New media platforms are enabling a new creator type: Digitally Native Vertical Creators
One year ago this month, Hollywood was counting their box office tally for the all important summer movie season that contributes nearly 40% of domestic theatrical revenue. The results for the summer of 2019 were exciting: US moviegoers spent $4.86 billion, which effectively tied the all time summer box office record of $4.87 billion set in 2013. That was thanks in large part to a little flick you may have heard of called Avengers: Endgame that eventually went on to become the most successful movie of all time. The theatrical movie business was booming.
This month, that same accounting exercise is a far different picture for Hollywood as Covid-19 has grounded the theatrical movie business to a screeching halt. The entire 2020 summer movie season — 4 full months — has brought in a meager $12 million in total revenue, or only 0.2% of last year’s take. It took Avengers: Endgame just over 1 hour of ticket presales to exceed that mark. The box office has been so bad this year that a 29 minute movie called Unsubscribe, shot entirely on Zoom, topped the charts the week of June 10th with a $25k gross. We are witnessing the most dramatic collapse ever for theatrical Hollywood, due to the Covid-19 crisis.
But there’s another story happening within the media industry at the same time. This year, Netflix added an all time record number of new subscribers in Q1 (16 million), and then posted all time record revenues in Q2 ($6.1 billion). Disney+ crossed 60 million subscribers in August, 4 full years faster than original industry forecasts. TV viewing has grown 12% this year, which will be the first time TV viewership has grown year-over-year since 2012. The live online streaming market grew 45% in Q2, and is up 100% year-over-year. We are witnessing the most dramatic acceleration ever for overall media consumption, due to the Covid-19 crisis.
Covid-19 taketh, but it also giveth. The pandemic isn’t so much ruining the media industry as it is rewriting the media industry. While there will be many media casualties like the theatrical business, there will also be many media successes born during Covid-19 times. The question now is which is which?
Digitally Native Vertical Creators
Over the past decade, a disruptive trend in retail has been the rise of Digitally Native Vertical Brands (or DNVBs), a term coined by Bonobos founder Andy Dunn to describe a new breed of retail companies born on the Internet, that design, manufacture, market, and sell products directly to customers. Bonobos is a DNVB, as are well known brands like Allbirds, Casper, Dollar Shave Club, Glossier, Warby Parker, and more who are all successfully competing against traditional retail brands with 10x the tenure and 100x the employees. How can DNVBs execute on all parts of the product lifecycle — from product production to discovery to monetization to most importantly customer engagement — with a fraction of the personnel and resources as their legacy competitors? Because other companies have signed up to do that work for them.
There are now dozens of technology companies creating enabling platforms that give DNVBs access to capabilities that traditional retail brands had to previously build on their own. For example, a DNVB like Public Rec can execute on product production without having to hire in house resources by using supply chain platforms like Anvyl. Same is true on executing on product discovery without a marketing agency through Google, and executing on product sales and transactions through Shopify. By using this new class of enabling platforms, Public Rec is free to focus on what matters most: constantly engaging with their customers.
Returning back to the media industry, the exact same phenomenon is happening here. A new class of content creators has emerged that is writing, recording, filming, and producing incredibly unique and compelling media and then connecting directly to audiences to showcase and sell their creative products. I call them Digitally Native Vertical Creators or DNVCs. And just like their retail DNVB counterparts, DNVCs are also building off a new wave of technology platforms that have democratized access to capabilities across the entire media product lifecycle for this new breed of content creators.
To run a creative business today, Digitally Native Vertical Creators (or DNVCs) have to manage far fewer things than traditional media creators of yesteryear because they can turn to a variety of enabling platforms to do those things for them. Composition and editing platforms like Adobe Creative Cloud enable media production, video hosting platforms like YouTube enable media discovery, and transaction platforms like Patreon enable media monetization. DNVCs then get to spend far more time focusing on engaging with their customers and building long term, direct relationships with that audience because of these enabling media platforms.
I first wrote about the DNVC trend last year in the context of YouTube creators who are building diversified media empires with hundreds of hours of content, sponsorship deals, and merchandise lines all run by tiny teams, because so much work could be offloaded to enabling platforms. Since then, the DNVC landscape has grown well beyond YouTube to all media types including music, gaming, education, publishing, and more because of all the supporting services to make creating a DNVC easier than ever. No matter what content type you want to create, there’s an enabling media platform to help you become a DNVC for that format.
DNVC in Covid-19 times
So what’s changed for DNVCs in Covid-19 times? To understand Covid-19’s effect on the DNVC market, we can simply look at the performance of the underlying enabling platforms that have made the DNVC movement possible in the first place. Courtesy of Second Measure, I’ve pulled historical revenue data through July for the most popular enabling discovery and monetization platforms that DNVCs are using across various categories:
- Substack, a platform for Writers to enable subscription newsletters
- Outschool, a marketplace for Educators to enable teaching online classes
- Bandcamp, a platform for Musicians to enable music and merchandise sales
- Twitch, a streaming platform for Gamers and other creators to enable live broadcasts
- Cameo, a marketplace for Celebrities and Influencers to enable selling personalized messages
- Patreon, a platform for YouTubers and other creators to enable selling exclusive content
- Gumroad, a platform for creators to enable selling digital products
Across all these DNVC enabling platforms and the different media categories they serve, the impact from Covid-19 is identical: eye popping inflection in their business at the exact same moment.
Covid-19 social distancing has created the perfect conditions for DNVCs: disruption of the traditional media product lifecycle (like studio production and theater distribution) combined with a massive increase in consumer demand for content. In response to these conditions, creators have launched new DNVCs in record numbers as being digitally native is the only way to create, distribute, and sell media now. And since DNVCs are built on enabling platforms, all of the above companies benefited with explosive revenue increases. For DNVCs and their enabling platforms, Covid-19 clearly giveth.
The meteoric growth of DNVC enabling platforms in Covid-19 times is clear, even despite some dips on a few platforms from May and June heights. I attribute these more to seasonal factors (ex. the start of summer) as the Covid-19 tailwinds for DNVCs still very much remain: theatrical movie releases continue to be delayed (Tenet) or canceled entirely (Mulan), concerts and other live shows are not happening, neither are schools and instructional classes. While Covid-19 is around, the best way for creators to reach audiences is online and direct, or in other words as a DNVC.
But what happens post Covid-19? Will the DNVC momentum continue? I’m reminded of back in 2009 when I was at Hulu and we ran our first Super Bowl ad which aired in the 4th quarter. We weren’t sure what the impact would be but no one expected this: traffic immediately spiked and maxed out our network switch which couldn’t handle the deluge of connections. Literally millions of people took a break from watching the Super Bowl to open Hulu.com in real time. That traffic surge died down, but the next day we found overall traffic 25% higher, and that bump remained consistent from that point forward. The Super Bowl ad threw us to a new plateau.
I believe the same thing will happen with DNVCs. Covid-19 has lifted the entire DNVC market at a rate that’s unsustainable. But when Covid-19 restrictions are finally lifted, the entire ecosystem will move forward from a new level. We’re already seeing signs of new levels when looking at the below iOS download data courtesy of App Annie that I pulled for Cameo and Bandcamp, which are two enabling platforms that Second Measure showed declining revenue for from their Covid-19 peaks.
For both Cameo and Bandcamp, iOS downloads aren’t necessarily declining in August, but rather settling around their new levels, which I fully expect to be the baseline for future growth as DNVC momentum continues.
Only one leader
Last week, R&B megastar Cardi B became a DNVC when she announced she would be creating new digital media content distributed directly to consumers for a subscription fee. Which of the many enabling DNVC platforms did she choose to use? Perhaps the biggest, fastest growing, most impressive one of them all: OnlyFans. Like with Patreon, Cameo, Twitch, and the other enabling platforms mentioned above, OnlyFans has seen an acceleration in revenue growth according to Second Measured, triggered at the exact same time by Covid-19.
But unlike those other services, OnlyFans saw no sign of leveling off as July was not only their biggest revenue month ever, but also their second biggest monthly increase ever. Comparing all the aforementioned services side by side on one chart, you can see just how impressive OnlyFans’ performance has been.
In Covid-19 times, OnlyFans has a lot of fans.