Stern Professor Jonathan Haidt. He talked about why TikTok and social media are so powerful. And I ended up making lots of notes.
One point he made was how MTV was a real change from traditional television. Because it dramatically increased frequency. MTV, with its 4-minute music videos, was a big change from traditional broadcast television. Which mostly had 30 minute and 60-minute shows.
Later on, comes YouTube, with lots more 4-minute videos. And then TikTok takes this even further by going to 30 second videos.
Frequency matters because it is more engaging. It’s like adding more sugar and caffeine to a drink. It’s just more powerful. The increasing frequency of videos reminds me of the progression from Coca-Cola to Starbucks to Red Bull (each of which had more caffeine and sugar).
Note: Increasing frequency also means better machine learning. And can mean more frequent dopamine hits.
Lesson 2: Digital-First Netflix Crushed Cable TV with Selection, Price, and Convenience
Netflix is mostly about storytelling. Just like cable and broadcast TV. And story telling is pretty powerful. Stories are captivating. They can be inspiring. And they are a form of escapism.
But Netflix is just a much better version of storytelling. Unencumbered by legacy architecture, Netflix re-envisioned tv and movie entertainment using a digital-first business model.
And using digital tools, it optimized for three factors:
- Big selection. Cable television offers 300-400 shows at any one time. Netflix offers thousands.
- Low price. Cable packages in the US averaged $110 per month. Netflix was $10.
- Convenience.
Netflix was a disruptor of cable television that made you follow a programming schedule. You could only watch on your television at home. According to their schedule. With lots of advertisements.
Netflix went for convenience. You could watch whatever shows you wanted, whenever you wanted. And you could watch on any device (phone, television, etc.). Plus, no ads. You can even skip the introductions to shows. They optimized convenience. It was a massive digital upgrade from traditional cable tv.
Lesson 3: Connected and Interactive YouTube Was Bigger and More Powerful than Non-Connected, Passive Videos
Digital tools enabled the bigger selection at Netflix (i.e., bundling). But that was still top-down programming and content production.
The big jump forward was when digital tools enabled the massive connectivity of YouTube. This was arguably the biggest change we have seen in 50 years. Suddenly hundreds of thousands of people could create content – and could be connected to an audience. That’s why I call this platform an “audience builder”. It is still the largest video service on the planet. By a big margin.
It’s also worth point outing that connectivity also enabled more interactive entertainment. Which is very different than passive viewing. The easy version of this is commenting, sharing, and liking.
The more powerful version is live streaming. Live sports has always been recognized as more powerful than recorded videos. It’s more exciting. This also follows from digital connectivity.
Lesson 4: TikTok Replaced Netflix’s Storytelling With “Endless Dopamine”
Enter TikTok, which doesn’t tell stories. It is just rapid-fire videos that are fun to watch. And that trigger dopamine. A big part of the reason TikTok is so addictive is how consumers flip through video after video. It’s like watching gambling addicts keep pulling the lever on the slot machine. Flip to the next video and get your dopamine hit. And dopamine = pleasure.
But TikTok took this even further. Because TikTok is “endless dopamine”. Which is a new thing.
From Professor Haidt’s comments, humans have evolved to seek out dopamine hits. It is a reward system that makes us pursue our evolutionary imperatives. You get dopamine hits when something is about sex (which is reproduction). Or when eating. Or when it’s about gossip. Note: We are strongly wired to want small town gossip (which helped keep us alive).
So, you get dopamine hits (i.e., pleasure) when you do something that is evolutionarily beneficial.
And dopamine is like potato chips. Not only is it good. It also makes you want more. It’s not like you get a dopamine hit and then are done. It’s like potato chips, you always want another. In fact, you start to anticipate your next hit. Your mouth waters as you walk by the store. Having your smartphone next to you will naturally distract you (should I check my email?). Note: I always put my phone in the other room when I am working.
Fortunately, in nature there are limits to this process.
You seek out sex (dopamine hits) and then that need goes away (for a while). You are hungry and then eat and get full. There are external limits on your ever-increasing desire for dopamine. It doesn’t look like an exponential. It looks like a bell curve.
But on TikTok there are no limits. You always want another. And nothing stops you. There are no limiting factors. It is like endless potato chips, where you never get full. I call that “endless dopamine.”
That is my simplistic explanation. Which probably has lots of mistakes. But I find it helpful as a way to think about Netflix vs. TikTok.
Netflix was very powerful in terms of storytelling. Which is great. But TikTok changed the game by providing endless dopamine. And it turns out this is more powerful.
Lesson 5: TikTok’s Machine Learning Matching Was Also a Superior Service for Consumers and Creators
That’s the dopamine lesson. Which is important.
But let’s not overstate that. TikTok is also just a really great product.
Who wouldn’t want to watch the funniest joke in the world today? Or the funniest meme in the world? That’s what TikTok offers.
How about listening to the most popular song right now? Or seeing real time videos from a conflict? Or hearing the most popular take by a commentator?
TikTok truly has amazing content for consumers. It has an unbelievable long tail. And the key to this is machine learning-based matching. It is just really great at showing you videos you will really enjoy.
It is also great for content creators. It is far more democratic than YouTube. Anyone can create content on TikTok. And that means anyone can go for status, which seems to be the most fundamental human desire. We are all “status seeking monkeys”.
And content creators really are the new celebrities of our time. It used to be the Royals. Then it was tv and movie stars. Now it is influencers on YouTube, Instagram and TikTok. It’s the Kardashians and the Hawk Tuah Girl.
In terms of consumer behavior meets digital, my explanation for TikTok is an “increasingly smart machine learning matching plus endless dopamine”. That is a powerful consumer offering.
Final Thought: Rene Girard and the Mysterious Nature of Human Desire
French psychologist Rene Girard came up on the All-In podcast. And he is really interesting in terms of “the psychology of desire”. Another watch to think about consumer behavior meets digital is by “desire”. Why do humans want the things they want?
Girard claimed that human desire functions imitatively. It did not come out of human individuality. Basically, we want what other people want.
I’ve been reading his stuff. My amateurish take is that human desire is appropriated. And this follows from identity formation, the transmission of knowledge and social norms, and material aspirations. All of which are about copying the desires of others who we take, consciously or unconsciously, as models.
Pretty interesting. If you have any good books on this stuff, please let me know.
That’s it for today. Cheers, Jeff
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Related articles:
- How to Think About Web 3.0 Business Models (1 of 2) (Asia Tech Strategy – Daily Article)
- Platform-Protocol Hybrids and Why DeFi is the Center of Web 3.0 (2 of 2) (Asia Tech Strategy – Daily Article)
From the Concept Library, concepts for this article are:
- CA1: Share of Consumer Mind, Share of User Mind
- Video: 5 Content Types
From the Company Library, companies for this article are:
- n/a
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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.
I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.
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