E434 | Victoria Palatnik, Raw Ventures, Peter Effenberg, Jay & Severin Zugmayer, New Renaissance Ventures: MediaTech Roundtable on Transforming Legacy Media and Redefining Content Creation with AI

0:00We're seeing a bit of a flight to quality. and this is why legacy media are winning again or gaining traction again or gaining ownership again because in times of X or Twitter or however you want to call it where you have a constant unlimited flow of live information which has its advantages and there is reasons why people love to spend so much time on X but you don't have that quality filter which you which you might have with with branded media right and this is um consumers um want that again um i want to at least to have a choice to say okay i can go to branded media and then no this is vetted i know there is journalism work behind it i know there's an editorial behind it i know there has been proper research being done on that um and i can trust that um as opposed to I get the constant live stream of information, but I don't have that quality approval stamp.

1:02I can't be sure if this is fake news or real or if there is misinformation, etc. It's interesting, Severin, because at least in the US, it seems very much like it's in the tech ecosystem. system, it seems very much like it has tipped in favor of the creator economy winning because they have ended up with a very biased institutional setup for their media. In Europe, I'm not seeing that crystallize in any way as clearly. However, I am myself very frustrated with the news that I am able to get in Denmark covering, as an example, everything that's happening in the US. with their finance now. Tear down this wall.

1:50It's more than just an ally. This is a union of values. Let's start acting. This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Welcome back everyone to the European VC podcast. Today I have a panel I've been looking forward to. Not so much because of the people here. They're not special at all, but because of the topic. No, I'm kidding, of course. I'm excited about it because it's going to be media tech, and that's obviously quite close to, if not my heart, my wallet here at EUVC. So let's just run around the table here, make sure everyone knows who everyone is and the perspective they come to this conversation with.

2:36Victoria, let's start with you, and then we go Peter and then Severin. Thank you, Andres. I'm Victoria. I'm the CEO of a venture capital company called Raw Ventures with headquarters in London and the UK by investing globally. We do have three clusters in our company. One and the most important one is media tech. And that's where I should probably stop because that's the topic of our discussion. For probably our next podcast of any interest, we also have a cluster in health tech and in sustainability. MediaTek for us is everything related to the creation, distribution, monetization of any type of content.

3:16How content is created and what type of content consumers are evolving as of today. So that's what we do. We invest in pre-seed and pre-series A startups, companies starting with half a million up to three million per company. We do about six to eight investments per year, and we continue to grow as we see that very interesting segment for our company going forward. I'm Peter Heierke, Peter Effenberg. I'm based in Potsdam, Germany. So I bring with me about 30 years in the industry, in the media industry, the intersection of content creation and tech all the time. So I was working about 25 years as a live producer with 250 films in my life.

4:06And then I founded the Media Tech Hub in Potsdam, which contains also the Media Tech Hub conference. But since a couple of years, I'm running a company which developed into the leading company for shoppable content in the entertainment industry, especially streaming and broadcasting. tell me 250 films anything that we would have seen it depends on which region you are the uk now well i'm in denmark but uh i guess a lot that is in the uk and it was mainly for uh for german broadcasters um that time a lot of documentaries that also brings that huge number of films uh in the in my last years as a line producer i also produced some feature films but my love was always with the real stories.

5:01So even the feature films we did were always connected to a real story which took place and this is my passion. Well, everyone, of course, if people doesn't know, film production is often referred to as one of the things that mimic the most the dynamics of venture with the power law distribution and the fact that everything is all the money is up front before you know whether anything succeeds and so on and so forth. So cool to have your perspectives here, Peter. Severin, my dear friend, would you please tell us about yourself and a small fund called Renaissance, New Renaissance Ventures? Sure.

5:39Yeah. Thanks. Thanks for having me. Pleasure to be on this podcast. I'm Severin, Vienna-based, Austrian. I'm the founder of a small fund called New Renaissance Ventures, which is the first venture fund dedicated to the cultural and creative industries, so to tech startups in those industries. I'm in the venture circus roughly for the last seven, eight years before launching my own fund. I have been part of the Speed Invest team, leading consumer investments and also had the privilege to work with some really increasing companies and founders throughout that time. but chosen specifically to focus on the culture and creative industries since launching the fund roughly two years ago.

6:26Why? First of all, there is a strong personal interest and passion for the topic. I mean, I myself, I'm a boring business administration guy, but my family background is very much in creative spheres. So there was always a natural fit for that. and secondly because I truly believe that we are at a transformative shift or fundamental shift with the adoption and immersion of new technologies predominantly obviously AI but also AI, VR and blockchain. And third main reason is I do believe there is a lot of space in Europe to build a venture fund and an ecosystem and a platform for tech founders who are active in the cultural and creative industries.

7:15And to close the circuit here, obviously media tech is one of my verticals or one of the verticals I look at within the creative industry, so to say. Beautiful. Okay, with those introductions done all the way around, let me go into the meat of the conversation. We're going to try and cover as much as we can in this hour of media tech going all the way from trends to challenges to emerging opportunities, predictions. But I want to start us off just by looking at a map of Europe, saying where are the most important hops to be paying attention when you're thinking about MediaTek? I think about a few months ago, the team of RoVentures conducted an analysis for our own review of, I think it was 847 companies in media tech, European companies plus UK.

8:16And statistics were that majority of companies, majority meaning, if I remember it correctly, about 33 % were from the UK companies in media tech sector, 19 % were from Germany, 13 % or something, 13 to 16 were France and about 13, 12 Spain. This were, as I remember it correctly, the major hubs where majority of the startups and companies were coming from. That's the analysis conducted by us and we do it actually quite regularly. That's the country level. I often think about cities and smaller ecosystems. Zarin, you were nodding a bit there, Peter, too. Am I wrong in doing so? And how do you think?

9:12No, no, I think I would agree. And I would probably follow the typical broader startup tech logic here that obviously also the main hubs for VC and tech and startups being London, Berlin, Paris, and obviously other cities like Munich. So Germany might be a bit more fragmented than France or UK. So I think these are the cities kind of obviously where we see the most opportunities and also most exciting stuff coming from. But that being said, it obviously doesn't mean that other cities don't bring very exciting opportunities on the surface. And it's very much related to the history of media companies, right?

10:00I mean, when you say, as everything which is right, it's London, Paris, and Berlin, or even Munich, it depends on a very strong broadcasting or streaming industry, which is a production company industry, which is there. Especially in Germany, we have Hamburg, Munich, Cologne, Berlin, which are very much related to broadcasters. London, of course, is a hotspot in the UK, with ITV, Channel 4, Channel 5, Sky UK, the BBC, of course. When you come more to, let's say, for the Scandinavian countries, it's also very interesting how they are driven, because they are smaller, but they are much more innovative sometimes.

10:50And that's not only from tech. I mean, that's also from, I mean, I'm a storyteller, right? The dogma storytelling from Las Ventrias was coming from Denmark, right? And that was very much related to technology by trying to avoid technology, right? I mean, I don't know if you know that philosophy dogma. like just get rid of all these lightning, get rid of all these equipment and just do the fill. And it's very interesting to see these kinds of hubs, especially Copenhagen and Oslo and Stockholm and what they are doing there. Severin, you're nodding a bit. Why are you nodding? No, no, I agree. And I think, I mean, Scandinavia has very strong brands also, right?

11:41And Pony or Shipstead. So if you think about more traditional media in the publishing space. So again, it's probably a testament to the innovative nature of the Nordics

11:56being more innovative in that sector than typically other countries are. But here you have the first trend, Andreas. This is a trend we are discussing at our conference with a lot of people and we're discussing that in the past years because Severin just said brands. And of course, we mean in the first role, we mean companies, right? We mean SVT, BBC, ITV as brands. But that's shifting. Or Netflix, Amazon Prime. The brand of today, and this is one of the most important things I see, is that the brand is the content. so if you are producing content you are not producing it anymore for a certain company you are producing it for a community and you see the content as a brand on very different distribution channels and that is also a shift on where you are producing your brand, your content, there is the media tech innovation, right?

13:04If you have, and that's very much related also to tax incentive systems, right, which we have all over in Europe. Germany does not have one, the law win. And I think, as everyone in Austria, you have just on hold, as I just was reading on the news, since you have these coalition negotiations. but let me give you one example we have a huge production company here just over the street which is called UFA and they were producing one of the most successful contents of the last year Maxton Hall from Prime Video but this is not understood as a brand of UFA or of Prime Video Maxton Hall itself is a brand And these brands, this content is also moving from distribution channel to distribution channel.

13:59And it's very important today to enable the teams who are doing that. I mean, when we're speaking about productive AI or generative AI or about workflows, all that kind of stuff, it's with the teams and that they are doing something new and they are creating brands out of this. This is very important. That also brings the resilience, right? And you can basically change platforms without losing your readers or your fan base or your viewers because the brand allows you actually to react across different channels and media platforms. We have an audience here that are not only media tech people. Can we try and translate to those that just heard what Peter said and thought, this was not what I was thinking at all.

14:48And I don't know exactly who of you should make this translation, but if we just make sure that everyone comes to this discussion with the right mindset when understanding what media tag is and where we're headed, because you jumped directly into talking an example of films here, film production. And obviously we have a lot of other streams of content on different parts of media. but what I hear you describing of this creation of it actually being the content of the brand so to say or the production company so to say I guess is that also what you would equate to seeing Fox News anchors going out building their own platforms a lot of other news anchors CNN news anchor just went out and you know built his own thing via x slash YouTube is this and Severin you're nodding a bit we have of course soft tag that i'm a user of that that is allowing me exactly to own my own audience build it as i want port it to anywhere if i want to um could you talk a bit about that try and put this in a in a bigger context than just films i mean we're not talking about film only we're talking about news we're talking about show we're talking about sports These are the brands of today.

16:11And what we do always is a distinction between what you, some years ago you said there is user-generated content and there is traditional produced content. If it is show or sports, whatever it is, right? Content which is produced with a lot of money, with a production team and all that kind of stuff. Today you would say it is the traditional way of producing content, one, and the other way is the creator community. And the creator community is extremely strong. This is one of the trends of the last years. And this creator community is not linked to just one platform. So you are in TikTok, you are in Insta, you are on YouTube, right?

16:59And the same thing now happens to the traditional media companies. So when you look, for instance, on Channel 4 in the UK, you have a huge strategy of Channel 4 to present all the content from Channel 4 inside YouTube. So they see YouTube not anymore as a competitor. So you have a brand which is called Channel 4 and you have a brand which is called YouTube. But you have content from Channel 4 which is distributed on both platforms by reaching out your audience. I think that's also a result of the struggle of the, let's say, legacy media industry, right? That they're trying to find ways to monetize the content and build new business models.

17:44And it seems they're kind of failing at it, right? Most of them. There's also like, I mean, there's a lot of like hybrid business models of advertising and subscription. And in general, I'd say there is a subscription fatigue, right? So it's extremely hard to monetize content these days. And also all the big publishers struggling. I think probably New York Times is one of the few examples who have been successful in building a subscription base. And even there, some are arguing that 50 % of that is because of the minigames in the app and not because of content. And I think that's exactly one of the key trends we are seeing.

18:26The definition of media tech or media in general is very hard these days because the lines are becoming very blurry. Social media is media, right? And every creator is media and LinkedIn is media and Substack is media. So the definition of media these days is very tough. Or there is a lot of ways how you can define media, I think. And maybe we come out of that at some point and there is a new definition of media, but it's definitely not the definition we thought of it like 10 or 15 years ago. I think the cat is out of the bag. Legacy media has been said a couple of times. We're talking trends.

19:08That's one of the things that I think is on everyone's mind in tech, especially because we're seeing, if not the demise of it, at least then the commentary on the demise of it. or the narrative that the legacy media is dying from all the US tech VCs. It's a very heavy speaking point for them. Is this true? When you're looking at the media tech sector, is this true at all? Peter, you're shaking your head violently. I can give you several examples on that. I mean, of course, everyone also in Europe was even at our conference three years ago, four years ago, everyone was saying legacy media broadcasters are dying.

19:52Right? Period. Right? And then something very funny happened. As Netflix Prime Video were coming up, people were not understanding that these companies were taking huge amount of money to just sit in the market with no idea of how to re-monetize all of this. Netflix was going up to the roof and Prime Video the same way. We are here in Potsdam at a place which is the oldest film studio in the world. Studio Babersberg. It's even Hollywood before Hollywood. And since 100 years, media has only two income channels. Tickets and ads. right that's the only thing so and netflix and and and and and prime they were just sticking on subs by saying okay this is the business model to go and they had serial drama they had feature film high-end productions you remember house of cards game of thrones all these extremely expensive and great stuff right and two years ago they were sitting there saying so hmm, it's not enough.

21:15Subs are not enough. So and then the whole Aboard sector established himself, right? Fast was, and when you look to Aboard and Fast, you can simply say this is the business model of pay TV and broadcasting, right? It is just bringing in ads into your content as a mid-roll or pre-roll, whatever it is, right? And I remember a conference two years ago as they were saying, as they were discussing, okay, if you need to feed your audience all the time with new content, right? Is it enough to do it on feature and serial drama and maybe documentaries? And then they ask, who will go for sports? And everyone on that panel, Amazon, Netflix, and some legacy broadcasters were raising their hand, it just Netflix did not.

22:15And then I said, are you going for shows? And everyone raised their hand again, except Netflix. What is Netflix today doing? Bringing in sports, bringing in shows. What I want to say is, broadcasters are not that, legacy media is not that, because they are producing ongoing, the most content you can ever imagine, one. And second, you have a huge diversity of content. And everyone, especially in the global streaming platforms, is trying to do exactly the same thing. Prime Video is now doing Champions League all in Europe, especially in Germany. I think Netflix is doing some of the major sports events in the meantime in the US.

23:03and if broadcasters are turning into streaming platforms what they are doing right now ITV to ITVX, RTL to RTL Plus 7.1 in Germany to join they are just moving their audience into that streaming but keeping still the linear channel and that is a huge advantage because you have established advertisement contacts which you can use I had a discussion with my company some months ago on in-stream shopping with Paramount. And then someone asked me, what do you think? Who will sell the retailer side to your shoppable stuff on Paramount? I said, Paramount itself. And then he said, they will not because they do not have even an advocacy department.

23:53They are just building it up. It's a bit different with Amazon. But what I want to say is broadcasters are not that at all. If they change technically, if they are opening streaming platforms, if they go as Channel 4 is doing to YouTube, there is a huge chance for broadcasters to be at least a local hero in each market. And they will be there 10, 20 years in the future as well. Victoria and Zarin, do you agree on their perspective? Is that also how you think about it when you are asked the question, is legacy media dying? I tend to agree with Peter and support what he's just shared with us. Again, coming back to the question that you've, your previous question, what is media tech?

24:45So for me in media tech, media sector, media tech sector, it's much broader than video or content creation. There is, again, you might call it a counter trend, but we're seeing a bit of a flight to quality and this is why legacy media are winning again, right? Or kind of gaining traction again or gaining ownership again. because in times of X, right, or Twitter, however you want to call it, where you have a constant unlimited flow of live information, which has its advantages, right? And there is reasons why people love to spend so much time on X, right? On other platforms, but you don't have that quality filter which you might have with branded media, right?

25:41and consumers want that again or want at least to have a choice to say, okay, I can go to branded media and I know this is vetted. I know there is journalism work behind it. I know there's an editorial behind it. I know there's been proper research being done on that and I can trust that as opposed to I get the constant live stream of information, but I don't have that quality approval stamp. I can't be sure if this is fake news or real or if there is some misinformation, et cetera, et cetera. It's interesting, Severin, because I'm preparing for this. I asked GPT as well, kind of give me an overview and analysis of where we are.

26:28It gave a real deep one that I will not discuss here, but it really ended up at the same conclusion, saying that the real battle is not legacy versus digital media, but institutional credibility versus independent creator economies, which I think is kind of what you say, right? But in other words, I would, however, maybe ask, at least in the U.S., it seems very much like it has, at least in the tech ecosystem, it seems very much like it has tipped in favor of the creator economy winning because they have ended up with a very biased institutional setup for their media. In Europe, I'm not seeing that crystallize in any way as clearly.

27:19However, I am myself very frustrated with the news that I am able to get in Denmark covering, as an example, everything that's happening in the US. So as an example, Trump just put out, so I've never ever, and I've asked many, have you ever seen a piece on Donald Trump that was positive? And this is even from the Danish equivalent of BBC. No one has ever seen that, which makes me think, well, there's definitely an editorial line here that I do not consider objective. Do I agree with it? Do I blah, blah, blah. That is not really what matters. What matters is whether I can trust it and I cannot trust it to give me the objective news.

28:08Same thing just the other day he announced this, what right now seems like completely wild plans of annexing the Gaza Strip and create a Gaza Rivera seems absolutely crazy, you know, but I am super annoyed with the fact that all I can get is statements from people saying that it's crazy rather than a journalist trying to get into his mind and the people around him, his and their mind trying to figure out what, why are they saying this? I cannot get that objective analysis of it because it seems like my media is not interested in giving me that. And neither is that an X, but on X at least I have some people that say one thing and some people that say another thing.

28:54And I can't really find that in the European media. Am I being wrong or correct? I totally agree with you. We have the same here in Germany. But I think there is a huge difference between the US and Europe in that case. Yes. Because I'm also following the US what happens in the US, also in US media. What I see from here, from Germany, is that in the US, you have a divided media landscape. You have either the Democrats or you have the MAGA thing. You have Fox News or CNN, right? You can stick to one of them. If I'm watching CNN, I'm never getting a positive narration about Trump. But my point is, do we have other than CNN in Europe?

29:47No. Look, what I want to say is in Europe it's different because Europe has, in my point of view, that's not a tech discussion, but in my point of view, Europe has a Western arrogancy. So the journalists, also what I see in Germany, they understand themselves more and more as people who need to educate audiences in what they think as journalists instead of being a journalist and going, taking your example with the Gaza Strip, and saying, okay, what does that mean? What he wants to do. Is it this, this, this, and this? And let the audience... And this is one of them. We were coming from that legacy media is not dying because they have this high quality news, for instance.

30:33And what I'm telling my people here in Germany all the time is, what you are doing is, you are destroying yourself at the moment because you are doing totally biased news because you are just transporting your own view on the world instead of acting as a journalist itself, right? That might, but that is a discussion which is more on the shift of the whole world or the second world world, which is shifting now and less on tech. What I really, coming back to tech... Well, let me just add on that, because where this is very relevant for tech is, of course, whether it's going to be owned by platforms that offer a free press type access.

31:24Is that the case? I mean, for instance, we have a very new news platform in Germany now, which is called Nius. It's driven by the ex-chief and editor of the build. it's a right wing stuff and they are just calling themselves as the free press you're we're not buyers and all what i what i what i'm saying to the journalists here in germany is look you have now in today technology which is so easy to get just in your backpack and going somewhere and even using this piece of glass and doing an exceptional video it just go it you don't need trucks with lights and with cameras and all that kind of stuff.

32:10You don't need permissions to go to Syria. Just go to hell, go there and do your job. And this is not what they are doing. When I see journalists, they have like the major news show in the evening and then they are calling people in, I don't know, in Cairo, explaining to me the situation in Syria. This is number one. What is that the hell? Why don't you go to Damascus. And number two is they are just reading something which they were just preparing shortly before they were going online, instead of really bringing, and this is mainly agency news, right, instead of bringing their own investigative stuff into it.

32:53That would be trust in journalism, and that would be a huge advantage for legacy media if you bring that also in the distribution channels, which are digital as well. You can bring that to TikTok. You can bring that to Insta. You can do shorts out of this. No problem. But people are really, they want it, but no one is really offering it. That's the problem. And do you see then, to bring it over to the tech space and the startup space, do you see tech founders building in this space, saying that there is a creator economy that's truly flourishing and that we should double down on? I mean, 100%, I think I see tons of startups also trying to solve bias in media and have some sort of like, how can you standardize it or define standards which make it less biased or less political.