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Point of View - Navigating Turbulent Waters
By Yvonne Von Jenna

Revolutions, by definition, are marked by surprises, upheavals, and wildly volatile swings. During the early stages of the industrial revolution thousands of start-ups failed because their business models were wrong, their drive and optimism misdirected. No one knew how to operate in the emergent, post-agrarian environment. Businesses had to invent everything anew – products, services, factories, distribution chains. Many assumptions, business models, and companies didn’t survive. The companies that survived did so because of their adaptability.

We’re only in the first stages of the digital revolution, with the new media industry caught in the center of the storm. There are few emergent practices to provide guidance to new media companies and no ‘pure’ new media business model has evolved such that exists for television, film, publishing, or music. Thousands of start-up companies have failed because they gambled too much on incorrect assumptions.

The survivors in the new media industry have been those companies that have been able to establish solid, profitable businesses based on service fees while adapting through small, smart gambles on emergent opportunities (such as added, complimentary service offerings, cross-platform entertainment-based content creation, and product development). This becomes apparent when you look at the adaptations of revenue streams that are occurring in the marketplace.

Service offerings – the base of any successful new media company - have evolved considerably in recent years. Originally, demand was for visual representations (e.g. CD-ROMs), then website development and now is primarily website enhancement. The emphasis has moved from being design intensive to being technology, back-end intensive. Success in services has depended not only on attracting, knowing, and properly servicing the client but also on recognizing the next important client focus and capitalizing on it.

Some successful new media companies have complemented their service revenue through add-on, complimentary services such as hosting, software development, strategy, etc. For example, Bluespark makes more of its money from such services than from web development, while ThinData complements its revenue by managing and hosting its clients’ sites and licensing its content management systems. In essence, they have adjusted their service offerings to meet the needs of their clients and in return, receive higher revenues per client.

Cross-platform entertainment-based content creation is another model that some new media companies have been adopting. New media companies playing in this space include:

  • Decode Entertainment created Angela Anaconda (plus a slew of other cartoons), both for TV and online
  • Dunedain created the Lord of the Rings site, based around its Trivia Engine product, for distributor Alliance Atlantis
  • Live Audio Wrestling creates content for online, books (for Stewart House publishing), and radio (such as Corus Radio)
  • Smiley Guy Studios is creating The Seen, an animated TV and Web show for The Comedy Network
  • Snap Media created the Degrassi: The Next Generation site with Epitome Pictures for CTV

Originally, these players created content for traditional media and used the web component as an add-on. Now, some are beginning to effectively move the characters created for the web onto traditional media although the revenue streams still derive primarily from the old media portion.

Yet other new media companies have moved beyond creative development to product development, such as ThinData with its Newsmanager and Dunedain’s Trivia Engine. They have re-tooled products originally created for service clients and are re-selling them as stand-alone products. The products tend to be partially developed and pre-packaged (i.e. 50% to 80%), with the remainder customized. They allow for differentiation with clients, the up-sale of other products and services, and larger per unit profits once development costs are covered.

The ability to survive and thrive has depended on navigating the turbulence. But the turbulence continues and there are no guarantees other than the choice lies in adaptation or extinction.

Yvonne von Jena is a Corporate Development Executive/Business Development Strategist with over 14 years experience across broad industries, products, and services. She has also worked in Corporate Finance at a boutique brokerage, as an Analyst for a large bank, and as CFO/COO of an Internet advertising agency. Yvonne has an MBA from U of T.


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