Case of NYTVR
The New York Times’ NYTVR was one of the first journalistic applications on the VR/360-degree market (Watson 2017). It’s a platform for high-quality VR/360- degree experiences for mobile VR headset audiences. What makes the NYTVR case interesting is that, when many other news mediums were still only exploring the technologies without considering profits, NYTVR had a clear business plan from the start: to monetize their high-quality VR/360-degree content creation in NYTVR using branded content (i.e., advertisements) (Hall 2016).
In this chapter we use the business model canvas (BMC) (Osterwalder & Pigneur 2010) to analyze and illustrate the complex elements of value in the chosen case of NYTVR. The canvas model is usually drawn as a graphical illustration of different value fields. These fields are: Value propositions, Customer relationships, Channels, Customer segments, Revenue streams, Key activities, Key resources, Key partners, and Cost structure. In the illustration the customer-related elements are grouped to the right-hand side and the partner-related elements to the left-hand side of the canvas, with the driving element, the value proposition, shown in the middle. The business model of NYTVR is presented below in Figure 10.1 with the help of the BMC canvas. In the following some of the value elements have been grouped together for ease of following the analysis.
Value propositions and customer segments: In the case of NYTVR two value propositions can be identified. The first value proposition of the NYTVR business model is high-quality immersive VR/360-degree content for mobile devices. High quality in this case means best possible technical quality and high production value. Since value is subjective, it is good to link to a specific customer segment. With this value proposition, the customer segment is all mobile VR users; to visualize the connection, all blocks related to this specific value proposition and customer segment are colored white.
The second value proposition of NYTVR is the ability to engage audiences, which refers to offering an engaging interactive platform for content delivery that attracts audiences. This is directed toward The New York Times’ corporate customers, i.e., companies/enterprises with global brands.This value proposition is represented by gray blocks.
Channels: the main channel for delivering the first value proposition (white blocks) is The New York Times’ NYTVR application. Other ways to access the
FIGURE 10.1 NYTVR Business Model (adapted fromVanhalakka 2018 and based on the model by Strategyzer 2018, image template used under CC 3.0 license).
content are through Youtube or Samsung VR applications. It is important to note that in order to fully experience NYTVR, a mobile VR headset is required. When NYTVR was initially launched, The New York Times partnered with Google and gave their subscribers free Google Cardboard headsets (Robertson 2016), thereby creating more users and hype for their platform. More recently mobile headsets have become more common and there are even specialized phones for mobile VR.
The second value proposition (grey blocks) is delivered by The New York Times’ marketing unit,T Brand Studio, that uses The New York Times’ branded journalistic approach, multidisciplinary knowledge, and new technologies to create branded content/advertisements for their corporate customers (T Brand 2017).
Customer relationships: NYTVR is a mobile application, therefore the relationship between the content consumers (white blocks) is mostly automated. The relationship between The New York Times’ corporate customers (grey blocks) is more personal, since the content is created as a collaborative effort between The New York Times and their client companies.
Revenue streams: the NYTVR application is free to use, therefore the content consumers do not provide direct revenue. The platform is monetized through its content; almost all production inside the NYTVR application is branded content, i.e., advertisements with an element of journalistic storytelling, that have been created together with NYTVR’s corporate customers (grey blocks), and thus the revenue comes from them as advertisement payments. The potential of NYTVR to attract new NYT subscribers is acknowledged with a dashed white block, which indicates potential future revenue for NYT as a whole, or a motivation for a person to stay as a subscriber.
Key partners: for the first value proposition (white blocks) there are three key partners: Google, Samsung, and content sponsors. The partners enable NYTVR to reach potential consumers, as well as provide Google and Samsung with a way to offer more content for their appliances. The third key partners for the first value proposition are the content sponsors as they sponsor more content for the platform, making it more compelling for users, and mostly cover the content development costs.
For the second value proposition the key partners are the users of the platform, since they are the audience for the branded content. Due to the engaging nature of VR/360-degree production, the users are more prone to sharing their experiences (Habig 2016) and thus become a key partner for the content sponsors in increasing awareness of the advertised brands.
Key activities: key activities for the first value proposition (white blocks) are platform development, content development, and marketing. The platform needs to develop simultaneously with the devices and software. At the same time, NYTVR needs to continue developing content, in order to retain or bring users back to their platform by offering them new enticing content. The final key activity for the first value proposition is marketing, since by attracting more users The New York Times makes their platform also more attractive for enterprises and companies.
For the second value proposition (grey blocks) the most important activity is measuring engagement, i.e., collecting metrics. These metrics can provide proof of concept about the different aspects ofVR/360: for example, whether the videos attract more engagement than the more traditional methods of branded content.
Key resources: the most important key resource for the first value proposition (white blocks) is the content. The content is required to attract an audience. The most important key resource for the second value proposition (gray blocks) is the creative talent, i.e., content creators. The New York Times’ marketing unit consists of multidisciplinary teams, combining the same talents who are responsible for their news content with marketing specialists (T Brand Studio 2017).This enables them to combine journalistic storytelling with branded content. The shared resources (white blocks overlapping with gray blocks) between both value propositions are NYT Brand and the NYTVR platform. The New York Times brand is known for high-quality branded content (Main 2017) and, as such, brings in customers for both value propositions.The NYTVR platform is a key resource, as it enables both value propositions and, from it, the company can collect metrics about the success of their content.
Cost structure: the main costs for the first value proposition (white blocks) come from the platform development. As mentioned before, the way mobile VR should be utilized is still exploratory, so the platform needs to be developed as the industry evolves. The main costs for the second value proposition come from the content development. It could be argued that the content development costs are a shared cost for both value propositions; however, in this case they is linked to the second value proposition for a reason. While the technologies ofVR/360 have large potential for use in a journalistic context (Watson 2017), the problem is that creating high-quality VR/360 content is expensive. Instead of only exploring how to use this technology in The Daily 360 (the journalistic VR/360 channel of The New York Times), The New York Times is exploring this in their branded content too. This means that their clients, the global brands, are paying for the content development and at the same time The New York Times learns about the technology and also attracts more customers to its own platforms.
Key findings: the most important finding from the business model is the synergy NYTVR offers to The New York Times. Media companies often have advertisement-based business models. The New York Times, on the other hand, has a subscription-based business model and, for them, advertisements are low-margin (NYT 2020 Group Report 2017).To get subscribers. The New York Times needs to offer engaging content. The technologies ofVR/360 offer a new possible platform for media, but the technologies are still at an exploratory stage and, as such, the methods still require resource-greedy development (Watson 2017). The New York Times is exploring how to use these new methods in creating their branded content, delegating the production costs to their corporate customers. While exploring and learning how to use the technolog)' in their own journalistic context, they are creating more engaging content for their subscribers and potentially attracting new subscribers.
The BMC model offers an at-a-glance canvas that communicates the value creation elements. The two distinct value propositions presented in this analysis also well identify the two-directional nature of value creation: while the content consumers are receiving entertainment value from the content they are viewing, they are part of the value proposition to other actors present in the canvas. With multiple value propositions and multiple revenue streams, it becomes easier to identify the path for financial gains in the immersive technology field.The value functions introduced in the previous section can be useful in identifying the multiple value propositions and the key partners and activities of value creation.The BMC visualization is thus a way to highlight and summarize the value function analysis, which otherwise may sometimes be a little difficult to communicate.