The document discusses how digital entertainment is changing as viewers increasingly watch online and on mobile devices. It notes that TV advertising dollars will move online over the next 5-10 years as audiences shift. Current online video services are not well-suited for this new environment as content is expensive to license and interfaces are clunky. The future of entertainment will be streamcasting short-form content optimized for mobile viewing. A new type of company is needed to produce and distribute this kind of mobile-friendly content.

1. How Digital Entertainment Works
by
Nick Blake
founder, Mister Kite Entertainment Corporation
617-650-5413
nblake@gmail.com
published in 2011

2. For years we’ve been locked into the
formats of TV and Hollywood.
p4 © 2011 Mr Kite Entertainment, Inc.

3. Times have changed.
Today media is fast & intimate.
Shows speak to an individual, not a wide
audience.
15-yr old nephew
zoned out to
mobile video last
Christmas.
© 2011 Mr Kite Entertainment, Inc. p5

4. New web media have emerged - web
series - that compete with traditional
media for audiences.
p6 © 2011 Mr Kite Entertainment, Inc.

5. Web content is so powerful it has
already changed audience
expectations of content.
Popular Sundance-winning indies today
are about social video (vlogs).
© 2011 Mr Kite Entertainment, Inc. p7

6. And TV has ... uh ...
... honestly, I’m not sure. I
disconnected my cable
2 years ago
and never looked back.
p8 © 2011 Mr Kite Entertainment, Inc.

7. New times in entertainment call for a
new kind of entertainment company
that reaches audiences where they are.
To understand what this is going to look
like, let’s take a look at the major forces
moving in the industry today.
© 2011 Mr Kite Entertainment, Inc. p9

8. Market Overview
p 10 © 2011 Mr Kite Entertainment, Inc.

9. TV is collapsing.
Why?
Audiences are moving online.
Advertisers - the life-blood of the
entertainment industry - have caught on
and are increasing their online spend.
This year $40 bil will be spent on TV
advertising.
Over the next 5 years that $40 bil will
move online - and will grow over the
next 10 years as western economies
pull out of the recession.
© 2011 Mr Kite Entertainment, Inc. p 11

10. p 12 © 2011 Mr Kite Entertainment, Inc.

11. © 2011 Mr Kite Entertainment, Inc. p 13

12. p 14 © 2011 Mr Kite Entertainment, Inc.

13. © 2011 Mr Kite Entertainment, Inc. p 15

14. p 16 © 2011 Mr Kite Entertainment, Inc.

15. TV today is controlled by companies like
these:
© 2011 Mr Kite Entertainment, Inc. p 17

16. And our new TV Guide?
p 18 © 2011 Mr Kite Entertainment, Inc.

17. But market forces are bigger than TV.
Hollywood is also changing, shifting
their productions online as well.
November 6, 2010
“What we independents face is how to replace the declining markets,” said Harvey Weinstein,
co-chair of the Weinstein Co. “We are going to have to take technology and drive our sales of
content.”
© 2011 Mr Kite Entertainment, Inc. p 19

18. “Digital Everywhere”
coming soon from Warners
p 20 © 2011 Mr Kite Entertainment, Inc.

19. Stiller partners with Par Dig
to make 2 web series
© 2011 Mr Kite Entertainment, Inc. p 21

20. And the online world itself is changing
as the world moves from the computer
to mobile.
MIPCOM 2010: The Digital Storm his Cannes
In the past, changes to media such as the introduction of home video and DVDs occurred sequen-
tially over the period of time. The difference between then and now is that the new creative and
commercial opportunities that are being opened are occurring almost simultaneously. This is the
reason why the digital media appears so chaotic: everything seems to be changing at once.
We’ve heard the comment ‘this will be the year of mobile’ so often, let’s stop saying it. Mobile is
here, mobile is mainstream. Mobile is generating more than $1.2b per year for carriers. It’s time
to take it seriously.
p 22 © 2011 Mr Kite Entertainment, Inc.

21. © 2011 Mr Kite Entertainment, Inc. p 23

22. 2013: Year of Mobile
p 24 © 2011 Mr Kite Entertainment, Inc.

23. Figure in the economic climate ...
IMAGINE:
It’s the fall of 2012. Obama has just been reelected for a second term. The
economy is beginning to pick up again.
You are a discerning consumer finally able to spend $200 for a new electronic
gadget. Will you be buying a new TV -- or an iPad?
© 2011 Mr Kite Entertainment, Inc. p 25

24. And you’ll understand why ...
TV will
CEASE TO EXIST
over the next five years.
Why buy another gadget?
TV? So 20th century.
p 26 © 2011 Mr Kite Entertainment, Inc.

25. Let’s recap.
The growth of online video has moved
viewers from the couch to the
computer.
TV advertising is about to follow, taking
a $40 bil industry online.
But online video is changing as viewers
move from the computer to their
mobile devices.
Something new is on the horizon.
I call it the streamcast.
© 2011 Mr Kite Entertainment, Inc. p 27

26. Entertainment
Tomorrow
p 40 © 2011 Mr Kite Entertainment, Inc.

27. © 2011 Mr Kite Entertainment, Inc. p 41

28. The high-growth market
opportunity is to take small,
streamable media and deliver it
effectively to mobile audiences.
Web series are small.
The content has low market
valuations.
The streamcast interface is still
nacent.
Web series distribution is the
future of entertainment.
p 42 © 2011 Mr Kite Entertainment, Inc.

29. To compete online you’ve
got to be small, fast &
cheap.
The content that will win
online will be the content
that scales fastest.
© 2011 Mr Kite Entertainment, Inc. p 43

30. With the web series format
you can stream
more data
per hour.
You can stream more content for
less money than any other
format on the market.
Simply put, web series are
easiest to scale.
© 2011 Mr Kite Entertainment, Inc. p 45

31. To compete online you’ve
got to connect with the
audience.
You must provide
meaningful content.
The content that will win
online will be the content
that builds loyalty.
p 46 © 2011 Mr Kite Entertainment, Inc.

32. Audiences love web series.
Web series are niche, so speak
directly to audience desires.
Some of the most popular series
target online gamers:
© 2011 Mr Kite Entertainment, Inc. p 47

33. p 48 © 2011 Mr Kite Entertainment, Inc.

34. Current web series serve a
specific audience and
establish a personal connection
with their viewers.
This will change somewhat as
entertainment moves away from
computers and towards the
streamcast.
But audiences will expect
personal connection - programs
that speak to them.
© 2011 Mr Kite Entertainment, Inc. p 49

35. Sony’s web studio,
Crackle. Just like Hulu!
p 50 © 2011 Mr Kite Entertainment, Inc.

36. Web series are global.
© 2011 Mr Kite Entertainment, Inc. p 51

37. But for all the success of web
series they have fundamental
problems.
p 52 © 2011 Mr Kite Entertainment, Inc.

38. The problem is distribution.
Current online distribution
focusses on individual videos.
It counts on an engaged
audience sitting actively.
TV fortunes were built on
passive audiences sitting on
couches.
Tomorrow’s fortunes will be built
on semi-passive mobile
viewership.
© 2011 Mr Kite Entertainment, Inc. p 53

39. The market is reflecting the
need for a new streaming
interface.
p 54 © 2011 Mr Kite Entertainment, Inc.

40. VHX.tv private beta preview.
Note how prominent the
content is!
But is this a mobile solution?
© 2011 Mr Kite Entertainment, Inc. p 55

41. Another streaming startup,
Shelby.tv, pulls media
suggestions from social media.
p 56 © 2011 Mr Kite Entertainment, Inc.

42. Let’s recap.
The market is being flooded with
dirt-cheap, high-quality content
that audiences love. Audience
numbers already match (or beat)
TV.
The content is small, fast &
innovative.
Productions are inexpensive.
It’s easier to distribute than
anything else on the market.
© 2011 Mr Kite Entertainment, Inc. p 57

43. Entertainment
Today
p 28 © 2011 Mr Kite Entertainment, Inc.

44. Broadcast is dead. The new buzzword is
STREAMCAST.
The streamcast reaches you, wherever you
are.
It’s multi-platform.
It’s accessible anywhere.
It’s a stream of content that you want to see.
© 2011 Mr Kite Entertainment, Inc. p 29

45. The streamcast is all digital, all the time.
To reach audiences today you have to be
in the stream.
p 30 © 2011 Mr Kite Entertainment, Inc.

46. The options on the market today (YouTube,
Hulu, Netflix) aren’t ready for the stream.
They’re based on outdated models.
- old user interfaces
- old content
- interaction, not consumption
- sharing, not streaming
They’re built for this:
© 2011 Mr Kite Entertainment, Inc. p 31

47. YUCK
p 32 © 2011 Mr Kite Entertainment, Inc.

48. YouTube is wrong for content creators.
Brand identity is difficult to establish,
creating apathy in the viewer.
Even the best branding gets diluted in the
clutter.
YouTube is wrong for server administrators.
The massive amount of server traffic caused
by constant uploading & streaming is a
logistics nightmare.
YouTube is wrong for innovation.
Audiences - both viewers and content cre-
ators - are locked into the format.
© 2011 Mr Kite Entertainment, Inc. p 33

49. There’s a show in there
somewhere ...
p 34 © 2011 Mr Kite Entertainment, Inc.

50. Hulu is wrong for audiences.
The interface is clunky & uses dull words like
queue, widget, and buffer.
This is not what audiences want to see.
They’re tuning in for the content.
Hulu is wrong for server administrators.
The files are huge
(note that the screenshot shows buffering
- that means not playing).
Hulu is wrong for innovation.
It relies on expensive content that’s difficult
to license.
© 2011 Mr Kite Entertainment, Inc. p 35

51. This looks like the most
awful service in the world.
p 36 © 2011 Mr Kite Entertainment, Inc.

52. Does this look like FUN to you?
© 2011 Mr Kite Entertainment, Inc. p 37

53. Audiences want video
delivered to them digitally.
Current entertainment is
having trouble online:
1. delivery methods are
problematic
2. existing catalogs are
expensive.
p 38 © 2011 Mr Kite Entertainment, Inc.

54. There is a lot of pressure to
fit old format content into a
new format.
Trying to fit traditional shows
into the online space is like
cramming a square peg into
a round hole.
It’s time for something new.
© 2011 Mr Kite Entertainment, Inc. p 39

55. They watch while waiting for
friends ...
Between
classes at
school ...
© 2011 Mr Kite Entertainment, Inc. p 61

56. Or at work ...
Or at the gym ...
... or anytime they’ve got
5 minutes to kill.
p 62 © 2011 Mr Kite Entertainment, Inc.

57. It’s the new world of
streamcasting.
p 68 © 2011 Mr Kite Entertainment, Inc.