When I left Hollywood and moved to NY Summer 2010, I started thinking about how I could start my own company, using digital media to disrupt the Hollywood system. I had just listened to Ted Turner’s autobiography, Call Me Ted, and was inspired by his innovation in the industry. I became convinced that digital to my generation was the broadcast to his generation and nothing significant had been done to tackle premium video entertainment (TV and movies) in a meaningful way.
Distribution Wields the Power
Having worked in the movie business, I had a first hand understanding that distributors (or aggregators) hold all the power and make most (if not all) of the money vs. the content producers. If you look at any of the media conglomerates’ financials, you’ll find that their distribution/syndication/aggregation businesses (i.e. studios’ theatrical distribution networks for movies, TV networks, MSOs) are the real moneymakers. This notion is validated by the book The Curse of the Mogul: What’s Wrong with the World’s Leading Media Companies.
While YouTube, Dailymotion, Vimeo and others had democratized the distribution of video content, those sites were populated by short, user-generated content. While fun to watch, this doesn’t satisfy those looking to fill the average of 3 hours of TV that people watch per day.
Furthermore, in the premium streaming business, companies like Netflix and Hulu don’t have live, or even up-to-date, content. Their streaming libraries are populated with older content that has been cleared for broader syndication. Again, while the content is valuable to satisfy short cravings for premium entertainment, they don’t satisfy the need for new, fresh, premium entertainment on a regular basis. The average person is filling 2 hours and 31 minutes of their day with TV programming.
The Rise of Mobile and Broadband
I also saw mobile entertainment beginning to mature. Gaming is the number one activity on mobile devices. The first iPad had just been released. And, i saw video eventually becoming the primary source of entertainment on those devices.
With broadband, WiFi and mobile data network speeds accelerating to the point that, not just streaming video, but live-streaming video, in good quality and without much buffering was possible, I felt even more strongly that premium video entertainment needs could be fulfilled on mobile devices.
How great would it be to have the ability to watch live, premium content on your mobile devices – anytime, anywhere?
TV Everywhere and the Digital Powerhouses
About this time I started hearing about TV Everywhere. MSOs and TV networks started releasing mobile apps where you could view their content.
Also, Google, Amazon and Apple started trying to enter the space with new products.
I figured with all these powerhouses, they were bound to get it right. So, I put the idea aside and moved on to my new job at Big Fuel – building a social content distribution network for the agency and its brand clients. Similar to how Ted Turner felt when he first conceived of a 24 hour news network: he just figured one of the other networks (ABC, CBS or NBC) had to be working on something like this. Ten years later he woke up and there was still no 24 hour news network. So, he founded CNN. Well, just over a year later, the media companies, Google, Amazon, Apple, Netflix… they still haven’t figured it out.
Sometimes the Best Way to Disrupt Is By Not Being (Too) Disruptive
I would venture to say that iTunes wasn’t that disruptive to the music industry. What was disruptive was Napster and other peer to peer music sharing sites. Then, Steve Jobs came in and offered record labels a lifeline: make premium recorded music (not the ripped, copied or live-recorded music that you found on Napster) available in the format that audiences now want it (single songs vs. whole albums), make it extremely easy for them to find and consume that content, and they’ll pay for it. What Steve Jobs did wasn’t necessarily disrupting the big music business, but, rather, saving it.
Similarly, movie studios, TV networks and MSOs are scared to death of losing control of their content, and with it, the advertising dollars that make them multi-million/multi-billion dollar companies. They’re the force behind the Protect IP Act (#stopPIPA) in the Senate and the Stop Online Piracy Act (#SOPA) (aka E-Parasite Act) in Congress. If you’re not familiar with these legislations, please see this video below.
PROTECT IP / SOPA Breaks The Internet from Fight for the Future on Vimeo.
So, how do you play to the Hollywood moguls AND satisfy audience cravings for premium content, live, anytime, anywhere?
Subscription-based Social TV
Create a MSO that is socially integrated and socially distributed, meaning
1. You can check into shows with friends and interact: My wife and her sister used to call each other on Monday nights and watch The Bachelor or The Bachelorette together. They loved engaging with the show, discussing the men and women, the dates and who might win. I can’t watch sports anymore without Twitter – especially Syracuse basketball. I’m constantly checking my feed on my iPhone or iPad (or both!) to see what other fans are saying.
- The lesson here: valuable content + accessible platforms = scalable communities.
- What does this mean for the moguls? More engaged audiences, around the most valuable content and the analytics to prove it. Traditional media relies on Nielsen data which many consider to be limited. But, online, MSOs could have access to an ocean of demographic and psychographic data about their audiences. This means higher rates for CPMs, sponsorships and product placement.
2. You can share, rate and comment on shows/episodes: Say you’re on the NJ Transit commuting from NYC, or at the airport waiting for a flight, or visiting family or a friend that doesn’t have premium cable. How would you like to check your Facebook or Twitter stream and see that a friend has liked/shared an episode of your favorite show – or even a show that you’re not familiar with? You click on that show in your stream and are able to watch the show on Facebook or Twitter – never leaving the platform? And, because you trust that person’s taste, the show is relevant to you and you enjoy it? In fact, you enjoy it so much, that now you share, rate and/or comment on it? Suddenly, you have access to curated, relevant, premium content in your social stream.
- Take that a step further. Say, instead of being restricted to viewing premium content at home on your TV (because that’s the device your MSO connects to) or on an app on your desktop/laptop/mobile device, you can log into your MSO on anyone’s Internet-connected device. And, when you log in, you have all the premium content channels your MSO bundle normally would have, plus a list (think DVR playlist) populated with the most shared, highly rated and reviewed content from your social and interest graphs (Facebook and Twitter, respectively). Channel surfing becomes curated content surfing. And, you can log into your parents computer and get access to all this content as if you were at home on your couch.
- The lesson here: According to AOL’s study, “CONTENT: What Drives Consumption?”, Unique Content + Quality (trusted, fresh, relevant, authentic) Content = Valued Original Content. Or, as I like to say, content without social context is worthless🙂
- What does this mean for the moguls? Viral effect of their content to the most relevant/engaged audiences (i.e. more views and more engagement), again leading to higher rates for CPMs, sponsorships and product placement. In addition to more accurate data, producers will have direct feedback from audiences – what did they like/dislike about an episode? what do they think about specific characters and story-lines? Who should live or die or breakup or get married? Producers will have a new ability to engage with, and satisfy, its audiences.
If this can be accomplished while maintaining the security of the content, so that it can’t be ripped/pirated easily (and, I think it can), then the advertising model can stay relatively the same as it exists now. Not too disruptive to Hollywood, or out of their realm of understanding (giving them the benefit of the doubt here).
The Side Effects
- The rich will get richer and the poor will fail: More accurate data on premium content will cause hit networks with hit movies and TV shows to be able to charge even more of a premium on advertising, while the niche networks with shows that reach smaller audiences and that rely on the MSOs forcing consumers to pay for their channels in their bundles, will cease to exist.
- Pilots might get longer lifelines: Every season, networks produce and release new TV series. If pilots don’t perform well within the first few weeks of release, they’re terminated. The slots are filled with existing content (often in syndication) or by new pilots. But, with social integration, pilots will have the ability to create strong, engaged communities early on, improving their chances of succeeding (i.e. staying on air).
- A middle class will rise: These are the Revision3, the Maker Studios, the YouTube Creators, etc. They’ll create low-cost, ongoing series in niche topics and genres that will be aggregated and programmed alongside premium, Hollywood content. They may or may not drive as much gross revenue as Hollywood content, but they will make healthy net revenue in context of their production/overhead costs.
- A Cadenced Evolution of the Industry: I can’t predict what the industry’s business model will be 10, even 5, years from now. But, subscription-based, social TV can help Hollywood and digital-native content producers explore new business models without breaking Hollywood’s back the way that music sharing broke the music industry’s back.
Would you subscribe to social TV? Do you know any companies working on this?