TikTok is the ‘triple threat’ Microsoft needs to break into the talent business

Analysts suggest Oracle will take home the prize thanks to the company’s roots in data security and privacy, a major issue for TikTok. However, without experience in media, content creation or distribution, this buyout seems like a stretch. Another contender, Twitter, certainly understands media and distribution but without foundational experience in original content creation or talent development, it’s unlikely.

People are also skeptical as to why Microsoft, a company primarily known for software, would want to buy TikTok, a social media network featuring fun music, lip-synch, dance and comedy videos. Is it because it looks like too-good a buying opportunity given the pressure TikTok faces from the president’s office? Or is it because it will make Microsoft a social media player right off the bat, providing a huge, highly engaged user base, sizable ad revenue and an outsized public profile?

Potentially, but I think Microsoft wants in on the talent business, and its wide range of experience sets it up for success.

TikTok is not a traditional social media network. Its customers, many of whom are younger, don’t use the platform to check in with friends, they check out content creators they don’t know. They discover and imitate new dance moves, comedy and trends. They are always on the next ’cool hunt.’

On Facebook, customers find the familiar and the comfortable – friends, community news and targeted ads that reinforce their routine. And while Instagram also provides access to explore and follow celebrities and strangers, it is a visual world: photographers, designers, influencers and food enthusiasts. TikTok opens a path to discovery that’s resonating with a new generation of social media users.

When most people think about Microsoft’s business, they focus on Windows, Office, Outlook and other software. That’s not on-brand for TikTok at all. But contrary to its stodgy image, Microsoft is deeply invested in entertainment and content. It built Xbox from the ground up, owns fifteen gaming content studios, bought LinkedIn and even launched its own streaming competitor to Twitch – Mixer.

While Mixer shuttered in July, it reinforces Microsoft’s clear desire to enter and ultimately own the talent business. Microsoft already has talent in the form of game designers, animators, writers and other creatives who produce content for them; it doesn’t have access to actual, human performers. TikTok presents Microsoft an opportunity similar to the one Amazon had when it bought Twitch. It won’t have to build a platform from scratch this time; TikTok is its shortcut to tens of millions of creators that will establish and reinforce its connection to the business of original, live-action content.

Other companies such as Facebook, Instagram and Quibi want in on talent too, but their approaches to harnessing it makes them seem archaic. Facebook is trying to reverse engineer a TikTok experience and pay creators to come up with original programming for Facebook TV. Similarly, Instagram is paying creators to come up with exclusive content for IGTV. Quibi, the short-form content streaming platform, is paying A-listers to create content for the platform, but its wide distribution is still in doubt.

But with TikTok’s acquisition, Microsoft would shift into passing gear. It can see that TikTok is the golden ticket to vertical integration – access to talent, content creation and distribution.

TikTok was thinking long term when it hired Kevin Mayer from Disney (who resigned just this week) as its US chief executive officer. Disney has always been in the business of long-term talent cultivation. It is a vertically-integrated entertainment business – it harnesses and cultivates talent to create original content, and then distributes it. It’s the system that created and continues to create the Britney Spears, Miley Cyrus, and Justin Timberlakes of the world. It really started with the Mickey Mouse Club – bringing talented kids into the spotlight and then nurturing their individual careers in Disney-produced vehicles. Mayer’s ascendency demonstrates TikTok’s understanding of this progression and the value it creates, even if it is now searching for his successor.

Now, imagine if Microsoft were able to harness the talent that TikTok has ready-made. It, too, could start to create original, live-action content – sitcoms, series, movies, talent shows, game shows, reality shows and more. And while they now have some content creation and some distribution, this acquisition could turbo-charge it. Early on, Disney had to hit the streets and scour talent competitions. All Microsoft has to do is buy an app, and they have access to every young content creator on the planet.

Everybody wants to be a ’triple threat.’ On Broadway, in the Mickey Mouse Club and today, if a young talent can sing, act and dance – the closer they are to star-power. Large companies at the intersection of entertainment and social media are also trying to come up with all three pieces of the vertical integration equation: access to talent, the ability to create content, and wide distribution.

Regardless, there’s one part of the equation that seems constant. Even as we move into an era of self-driving cars and of virtual reality applications, real live, spontaneous, old-fashioned human talent is the next big thing. And Microsoft is tapping into that universal need.