Back in February at the urging of Mike Stern, we wrote a client memo about the Wordle phenomenon. I’ve been known to play word games – the New York Times crossword puzzles (even on Saturday) has been a ritual for decades. And in the last few years, I’ve been known to have a dozen or so games going at the same time.
It didn’t take long for me and tens of millions of people around the world to get hooked on Wordle – a simple gaming platform built for now – one game a day you can play in just a couple minutes, it’s competitive, and you can easily share the results socially.
The invention of Wordle is a bootstrap story from last October. A guy named Wardle (you can’t make this up) who lived in New York came up with the game for his girlfriend. When the game started getting copied and cloned, Josh Wardle knew things were out of control.
In January, rather than hiring lawyers and spending time defending his creation, Wardle decided to sell the game…
…to The New York Times.
While the price wasn’t disclosed, the Times confirmed they bought Wordle for “a price in the low seven figures.”
When you think about some of the numbers being bandied about lately as radio companies buy….(wait for it)….more radio stations, the suggested retail price for Wordle gets even more interesting.
That’s because without materially changing anything about the game, the Times reported its first quarter earnings earlier this week.
While not disclosing precisely how many new players it had attracted since buying Wordle, the Times Company’s president and chief executive, Meredith Kopit Levien told us what we already suspected:
Tens of millions of new users came into the fold, “many of whom stayed to play other games, which drove our best quarter ever for net subscriber additions to Games.”
In case you missed it , Games started with the Daily Crossword, added the bite-sized version – Mini – in 2014, and has gone onto to launch other highly addicting games, including the insidious Spelling Bee, which is part of my wife’s morning habit.
Before buying Wordle, Games reached the one million subscriber mark in Q3 of last year. Now with the infusion of all this new “cume” from its acquisition of Wordle, Games’ next quarter numbers will look like the vertical is on steroids.
Similarly, Cooking hit the ground in 2014 with 18,000 recipes, became a subscription service three years later, and now boasts archives of 21,000 recipes. Like Games, it reached the one million subs milestone last year, attracting millions of chefs to try their skills at creating content with food.
The overriding strategy is mostly brilliant – building near-adjacency verticals that are simpatico with current Times customers, but also provide successful brand extension.
In their first quarter report to Wall Street, the Times Company reported 9.1 million subscribers, adding nearly 400,000 in the first three months of 2022.
But wait…there’s more.
In January, the company also acquired the well-known digital sports publisher, The Athletic for $550 million. That purchase also helped vault subscription revenue, although the sports publication lost nearly $7 million in Q1.
Interestingly, sports news has never really been a core strength of the newspaper version of the brand. With this latest acquisition, the Times Company is bolstering its coverage to include a vertical whose followers are as maniacal as those who plays Games – sports fans.
As we have seen over the past decade of including 14 different formats in Techsurvey, those addicted to sports are especially apt to feed their habits – with additional content, event attendance, merch, and yes, gambling. The current frenzy over online wagering is testament to just how profitable sports can – and the potential to – be. Just ask radio sales managers in states where sports betting is legal.
What can radio learn from how the Times Company is building its subscription empire?
1. It’s smart to bundle – Yes, there’s a limit to how many subscriptions the average consumer will add to their monthly credit card statements. We’ve seen this again this year in Techsurvey 2022 as more and more people grow concerned about these fees adding up. By mashing up its traditional news products with access to these lifestyle verticals, the company is showing incredible upside.
2. Stay close to home – The “near-adjacent” strategy is a logical line extension to the original brand, combining its core straight-ahead news and information product with these lifestyle brands, none of which venture very far from the core. And all of this recent acquisition activity encompasses existing core strengths within the company – content creation, subscriptions, publishing, and BtoC transactions. Soon, the trucks and delivery staff will be a quaint vestige of the print past.
3. Acquire, then build – The Times Company is proving it can grow verticals by intelligently adding popular pieces to existing profit centers like Games or Cooking. This allows their biz dev team to look for other appropriate purchases that are great fits. And every once a while, a true bargain emerges – like Wordle – where very little has to be invested in order to instantly reap the benefits. Purchases already in “move-in condition” are that much more attractive…and immediately profitable.
4. M&A is a megatrend – As we’ve discussed before in this blog, mergers, acquisitions, partnerships, and collaborations are proving to be more than just a fad – they’re a trend. Size and speed are both key attributes in the media world.
5. Think BIG – For the Times Company, this is congruent with how they’ve behaved throughout most of the Digital Era. The Times got serious about building paywalls back in 2011, amidst pundits who believe paying for online content wouldn’t be successful. Today, the Times Company’s goals with subscriptions are truly mammoth, suggesting that whatever level you’re on, hefty ambitions are the way of the world.
As Levien noted in her company’s earning announcements, the strategy is a simple one:
“Become the essential subscription for every English-speaking person seeking to understand and engage with the world.”
What does that look like in real numbers:
At least 135 million potential subscribers.
So, even though they’re now at the 10 million milestone, there’s clearly a lot of upside growth.
Could a traditional radio company have purchased Wordle from Wardle? At $1-2 million, absolutely.
Would it have been a good fit? Probably not.
But as the Times Company is proving, a “near-adjacent” content strategy is a smarter way to go.
For radio broadcasters, podcasting acquisitions are already part and parcel to both iHeartMedia and Audacy’s respective strategies.
Audio streaming has proved to be a tougher road to hoe. Have you seen Spotify’s stock price of late? Its shares are now selling below the company’s IPO price back in 2018.
Talent and syndication are the content jewels in the crown. Hard to manage, volatile, and unpredictable, franchise shows might be part of radio’s “near-adjacent” opportunities to grow in the audio space.
And then there’s the metaverse, a virtual arena with lots of promise for any media company looking to grow. It may not as sure as Wordle, but it’s not hard to imagine a “meta” wing at CES in the next year or two as brands take their content and its stars into once far way VR and AR regions.
The Times Company isn’t about to change its slogan to “All the Content That’s Fit to Bundle” just yet. But its penchant for adding smart pieces, developing them, and growing its subscriber base is worth taking note of.
But if you think what the Times is doing isn’t exactly relevant to radio’s challenges and aspirations, let’s not forget their forays into the audio space. They’ve made strategic investments in podcasting companies, developed the most successful news podcast, “The Daily,” and they’ve developed a slick “all audio” app.
Here they come.
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