Democratization, personalization, monetization: the voracious appetite for content
Programming overload is the result of the overwhelming volume of available entertainment options. One could not possibly watch all that has been created.
Nonetheless, there is a voracious appetite for content on a global level that has been created by an industry that has gone through a paradigm changing democratization of production and distribution. This content ranges from the broad mass market to narrow limited niche appeal. And it will not change in the foreseeable future.
This has created a vast, robust and highly competitive ecosystem to support the growth, on both the horizontal and vertical value chains, raising the stakes as significant money is spent to produce the wide variety of our entertainment content.
In fact, competition is now so robust that the Department of Justice is looking into repealing what is known as the consent decrees. Those decrees were handed down by the US Supreme Court in 1948 in the United States v. Paramount Pictures, Inc. case.
The decrees by SCOTUS were related to anti-competitive behavior by several of the studios who were horizontally integrated, from production with talent under contract, shooting on the studio lot with company owned equipment and extending through to and including exhibition in studio owned theaters.
Once the decrees were imposed, the industry began a democratization process, starting in the early 1950s and continuing today. It is now reflected in each of the many distribution windows that exist currently, although only theatrical was a factor at the time of the decrees.
Tracking the numbers indicates that the move to repeal the decrees makes sense.
Democratization – There was a time when newcomers and independents had significant challenges in not just developing and producing content, but in getting effective distribution and monetization as well. The decrees changed that.
Many consider the democratization of content creation tools to be a phenomenon of the digital era, with digital cameras (including the increasingly sophisticated cameras in smartphones), post production and digital cinema in the theater and home entertainment technology delivering content to the device of our choosing on demand.
Not so.
As a direct result of the decree, studios began to divest themselves of their theaters, contract talent and even some of the equipment they owned and maintained at their facilities. As a result, independent suppliers became a fundamental part of the ecosystem.
Today, anyone with financing and a script can get a movie, a TV show or a short, produced, whether for a broader audience or one that is personalized to a select niche, targeting the audience segment that would best enable them to profit from the distribution, including one of the key drivers, the theatrical market.
Theatrical – Theatrical drives a large part of the market. The past year has seen dramatic changes in the global film industry with 2017 experiencing a 3-year low in North America’s box office, yet performance in 2018 at this writing, is up 8% over 2017, with analysts predicting a record or near record year.
Even with the annual fluctuations in North America, the #1 market, the global box office was up 5% in 2017 over 2016 with International totals up 7%.
China, a solid number 2 in the global box office race, is on track to eclipse the North America totals in the next couple of years. Their dominance has changed the way studios determine which stories they are going to produce, eyeing China as a lucrative market.
Streamers – During the past few years the major streamers, Netflix, Amazon, Hulu, Apple and YouTube, have turned the industry on its head, spending aggressively to produce new and compelling content for their growing, cord cutting and mainstream audiences.
Indicative of the opportunity, a recent study entitled All-Screen Streaming TV Census Report Q2 2018 from @Conviva reported that streaming more than doubled in the past year.
Thus, it is not surprising that the major streamers’ projected total production spending for 2018 is anticipated to be approximately $20 billion, even before distribution costs where they seek a theatrical release in order to compete for Academy Awards. It will likely be much higher in 2019.
They have disrupted the entire studio ecosystem of movies and TV as the studios and broadcasters attempt to meet the new competition head on with their own direct to consumer offerings. For example, Disney is spending over $70 billion to acquire Fox as a part of their attempt to beef up production and have access to a sizeable library.
Personalization – Democratization has enabled content producers to go from the broader market to niche target markets, sometimes labeled as microtargeting. What was once thought would be a 500 channel universe, is now a universe of an infinite number of channels.
Today anyone can become a broadcaster through the use of digital equipment, with programming streamed live through numerous sites, including YouTube, the dominant player in personalization, to Facebook and Twitter, among others and for the content to be recorded and archived for playback seemingly forever under the long tail concept.
Monetization – Monetization does not mean profitability. Profitability is the ability to derive revenue from the exploitation of programming. Profitability comes when sufficient revenue is generated to cover production and distribution costs and provides a contribution to overhead and profit.
Revenue is the challenge, but many methods are available in the digital age. Among the most prevalent are subscriptions as in what Netflix, HBO and others use, and ad supported, the traditional broadcast model.
The current robust economy in the US and globally and high consumer confidence supporting discretionary spending has enabled enhanced monetization.
Future – Data, AI and next gen broadband/5G cellular tech will drive the future of content production and distribution.
Data was highlighted in a recent in Streaming Media Magazine headline which said “Netflix uses data to drive creativity, and it’s terrifying Hollywood.” While the article goes on to say that Netflix does not use data to make creative decisions, it does use data “to make smart decisions about what genres, directors, and actors we wanted to see, and how to fund each project based on expected viewership.”
Initially driven by eliminating anti-competitive behavior, effective modern era democratization has led to a voracious appetite for content and a wide range of suppliers to satiate that appetite. The highly competitive environment will continue seemingly unabated on a global basis, in the developed countries and increasingly in the developing countries, who leapfrog over old technologies to enter the modern age, all to our collective advantage.
As for The Shindler Perspective
Insights for business – Our work through the years in independent consulting, with one of the major firms and in our hands on management roles, has focused on providing insights for business to a wide range of companies in and around the entertainment and technology sectors. This has involved various services, including, but not limited to, strategic planning, developing growth strategies and organizational/operational analysis.
Former employer PriceWaterhouseCoopers recently issued a study about what CEOs are doing with their businesses this year and into the future as a result of recent tax legislation. One of the highlights in that study is that “80% of executives plan to route tax savings to strengthen one or more initiatives to make the company stronger.”
PWC went on to state “we believe strategic-minded executives will seize this opportunity and make bold investments ahead of their competitors.”
What are your strategies? If you are considering what would make your organization stronger in the current positive business environment, our knowledgeable and independent insights into business could contribute to your success. Contact us to begin exploring how to make that happen.
Siggraph – We’ll be heading to Vancouver and Siggraph next week. Siggraph is always a great way to see the latest trends in the overall computer graphics market.
Jon Peddie Research issued a press release recently on the growth of the CG market, indicating that “the overall CG market grows to $147 billion by 2021.” A robust CG and VFX market is fundamental to the democratization ecosystem.
Digital Hollywood – Continuing my involvement in various industry conferences, I am producing and moderating the Future of Film: Global disruption, rewards & challenges – formats, streamers eSports & new tech panel at Digital Hollywood Fall.
It is a vital topic in the world of entertainment, democratization and monetization in 2018 and beyond. The stellar lineup of industry execs includes:
- Heather Blair – Head of Cinema Sales, MediaMation Inc.
- Paul Dergarabedian – Senior Media Analyst, comScore
- Chris Fenton – Media Strategist and Dealmaker; Former President of DMG Entertainment
- Robert Lenihan – President US programming, AMC Theatres
- John Rubey – CEO, Rubey Entertainment LLC.
- Ted Schillowitz – Futurist, Paramount Pictures
- Marty Shindler – CEO The Shindler Perspective, moderator
For more information on the October 17 event, tickets, etc. click here.
Display Week – Display Week has become one of my favorite trade shows and conferences. It is future thinking in a technology sector with a vast ecosystem of companies which impacts all of us on a daily basis.
We posted two blogs related to Display Week. They are:
Through the Looking Glass: Futuring Displays for Story Telling and Nits, bits and other tidbits – takeaways from SID’s Display Week 2018.
Future of Cinematography – In June, as a part of the annual CineGear Expo, I was involved in the Future of Cinematography panel, lending a business focused perspective to the many cinematographers, ASC members and VFX Supervisors who also participated.
Comics reflect reality – The daily comics in many newspapers often reflect reality. They make us laugh, smile and often recognize that the cartoonist is right on.
We read them daily and often post them on our social sites with commentary and regularly include them in our periodic consulting newsletters.
The following represent a take on technology and how it impacts us – for better or worse and how we are each addicted to tech in one way shape or form.
Pardon my planet – It seems we cannot escape our need for wifi and/or a solid cell signal, at least till death do us part.
Family Circus – Photo realistic images will be a topic at Siggraph next week, it always is. The goal is to make the imagery as real as real life for an audience of all ages.
Dilbert – Even when it is shocking at times and when we recognize our addiction to social media, many still continue to use it on a regular basis, even newbies.
Non Sequitur – Digital Assistants and AI are going to continue to have a profound impact on our lives. Some of it will be good and some not. Agree?
Share your thoughts with us on our newsletters, posts, etc.
Roberta Shindler and I look forward to an opportunity to discuss with you how we can contribute to your success.
For The Shindler Perspective, Inc.
Marty Shindler
Chief Executive Officer
© 2018 The Shindler Perspective, Inc.