PMF for Consumer Video
In the Entertainment Value Curve, Ravi Mehta gives a framework that best explains Product Market Fit in the Consumer video streaming space. I modified the framework but the essential thesis remains the same-
Successful mobile video apps aren’t just viewing experiences, they are social experiences.
Entertainment Value = Production Value + Social Value
X-Axis = Production Value = The quality of the content relative to highest quality in the genre.
This is a measure of value that is added through the content. Production value measures the “objective” level of quality of a piece of content. This assessment varies by genre and isn’t entirely about aesthetics. For example, a Marvel movie represents the highest production value for an action movie. Typically a “high production value” means big budgets, high quality equipment, expensive actors, expensive stadiums, expensive sports clubs etc. All things being equal, people enjoy higher production value content more than lower production value content. But, all things are not equal.
Y-Axis = Social Value = Interactive
This is a measure of value that is added through actions of other users on the platform. This could be any form of community interaction such as likes, upvotes, shares, comments, live chats, etc.
The more effort it takes to create an interaction, the less frequent it is. Tweets can be sent in seconds, lip-syncs can be uploaded in minutes, but creating a high quality two hour movie requires effort. Generally, interactions that take more effort add more value to users.
We can measure this by looking at “creation participation rate.” The creation participation rate is defined as the percentage of users who create content (typically on a daily or weekly basis). Snapchat has the highest creation participation with ~60% of active users creating per day. At the other end is Netflix where only elite producers meet the quality bar and in between lies Youtube with ~2.5% of YouTube users having ever creating content.
Another way to measure this is through the number of interactions that the platform encourages. Twitter wants users to rant at every opinion while Netflix expects users to get engrossed in the film. On Youtube, likes and comments helps users take a decision if they should watch the content while Netflix abstracts away other users and gives an algorithmic match percentage.
Successes Live Along The Entertainment Value Curve
The most successful products place somewhere along the curve where they deliver the right combination of content + interaction. Successful products distance themselves from other competitors across the Entertainment Value Curve and find their own combination of social value and production value. Products that fail to offer a compelling proposition don’t acquire enough users and fall into the video death zone.
On the extreme right are OTT Apps like Netflix, Amazon Prime Video, Disney+Hotstar which host a catalogue of high production value content. Usually such content is created by elite producers and then the rights are acquired by OTT players. Content is king and there is heavy competition between OTT players to acquire high quality content.
Users hardly interact with the platforms and the user experience is similar across the apps. Success depends on the content acquisition engine and purchasing the right content that keeps users hooked.
On the extreme left are Social Apps such as Snapchat, 9gag and Twitter that provide high interactions within the network, but have very low production value. Instagram requires users to snap a picture, and apply a filter to post content. Twitter requires users to post 140 characters. Once a product takes over a particular use case, the product gains a monopoly because of the network effect of existing users powering future growth. Since the content in these social networks is of low production value, it doesn’t hold the users attention span for long and users need continuous interactions to keep them interested.
Escape video death through PMF
Twitch is the most successful product to focus on a different niche and find PMF, creating a live streaming platform for gamers. It lies between Tiktok and Youtube on the Entertainment Curve. It’s much easier to stream ‘Among Us’ and keep users engaged for two hours compared to keeping users engaged through a two hour film. Twitch focused on increasing this interactivity to an extent that average Youtube users end up confused by Twitch’s platform and drop off in the first couple of minutes.
How to iterate to PMF
Startups have to start with the market and map their content across the X axis of Production Value. They then have to create a content strategy that matches the Production value and evaluate if they want to iterate upstream or downstream along the Y axis until they find PMF. Let’s break this down into three parts and take the example of Clubhouse-
1.What is the production value of the content being created on their platform?
Clubhouse which describes itself as “Drop-in audio chat” has a content production value that lies between TikTok and Youtube. It is difficult to keep an audience engaged for 15 minutes compared to creating a 30 second funny video. However, it is much easier to do an impromptu interview than give rehearsed talks. Launching a high quality talk on Youtube requires rehearsing a script, shooting it with good equipment, editing it masterfully, uploading it and then praying to the algorithm gods.
2.What is the content strategy for the platform?
Clubhouse went after the Q&A niche and unlocked creators such as VC’s and Entrepreneurs who have the knowledge to keep an audience hooked for 30 minutes, but don’t want to be concerned with video, topics, lighting, graphics etc.
3. What are the social features that add value to the platform?
Clubhouse built interactions necessary for a Q&A session such as Invite speaker, Raise Hand, Moderate Queue.
Clubhouse has a clear differentiation across the Entertainment Value Curve creating a compelling experience for users who flocked to the platform. The most successful startups have clear answers to these three questions, and end up unlocking a new type of creation or a new type of interaction that users just can’t get anywhere else.