Seeing The Money: Digital Hollywood - Summer 2009

Digital Hollywood always speaks to the essence of the day and where the prevalent technology will be the most optimized. The distinction here falls within the structure of the tipping point of what is possible and what is profitable.The New Hollywood Equation - Content Owners, New Platforms, Agents & Commerce The end point always becomes money but the rub becomes who can accurately debate the second coming of revenue. David Hutchinson, SVP of Digital Media at Program Partners, thinks that there is only two ways to go about it: either you pay or someone else pays. Everything in his mind has to flow through that universal reality. From his perspective, in the "old days", you went to school, worked for a company and retired with a gold watch. In the digital environment, it is much easier for a small company to succeed with not much overhead. He finds that encouraging but realizes the new competition that it incites. David Goodrich,  SVP of Digital Communications at ad agency powerhouse Universal McCann, believes that this is not over thinking the situation. These are the types of experiences he believes people are capitalizing on. In his mind, the coming discussions of content subscription can be simple; they don't need to be complex. Carlson Choi, the Director of Interactive Marketing at Activision, says that to be successful in this niche marketplace you have to go by three rules: keep it simple, keep your hand on the pulse and be flexible. Charlie Koones, a principal at Rockmore Media, takes a different perspective in saying that it is very hard for social media companies by comparison to monetize. The beneficiary on the whole is entertainment. With the aspect of sites like Hulu, it is uniquely powerful because you are able to harness this ubiquity cheaply and powerfully. Choi of Activision responds that they do keep social media in mind but what can happen, in an adverse way, is that you can segment your community. Goodrich of Universal McCann closes the discussion explaining that they know where the audience is and the fragmentation that will happen but it is incredibly difficult to keep it all aligned since there is no tried and true method in place.Hollywood Content, Distribution & Advertising - TV & Broadband The key is how do big creators of content and the mainstream successes find a way to harness this power. The energy displaces in so many different ways that sometimes it is hard to find the right portal. Daniel Rappaport, co-founder of Management 360, has a unique perspective. One of his clients is McG, director of the upcoming "Terminator Salvation", who is currently pursuing a soundtrack label. In his experience, Rappaport says that the client expects there to be some kind of digital outreach. They know that Film & TV is still the core business but seem to be discovering that there are other areas to play in. He also brings to mind that it can fail in other specifics although the elements on this don't seem well informed. Rappaport cites "Cavemen" on ABC as a move that didn't work. It gave the Geico people free advertising but the problem was is that they got the script two days before shooting the episodes. He cites though that sometimes the balance can work. One of his clients had just got a series picked up that morning called "Trauma" and a key to the deal was an online component. He believes that the outdoor interest and the captive audience will wrap around digital and film in due time but it is a full cycle that hasn't happened yet.Cable & Broadband - New Content & New Networks When it comes to envisioning the new perspective of how changing content will be conceived and delivered, the importance becomes one of creativity and focus. Michael Kernan, a former executive at ICM and CEO at NuMedia Studios, debates that cable splintered the audience but that the internet will splinter it much further; it is just going to be in a more targeted way. In his mind within this increasingly shrinking space, there are only two ways of making money and internet predominately has looked to the model of television. Rob Hayes, SVP and GM at Showtime Digital Media, believes that we are at a tipping point in terms of engagement. The opportunities that technology is presenting through its evolution will change content. Jason Cieslak, Managing Director of Interactive Media at Siegel + Gale, believes that the renewal resides in the social side of the business. 2.0 is about engaging through apps like Twitter. The question is how does that apply to Hollywood. One of the most interesting developments in his mind is Facebook with CNN. Imagine, according to him, how that could interact with the NFL season if done right. Hayes of Showtime responds to the counter agreeing that social media is a powerful tool but the question is how do you monetize it? When you give the report about how it is being done to the CFO, it gets tricky. How do you scale the gains and losses? Steve Stanford, President of Content and Entertainment at Agency 3.0, adds that 15 hours of video gets uploaded on You Tube every minute. But how do you orient that to capture the dollars?The next phase has to do with the perception of distribution and how it is evolving. Stephan Shelanski, EVP of Programming at Starz, says that his company looks at it from a subscription point of view. The internet is just an enhancement. As far as he is concerned in terms of product and content created just for the web, there is no financial model. It is simply a derivate of feature films for the content. Ryan O'Hara, President of TV Guide Network, adds that the scarcity of distribution has blown up because of the conflict between the Hulu and the You Tube model. The technology has hurt distribution in a way by opening it up. The only way seemingly to approach it is to stand loyal. The subscription model is one way to go about as evidenced in the efforts of Time Warner and Comcast who are trying to create new systems to access the elusive audience through traditional mechanisms. However there are many different ways to play it.Stanford of Agency 3.0 agrees in theory but says that the cat is already out of the bag. Business models will be built off of these continuing constraints. He cites that historically consumers have been happy to subscribe to the HBOs of the world and pay $100 a month to access something not available otherwise. Hayes of Showtime also makes a good point in that Showtime as a network have not put up any episodes of their series on services like You Tube or Hulu. They have held back their content which Hayes believes makes it more valuable. By delaying the window, you make it more of a premium experience. Shelanski of Starz echoes the effect on the regular networks saying that the majors are perpetrating this ubiquity which is going to make any business model change difficult. Stanford of 3.0 then retorts this saying that the business model doesn't support the CPMs in this type of fashion. As things move forward, he says, the budgets won't be covering what is expected. Kernan of Nu Media sees somewhat of a different perspective in his response. He believes that the Internet is not supposed to be about video. It is essentially a social platform and he thinks Facebook will figure it out. The question becomes how you monetize all the time spent socializing. O'Hara of TV Guide balances the argument saying that the new business models also don't support deficit financing. The syndication options that were available before in traditional television are disappearing. It is great for the consumer but bad for business.Stanford goes on to say that the agency approach might be part of the problem since he sees that as an incredibly inefficient process. The key right now is that the brands cannot react fast enough to make it work. Cielsak of Siegel + Gale says that alot of the conversation surrounding this advertising base is driven purely by understanding of the long form format. It is about what kind of ecosystems you build around these properties. This new world is an interactive medium...and it is not passive. Shelanski of Starz responds that it comes down to simply a more convenient way of viewing content and ease of use. Kernan of Nu Media adds that it is hard to cut through the clutter. Content cannot be looked at as being on one platform only.  O'Hara of TV Guide says that the telling moment will come when there is a big thing like "American Idol" but that can only be seen online. The thing with top line talent is that internet rights is an addition to the contract, not the primary.  Stanford of 3.0 says that it will simply in the long run come down to the business model issue. The issue is that you can't keep making four million dollar an episode television shows and expect them to scale. There has to be an approach that deals with talent differently. The talent in the long run will be open to experimentation. It is already starting to happen. In Stanford's mind, if they can do 3 minutes for $10,000 a minute why can't they do 20 minutes for $10,000 a minute as well. Shelanski by chance plays devil's advocate in response asking the question to what cable and satellite operators will do. These companies are not just going to let their audiences go. O'Hara of TV Guide seems trapped more in the middle. He believes that this issue has already been tipped by the consumer. There are simply going to be less margins and profitabilty.Entertainment Advertising Vs. Entertainment Advertising This panel offered the question dogging many within the online realm: how do you make advertising congruent with the entertainment so the consumer doesn't mind sitting through the possibilities? Glenn Slanders, Creative Director at The Viral Factory, says that the biggest aspect is the risk and willingness to take it. Anthony Nelson, Executive Integrated Producer at Crispin Porter + Bigusky, cites one of their recent campaign "Whopper Virgins" as a breakthrough in that they got the client to take a risk. In this case Whoppers won by 2/3. Nelson believes that the brainstorming in this situation was essentially about pushing the concept forward. In essence you have to be like a showrunner. In the current climate, alot of agency creatives come specifically from ad school which makes the angle specifically narrow in certain ways. Sanders says though that the first thing before any of these motives is simply understanding the audience. He says that they don't usually get the marketing reports or look at them. The key is talking to the brands and then balancing that with the response of the actual audience. The first question is what is the client's ultimate goal? You will have to ask if viral actually is the right way to go. When it comes to consumer packaged good, he says that they would almost recommend a more traditional approach. Nelson says, in comparison, his company defines the outlook by metrics. He uses Old Navy, a client of his, as an example. They came up with a cast of characters as mannequins and used them in both TV and web campaigns completely encapsulating and rebranding specifically to this aspect. It can become big simply off that.The rub continues to be the fact of the balance of a business model but one that both keeps the client and the consumer happy. The aspect of such a tall order seems to rest in the overwhelming consensus that subscription portal centric models will become the norm with the inital possibilities offered by the pay TV networks while the major networks scramble to redefine what indeed will motivate the bottom line.