Pocket.watch CEO Chris Williams on Key Trends Shaping the Future of Media (All Things Video Podcast)

Chris Williams, the founder and CEO of the kid-centric entertainment studio Pocket.watch, began his career as one of the first 100 employees at Yahoo, then launched his first startup, FanLib, which later rebranded as Take180 and was acquired by The Walt Disney Company in 2008. Chris spent three and a half years at Disney and then joined Maker Studios as Chief Audience Officer. Maker was also acquired by Disney in 2014, and Chris spent another two years there before founding Pocket.watch in early 2017. Chris and I sat down recently to discuss the key trends shaping the future of media and entertainment. He started by sharing his experience from the early days of Yahoo and what inspired him to launch FanLib (later Take180), born out of a desire to serve passionate online communities around fan fiction. “The notion that there are these subcultures that actually had massive scale — fan fiction being one of them — was just really compelling to me,” Chris explained. “Anime is another one that it was always like ‘Why hasn’t this bubbled into the mainstream?’” Unfortunately, not all fan fiction enthusiasts were happy to have a company commercialize their work. Chris compared FanLib’s initial efforts to action sports before the X-Games and ESPN coverage: “The purists don’t want it to change.” In response, Chris decided to pivot to create what he calls “participatory entertainment.” This new approach enabled fans to contribute creatively to new projects: “anything from a line of dialogue to a costume idea to something that would manifest itself in this professionally produced series that we were creating.” Chris also reflected on his experience at Disney, following both the Take180 and Maker Studios acquisitions. He simultaneously referred to Disney as “the greatest media company in the world” while also acknowledging that it can be “a hard place to work as an innovator.” Like any massive media company, Disney has necessary layers of legal, corporate branding and PR teams whose job it is “to protect what exists rather than create what’s new.” What has enabled Disney to innovate and outpace the competition over all these years, Chris argued, is its strong leadership — from Walt Disney to Michael Eisner and, more recently, Bob Iger. In fact, Chris made several observations about Iger’s leadership. Not only can he “manage creative people as good as anybody in the world,” Chris argued, but “he’s just been remarkable at balancing the short-term needs of a public company […] with long-term planning.” Perhaps the greatest example of this is Disney’s foray into digital streaming, from its agreement to buy out Comcast’s stake in Hulu to its highly anticipated launch of Disney+. Critics claim these moves come too late, but Chris argues that Iger’s timing is perfect, as he prepares Disney to succeed in the new entertainment landscape. “I do think he genuinely has a drive to innovate,” Chris said. “That doesn’t always make its way down into the middle layer, but I think there is a genuine desire to disrupt himself and disrupt the company from within.” Chris also commented on the performance of another major media executive, Viacom CEO Bob Bakish. Viacom has undergone a dramatic digital transformation in the last few years, which Chris credits to Bakish’s honest acceptance of the current media landscape and willingness to build toward that future. As Chris said, “[Bob Bakish] is not out there saying, ‘We’re going to put the cat back in the bag, and cable television as a business model is going to go from decline to increase. Let’s acknowledge the world as it exists today and is going to be going forward.” In keeping with this vision, he brought Kelly Day aboard to lead the newly created Viacom Digital Studios and hired Brian Robbins to reinvigorate Nickelodeon. As Chris said, “Brian was the one who brought Fred to TV in 2010,” so it’s no surprise that Brian understands the opportunity. He’s taking the lessons learned in digital and applying them to achieve unprecedented results: “It’s kind of like TV at digital speed.” We also debate the ultimate outcome of the streaming wars based on what Chris defines as the five pillars of the media industry: pipes, platforms, branded channels, franchises and talent. “I look at Netflix as basic cable for the world,” Chris said. “They are literally basic cable, so everybody is going to have Netflix, and then it’s about what else.” Chris and I both agreed that there are going to be several winners, but Disney is uniquely positioned to succeed with Disney+, ESPN+ and Hulu due to the strength of its brand and content catalogue. Not only is Disney home to the characters that audiences love, it’s also built the most robust marketing engine across its various assets, from theme parks to cruise ships to consumer products. As a result, it’s not the entertainment studios that will suffer, but rather cable television operators. According to Chris, “I personally don’t believe the primary driver of cord cutting is price. I think it’s value.” People look at cable and wonder why they’re paying for content they don’t watch. Add to that a clunky and outdated user experience, and you’ve got a recipe for declining cable subscriptions as more dollars shift to on-demand programming. Audiences are spending more and more time on entertainment experiences, Chris argued, so “people’s media spend per capita will continue to go up.” Ultimately, cord cutters are going to end up paying roughly the same amount as a traditional cable subscription, but they’re going to get more of what they want and less of what they don’t. Nowhere are these changing consumer preferences more apparent than what is happening in children’s entertainment. As Chris explained, the original inspiration for Pocket.watch came both at home and in data. He observed his kids showing little interest in watching broadcast and cable programing on the family’s big screen TV, preferring instead to lie on the floor and watch YouTube videos on their phones. Meanwhile, “kids television, from a ratings perspective, was off a cliff,” so he turned to digital platforms to discover and develop new characters that could be built into 360 franchises across consumer products, books, tours and more. Ultimately, Chris hopes to exploit a massive value gap that he sees between digital stars and traditional entertainment franchises. When I asked him about Pocket.watch’s signature talent Ryan Kaji, the 7-year-old who reportedly earned $22 million on YouTube in 2018, Chris indicated that they have much bigger plans for Ryan’s burgeoning media empire. “OK, little Ryan makes $22 million, that’s good. But there’s a bit of a delta between that $22M … and the value of ‘SpongeBob’ or Mickey Mouse or ‘Paw Patrol.’” To that end, Chris and his team have expanded Ryan’s brand into new lines of business by tackling things that have high friction, like selling a product in Walmart, getting a TV show on Nickelodeon and developing a top performing mobile app. Finally, Chris explained why YouTube is the premier content destination for kids. We touch on a number of challenges YouTube has faced recently around kids and family entertainment, and he acknowledged that YouTube CEO Susan Wojcicki “has probably the most difficult job on the planet.” But despite YouTube’s best efforts to clean up its platform, much remains to be done to ensure a safe, engaging place for kids. According to Chris, all these sudden policy changes make YouTube “a scary partner.” Unlike governments, which are transparent, move slowly and provide a runway for compliance, “YouTube changes their guidelines on a dime, in a completely opaque environment and then expects compliance immediately and retroactively. That is much scarier for me as a business owner than the government.” Listen to our full conversation on the latest episode of the “All Things Video” podcast.