Broadcast Contracts Will Kill Hollywood

It does not surprise me that Game of Thrones is the most pirated show on television. Without cable, I have no way to watch it. I’d happily pay $20 per month if HBO GO was open to people without cable subscriptions. Unfortunately, that’s not that case. None of HBO’s shows are available on iTunes, Netflix, Hulu or Amazon. I have no way to watch any of HBO’s shows except pay a $75 per month cable subscription for a television I don’t have, wait for them to come out on DVD, or pirate them. I’m a good boy with little expendable time, so I avoid Game of Thrones altogether. But 25 million people have not been angels and found the show through whatever means necessary. Who knows how many more people opt out entirely and forever pass the show by?

I’ve said before that Hollywood should concern themselves less with piracy and more with audience access. Simple supply and demand metrics – audiences demand content and providers are failing to supply to increasingly popular internet channels. It’s the whole industry’s fault for inciting piracy. They are missing out on an expanding margin of customers. In defense of HBO and others, production companies have entangled themselves in lucrative and restricting contracts with cable partners. To offer direct-to-consumer digital distribution would breach their contracts and deprive them of their single strongest revenue source. For most companies like HBO, that may never happen – at least not until everyone has internet televisions or the cable providers themselves die.

Broadcast contracts may be a reasonable excuse for holding content back from web distribution. But if companies plan to stand behind that excuse, they need to stop making such a big deal about piracy. By threatening or incriminating millions of people who cannot access your primary distribution method, you are alienating potential evangelists of your content and failing to understand the trajectory of your market. Web television is not a trend. In five years, most motion picture content will be consumed online – on connected televisions, game consoles, mobile devices or computers. To fight or deny this is foolish and egoistic.

I left Hollywood because no companies were willing to put the engineering muscle behind personal distribution channels. Beyond sheer web design and database builds, online services require customer service and billing infrastructure that can cost a lot of money. Fortunately, these things are getting easier and cheaper. An independent production company with enough content to leverage could easily set up shop on the web with a very controllable investment and small handful of people on the tech side.

If you want a sustainable career in the movie business, start or work for a company with full digital rights. Careful signing onto productions with traditional broadcast contracts and no digital rights – these opportunities, no matter how lucrative, are sinking ships. If they cannot find a way to breach contracts soon, they may not survive the next wave of liberated web-savvy competitors.

Advertisements

Consolidating the Online Content Experience

Image representing Netflix as depicted in Crun...

Image via CrunchBase

Marvel’s The Avengers raking in a $200M+ opening weekend leaves little room to tell Hollywood that they are doing it wrong. The 40-year old blockbuster model continues to pay for the movie business. In the early days, the cinema experience was not far removed from attending a Broadway show: dressing up and cozying into ornate movie palaces staffed by ushers and orchestras. To expand the experience, multiplexes cropped up everywhere. To augment the experience further, Hollywood learned to tentpole a film, merchandise it and open theme park rides. The cinema experience is larger than life.

While all of that may work for three or four titles, hundreds of motion pictures barely scrape by each year. The internet and a proliferation of choice in the new millennium continues to threaten the sustainability of the movie business. The entertainment industry as a whole keeps falling behind the times. They still depend on Nielsen‘s myopic ratings and surveys to make strategic market decisions. They collect little to no data on their viewers to leverage repeat conversions. They build no intimate relationships with their customers and create few opportunities outside the theater to communitize their content. They embrace an antiquated scarcity model by rolling content out onto different platforms across rigid windows weeks and months apart, thereby eliciting content access demand and piracy. Merchandise still sits on retail shelves or on random websites online, far from the experience of seeing the movie itself. Without update, these practices may be fatal. While box office may be up (due largely to increased ticket prices and 3D or IMAX premiums), attendance is down – even more painful when considering population growth.

All of these issues could be solved by incorporating a thicker web layer into and consolidating the filmgoing experience under one roof – literally and figuratively. By converging merchandise, community and content into a digital or real world platform, Hollywood could make all facets of their business more accessible and leverage entire catalogs toward a more scalable, niche-friendly or cost-effective practice. Loved the movie you just saw? The theaters should make it as easy as possible to leave the theater and impulse buy a plush or action figure of your favorite character. Imagine if you could buy merchandise from and connect with other fans on a movie’s page in Netflix? Organize public screenings or petition for a sequel with the masses online? The community layer would add to the consumer experience and give filmmakers a platform to understand how people engage with their work.

I love the movies. I love the theater. I want the industry to succeed. These issues are reparable. If the industry can recruit key talent from the web tech sector, surrender a century’s worth of logic around brick and mortar business practices, build relationships with consumers online and put storytelling first, there may be a glimmer of stability and hope for film professionals and moviegoers alike. We’ve got work to do. There’s plenty of stories to tell and opportunities to make a living by producing great content.

Live Performance

If you want to connect with your audience, you must share a room with your audience. You must get up on stage and entertain. Campaigning politicians and rock stars learned this a long time ago. Beyond entertainment alone, a successful live performance can communitize the audience around your personal brand. Everyone sharing a room together will feel apart of a big family, a family with your surname. Audience applause and energy are contagious; spread adoration for you and your product by collecting or streaming as many fans as possible into one room.

Unlike Netflix’s Reed Hastings, Steve Jobs never hid behind the veil of a press release or blog post. He stood on stage, fielded questions without fear, and put on a live show. I am convinced Apple succeeded on the foundations of its audience’s oohs and aahs at these keynote events. I am convinced Apple advanced forward because Steve Jobs knew how to put on a show. The collective power of audience intrigue spreads like a virus, and that intrigue can only be fostered in person and en masse.

If you want to build a brand, learn to overcome stage fright and put on a great show. This goes for anyone trying to make an impression on the market or on the world. You must show your face to the crowd.

Side note: one of the best live performances I’ve ever seen in person happens every Sunday night in Santa Monica. If you haven’t already, all Angelinos you must check out The Toledo Show – a “Cabaret Funk” band that performs every Sunday night 9pm at the classic Harvelle’s. $10 cover, two-part set until around 1am, totally worth every minute. The new definition of “cool.” Thank you, Adam Speas, for introducing it to me.

The Controversy of Change: Netflix, Facebook, and Chameleons

Many people freaked over Facebook’s face lift and Netflix’s reorganization. Yes, these changes are inconvenient. Some may break your routine or even damage your business. But what would you prefer instead? For the company or service to stay exactly the same?

Companies that fail to change fall prey to the market evolving around them. Inevitably, they are slain by the next best thing. By asking them to stay the same, you are asking them to fail. You are condemning the brand you embraced for so long to a slow death.

No, change may not always be good or necessary. But you cannot know until after you try. And neither can brands. No one has a crystal ball. Not even Steve Jobs. Smart leaders fail more often than lesser leaders and learn from their mistakes. They know that the biggest risk is avoiding risk altogether. You deserve to be eaten if you sit still in the savanna.

Like puberty, change may always be an ugly process. Some coast through it smoother than others. Those who make it out clean never forget who they are or what they believe in. A strong brand transforms with the market, but keeps its core mission at heart.

Embrace the chameleon business. Invest in progressive brands with solid foundation, not products destined for revision or absolution. If you truly believe in a brand, you should trust in change. Forgive the minor transgressions and take pleasure in discovering the next step along the way.

New Media: Producer’s Intent? [Film Friday]

This is the first in a series of posts I announced last week called “Understanding New Media.”

One argument I’ve heard from filmmakers trying to define “new media” favors a producer’s original intent for the material. If the story being told was meant for web and first launches online, then it (by definition of producer’s intent) should be considered “New Media.” I suppose that’s fair – if it was made for web and only ever lives on the web, what else do you call it? Well, I call 99% of it “Casual Video.”

YouTube is the biggest marketplace for “Casual Video,” where users upload literally anything they can capture. Most YouTube videos have no revenue agenda, are authored by individuals arbitrarily, and lack front-end logistics or financing. For a video to transcend “casual” status, I think it must first have at least a little foresight, structure, and craft tied into its execution. “New Media” is a film industry term, so there should be a certain level of “industry” to the content being produced. There is really no “industry” to my friend Jim skateboarding off of a cliff. It’s merely pure, casual fun.

So I’ve raised a little money and produced something for the web. “New Media,” right? What happens when that content syndicates on television? Or premieres on the big screen? Is it still “New Media?” Or has it become more than that? On the flip side, what happens when a feature film, originally intended for the big screen, first ends up online out of failure to platform in theaters? Is it still a “Feature Film” or has it become “New Media” in spite of the producer’s original intent? Tough call.

Moreover, what happens when our televisions and movie theaters are networked through the web? Is a cable show broadcast on Google TV “New Media” or “Television?” I stream Netflix and South Park the same way I stream YouTube antics. Don’t you? So what’s the difference? Well, there is no difference to the consumer, except perhaps the quality and duration of content. The lines between web and other platforms are blurring. Just because something plays online does not necessarily make it “New Media.”

I suppose the “original intent” argument can stand for now concerning content that was financed, produced, and distributed exclusively for the web. But there’s much more to it than that. Does the content play as part of a greater whole? Is it a spinoff or tie-in to another intellectual property on another distribution platform? Should the content then be called “Bonus Material” or “Marketing” instead?

Tune in next week for a discussion on web content’s autonomy.

Bootlegging Yourself (Marketing Controversy 101)

A few days ago, a bootlegged version of a red band trailer for David Fincher’s latest film, The Girl with the Dragon Tattoo, hit YouTube with a vengeance. Before Sony Pictures pulled it for “a copyright claim,” the video had nearly 2 million hits after only two days. There is speculation that Sony launched the trailer themselves to kick-start a viral marketing campaign. Whether or not this is true, the video’s premature release certainly did not hurt Sony or the film. The leak was awarded widespread coverage in press and online. If audiences were not aware the hit novel trilogy was being adapted for the American screen, they definitely are now.

I find the entertainment industry’s preoccupation with piracy amusing. Sure, I am a filmmaker and can appreciate revenue lost to piracy. But as veteran studio executive Bill Mechanic once pointed out to me, “Pirating means that people want to see your movie.” As I see it, stolen entertainment media suggests one of two things: your content is not good enough to pay for or too difficult for the average consumer to find. Both problems are your fault and worth solving. iTunes rivaled music piracy by promoting easier access to music: it became easier to buy a song on iTunes than steal it from a torrenting site. With bandwidth evolving and platforms like Netflix and YouTube on the rise, movie studios are running out of excuses not to open their libraries. Simple: help audiences consume the entertainment they want to consume. Most people will gladly pay for that. And pirates will help spread the word in the meantime.

But I digress. In a world saturated by media noise, it has become necessary for marketing materials to have unique stories wrapped around them. The Dragon Tattoo leak promoted three levels of discussion: the bootlegging of the trailer in the first place, whether or not Sony released it on purpose, and finally the irresistible quality of the content presented. Trailer discussion spread the word and inadvertently spread the message: “She’s coming.”

Movie studios should bootleg themselves more often. And you should too.

Film Friday: Power to the Theaters

A Certified Fresh logo.In the good ol’ days, content was king. Producers and publishers thrived off of the complexity, scarcity, and cost of generating and distributing entertainment. Very few people could publish a book, record an album, or produce a theatrical feature film. Times have changed. Through the commodification of consumer production tools and publishing platforms, content generation and distribution are easier than ever. The result? Far too much noise. Public discourse is completely cluttered by personal voice. To whom should you listen?

Ears and eyeballs are in high demand. Seth Godin said, “We don’t have an information shortage; we have an attention shortage.” Content is no longer king. Attention is king. Those who command the respect of the masses command the value of entertainment product. Content Producers are less powerful than ever. Content Curators, like companies and critics who drive discoverability and promote entertainment traffic, are taking the cake. Warner Bros. demonstrated a progressive value in discovery platforms through the purchase of Flixster and Rotten Tomatoes. Systems like Netflix, Pandora and YouTube that navigate consumers through targeted entertainment are dominating the market. As the library of public content continues to grow, so too will the value proposition of these companies.

Platforms are the near future. Traditional theaters need to wake up and smell the opportunity. As it stands, film exhibitors are little more than the leashed pets of the movie business – completely at the whim of their masters. If theaters take liberties to curate, program, and leverage alternative product against the studios, their value to the average consumer will increase tenfold. The quality of entertainment will increase, revenues will increase, and cultural sophistication will increase. Theater owners know their communities well and should play an active role in curating entertainment. Curator Exhibitors (theaters) need to earn the respect of local audiences by consistently screening top-notch entertainment and communitizing outside Hollywood.