BYOC, Or How Bring Your Own Content Will Be Bigger Than BYOD

In the last five or so years, a lot of digital ink has been used to cover the trend to BYOD (Bring Your Own Device), mostly for the enterprise, but also for consumers directly — in-flight entertainment via your iPad or the security updates for your iPhone so that you can use it for work. Even the work/play split for Blackberry’s Z10 (RIP) was following such an initiative. Companies jumped on the bandwagon and allowed employees to use their own devices for both purposes — after all, it seemed a bit strange that each one of us would have two laptops, two tablets, two phones and the gain of productivity (outside the risks of security) seem to be positive for most companies that accepted these policies.

Recently, despite clear distinction of operating systems and hardware, smartphones are moving towards being a commodity, whose only differentiation might become accessibility, rather than functionality. Arguably, a Samsung SUHD, demonstrated at CES 2015 might bring more gimmicks to the tech minded, but ultimately, watching House of Cards on it versus watching it via your Apple TV on an older TV set, be it not HD, is the same in terms of content. At the end of the day, with the Internet of Things, the transmitter of the content will be just that — whether that is an Apple Watch, Samsung TV, or a Xiaomi phone. I believe that the trend which will define the next 5–7 years of distribution will be BYOC (or Bring Your Own Content).

With so many options and clear pricing differentiation, the hardware and software powering the connected devices might become less and less relevant, as content, accessed via paid or freemium subscriptions will take over. The trend is not new, but rather accentuated by the growth we are seeing:

• Netflix boasts north of 57M subscribers globally and continues its international growth.
• Spotify’s streaming music services puts the flag at 60M, of which 15M are paid.
• Whatsapp’s 700M users certainly have 5–7% paid subscribers, who drop a pound/dollar after the first year of usage.
• Dish’s new Sling TV will offer ESPN streaming access for $20 per month.

The list continues — Microsoft is moving to subscriptions as well, with Office 365, and even YouTube has been rumored to have a subscription model in the making. On its own, it makes sense — software and services companies need to distribute through all platforms. But more and more, the users are starting to use their access to content outside of their own devices — Marriott is testing Netflix and Hulu streaming through the room TVs for its guests, while some airlines have considered allowing customers to use their own content on the flat screens on the back of the seat in front of you.

I believe this will affect the economics of distribution in two major ways:

1. Customers Are Starting to Pay For Exclusive Content

More and more, customers seem to be OK with the idea to pay for good content, that is reliable and/or exclusive. Amazon and Netflix’s move to start producing their own content is just a sign of how the trend is shaping up — if you want to see Frank Underwood before your friends, you have to be a Netflix subscriber. But you don’t have to be an iPhone user, or even own a laptop. You just need to be connected.

In travel, this is not necessarily new — Loyalty Program members have historically had access to good, exclusive deals, and while not directly paid, this access is secured by spending enough over time. Black Card AmEx holders need to secure a minimum spend annually and pay a fee to have access to the AmEx concierge service and exclusive deals.

2. Customers Want Freedom and Reliability

While allegedly subscriptions could be more expensive (3-year plan with Dropbox would be more than a 5–7 year usage of Apple’s 2TB Airport Express), the freedom it allows in terms of discontinuing the service, taking it with you from one device to another, or simply, the reliability that you as long as you are paying subscriber, the company providing the service has an incentive to offer a superior product, are strong arguments why this is happening.

While companies risk abuse, due to lack of control (you can share your password with family and friends), I believe it is a smart move to allow customers to take their content with them. The more usage there is, the more indispensable the service becomes — the fact that I can watch my favorite shows and movies on Netflix in my hotel room is great — I don’t have to carry my laptop with me anymore and the convenience of access is great. If at any point I decide to move away from Apple (unlikely), I’d have no issue — my likes, recently watched shows, and history will remain the same.

Overall, hardware makers had a good run by limiting their software products to their hardware ones (Apple is a prime example). Sometimes, their software products were in fact the reason why people bought their hardware — BBM did give RIM a bit of a boost because loyalists really liked the messaging service. The investment over time, such as your iTunes Library purchases, were the lock-in factor why you stayed within the same ecosystem.

But that is changing. With more services that allow us, as consumers, to access the content on demand, at any time, without storage, on any device, the distribution and business models are changing. Without the lock-in in the ecosystem, I would not be surprised to see even companies with long-standing tradition to keep their software to their hardware, start distributing/owning such content services as a revenue generator above and beyond OS royalties and hardware. BYOC, with quality and exclusive content, based on freemium subscriptions, will probably define the business models in the next 5–7 years.