This is the first of a series, analyzing the rapidly evolving Entertainment industry
One of the most fascinating (at least, to me) shifting and moving around that’s happening in the entertainment industry. The old model (writer, content creator, distribution / network all being separate – and being subsidized by traditional “push” advertising messages – is clearly dying, yet the old establishment is stubbornly clinging to the way they’ve been doing things since time immemorial instead of innovating. Sure there is a ton of money involved, but they are going to lose out in the end so why not embrace it?
Perhaps there are just too many contracts involved. But when you can watch the same program in multiple ways (broadcast, on demand/tv, on-demand/streaming via internet – on television, computer, tablet, game system, OR telephone – and excluding any near future new devices) – and with all parties all trying to be the gatekeepers and control the process (content creators, networks via television broadcast, networks content distributed through owned websites, network content distributed through third party entertainment portals, Neflix, Hulu, cable, satellite, phone companies (Verizon, ATT), Apple, Google etc etc etc – Phew! getting tired even trying to type it all!) – well, it is obvious that a shakeout is happening.
The problem, among other things, is that each party is desperately trying to protect and control their traditional little chunk of the business. And focusing on the impossible quest of trying to force the world to conform to their business model, instead of adjusting their business model to suit the way the world actually is.
But they can’t because serious disintermediation is happening in the form of the infrastructure that lets you stream entertainment on demand, where, when and how you want it. Attempts to control distribution by enforcing hard hitting copyright laws (like SOPA) – in the digital era of sharing and on-demand – aren’t going to do it; and giving the consumer only an ever increasing set of hoops to jump through (like the severely limited amount of pre-bundled “options” that the cable companies for you to choose from, when consumers have an ever increasing set of flexible options to see their entertainment; why can’t I just pick the networks I want to subscribe to on a one-by-one basis?) isn’t a solution either.
On a side note, bazillionaire Barry Diller (among other) is trying to change the bundle model by recently launching Aereo (if you’re curious to hear an explanation about it, click here.)…so is Mexico’s Carlos Slim with Ora TV. So many new players…so many ways to distribute (the same) content. But I digress…
So I watched with interest when Netflix – a newcomer to the scene, and a “mere” distributor of content owned by the big boy networks etc, launched it’s own (co-produced – more on that later) series Lillyhammer. All at once, as it turns out; instead of following the decades old tradition of keeping the audience strung along at the *distributors* enforced “once a week” rate, they put out all 8 episodes at once – realizing, no doubt from looking at their own data, that people aren’t interested in waiting a week between episodes – and hoping they remember to return – but I digress…I was curious to see what the quality of the story, production, and acting was; after all, HBO and others have made a good deal of money by producing high quality shows, as a reason for people to pay the extra subscription price. But now all of a sudden, here’s a mere digital tv channel as it were, creating thier own content; and you know what? It was really good!
Yeah for them to being brave, as well as practical; as the number of places/ways to watch entertainment proliferates, they need to create their own brand; without it they become a generic pipeline. With original content, they’re creating a reason to subscribe to Netflix…maybe not because of one 8 episode show, but it’s a tentative toe dip in the water to see how the market reacts. And it reacted well, garnering better popular ratings than The Tudors (actually, I’m a bit miffed about that lol, I find The Tudors rivetting…).
This is a brave also, since Netflix is creating competition for the content they license from the “big boys” – who could very well get angry (scared?), and pull their content. Because there are other generic “digital pipelines” to distribute content through – or, as some are attempting to do, building their own “digital deliver system” (aka, online network)”.
There have been, of course, other attempts to create entertainment outside the traditional “studio / network” model – Web Therapy with Liz Kudrow’s involvement, among others, on the theory that of course anyone can create something and post it. While technically true, the hurdle of drawing viewers, to a http://www.VISITME.com url without an established audience, or brand, being a large one (Lisa’s involvement of course ensuring a draw – so you need at least one brand name involved); the second issue of how to pay for it being another one, since advertising online is as much based on traffic – and without the established traffic it is difficult to attract advertisers.
As is the not to be dismissed issue of the cost and experience needed to product good content – story, production values, etc. Sure, maybe every film major in college thinks they can produce something extraordinary, the truth is that experience (and a good team) counts for almost everything, and that my friends, is not cheap. Lillyhammer is promoted as independent Netflix content, but was still commissioned by the Norwegian Broadcasting Network, “in association with Netflix“. And starring a name (Steven Van Zandt) which has at least some name recognition from his days in Bruce Springsteen’s band. So it’s not exactly a kid in a garage. And it’s also not exactly Netflix creating an entirely new show on their own; they just went outside the US system (no doubt to avoid offending one US network/studio over the other, and step on the proverbial toes of the networks whose content they distribute). But they know they don’t have the experience/DNA to create and produce something completely original on their own.
But if each is indeed trying to create their *own* digital destination entertainment portal (HBO.com, NBC.com, Google.com, etc) – which is what they all seem to be doing – the result will be a completely fragmented entertainment universe. Throw in everyone else (indie productions) trying to produce their own entertainment, and make money on it and you have a complete fragmented mess. Not good, or easy for the consumers to navigate…this defeats the purpose from the consumer’s point of view; they don’t want to have to skip to 20 various online destinations (include stand alone players) to see what they want to see – they want one stop shopping.
How do you get people to come to you if everything they watch is on demand, and they have to go to 20 different places to watch what they want? Because – in that situation – to find the entertainment you *like*, you have to search across multiple “walled gardens”. The operative word being, “search”. Which is a fine (if inelegant) solution if you *know* what you want to watch. But what if it’s a new series? And you don’t have Netflix’s established name, and 23.6 million subscribers (as of 4/2011) distribution?
So where’s it going to end up? We have:
- Content creators with an evolving distribution model they don’t understand (but who have the experience to produce things people want to watch);
- Traditional distribution (cable) that is a generic pipeline with new distribution models emerging (which it can’t seem to figure out how to take advantage of) who are trying to defend their position by shoving pre-formatted (expensive) subscription options down consumers’ throats – at the behest of the content creators / networks who insist on charging huge license fees to the cable companies; meanwhile, other than locking people into long term contracts, they are generic;
- A new, fragment breed of distributors who don’t have the rights to legacy content, and who are forced to pay the same exorbitant fees to license – to deliver the same content hosted by many others (non differentiated), forcing a huge upfront investment – with a high potential for failure;
- Consumers increasingly pissed off, and confused – who increasingly won’t stand for content they have no control over (time, place, mode)
- Many, many different ways to watch: can’t forget the phone (telecom) companies who are fighting the increasing bandwidth being used by consumers who stream the content (with whichever methodology – web, app, etc) to their phones.
Both the cable and phone companies are fighting with consumers and their inevitable demands to watch what they want, when they want it, how they want it. But for different reasons.
To start tackling this issue, I’m next going to do my best to explore the role of brand in the entertainment space (aside from being complex, it’s also nebulous – so I’m sure I’ll end up leaving *something out lol), and how it’s a shifting concept – ironically more important than ever, yet more difficult to define. And leverage. And new opportunities….that aren’t (to my knowledge) yet being done, yet will change the industry beyond recognition. And then explore some of my own ideas, because hey, it’s my blog! Not sure exactly where this will go, but am enjoying the mental wrangling and detangling.