Strategy and Innovation - Audiovisual Market, The Digital Revolution

1. AUDIOVISUAL MARKET
THE DIGITAL REVOLUTION
Group:
Bruno Barros
Carlos Russo
Marina de Gusmão
Renan Couto
Sabrina Alves

2. ● Film stock & DVD e VHS producers: mandatory players before the digital revolution.
● Producers: already producing movies in a Digital format, however, few adoption by the other parts of the ecosystem
● Distributor: high power due high control.
● Movies theatre: didn't want to implement Digital format due high cost.
● Rental shops, Retail & TV: the only alternative for movies that were not on the movies.
FILM PERSPECTIVE: AUDIO VISUAL AT THE END OF LAST CENTURY
Who were the main players?
Source: Coppead Group
FILM STOCK
PRODUCER DISTRIBUITOR LOGISTIC
OPERATOR
RETAIL FILM RENTAL
SHOP
VHS/DVD
PRODUCER
CONSUMER
TVPAID TV MOVIE THEATRE
LOCAL DISTRIBUTOR
TELECOM

3. A group of hackers changed the entire Music
Industry.
Peer-to-peer (P2P) file sharing created an inflection
point.

4. But, what it has to do with movies/entertainment?
Everything is connected!

5. Incumbents reaction: 1st law
suit against Napster
WHAT MUSIC HAS TO DO WITH MOVIES?
Change in the way we have access to music and then films
Illegal access to music: no
copyrights
High number of adopters
"Positive feedback makes
large networks get larger"*
Jun/99
Source: Shapiro, Carl; Varian, Hal R.: Information Rules. Boston: HBSP, 1999.
Dec/99 Jul/00
Incumbents reaction: Napster
shut down
Feb/01
Napster: 26,1M users
Unlimited and illegal access to
music and films

6. Change in the current
ECOSYSTEM

7. FILM PERSPECTIVE: AUDIO VISUAL AT THE END OF LAST CENTURY
What were the main changes
Source: Coppead Group
FILM STOCK PRODUCER DISTRIBUITOR LOGISTIC
OPERATOR
RETAIL FILM RENTAL
SHOP
VHS/DVD
PRODUCER
CONSUMER
TVPAID TV MOVIE THEATRE
LOCAL DISTRIBUTOR
TELECOM

8. FILM PERSPECTIVE: AUDIOVISUAL ECOSYSTEM
What were the main changes
Source: Coppead Group
DIGITALIZATION OF
CONTENT
PRODUCER DISTRIBUITOR LOCAL DISTRIBUTOR LOGISTIC
OPERATOR
CONSUMER
TVPAID TV MOVIE THEATRE
OEM
STREAMING VIDEOS
WEB SERVICE
INTERNET PROVIDER
SOCIAL MEDIA (WITH
LIVE CONTENT)
CHANNELS NETWORK
TELECOM
Illegal Content

9. How AUDIOVISUAL CONTENT are
going to be consumed in 8 years?
Scenario Planning: Key Focal Issue

10. 1. SOCIAL
AUDIOVISUAL DRIVING FORCES
"Themes and trends that are likely to affect, influence and shape the key focal issue"
- Centralized x decentralized: user generated content will
become part of prime time television;
- Internationalization: even more similar taste and
consumer pattern → insurgence of consumer patterns
based on niche preferences, not on geolocalization;
- User generated content: co-creation of content and live
transmission;
- Digitalization of social dynamics.

11. 2. ECONOMICS
AUDIOVISUAL DRIVING FORCES
"Themes and trends that are likely to affect, influence and shape the key focal issue"
- Change in the way we consume content: paid x free;
- Usage of cryptocurrency by every person for exchanging
content online;
- Less influence of Producers and Distributors;
- Changes in the way copyrights are paid (Example:
Copyleft);
- Reduction cost of data transmission.

12. - Countries incentives for production and content
exhibition (Example: Brexit menacing the production of
Game of Thrones - EU finances a part of the production);
- Change of axis of influence (Example: Occident - West /
USA - China/India);
- Internet provider: change in regulation regarding
subscription to pay per usage.
3. POLITICAL AFFAIRS
AUDIOVISUAL DRIVING FORCES
"Themes and trends that are likely to affect, influence and shape the key focal issue"

13. 4. TECHNOLOGY
AUDIOVISUAL DRIVING FORCES
"Themes and trends that are likely to affect, influence and shape the key focal issue"
- Open Source, crowdsourcing, copyleft;
- Blockchain;
- Virtual Reality;
- Full sensory experience (Example: Movie Theatre 4D);
- Super high quality x average quality;
- Artificial Intelligence: creation of content / reduction of
boundaries between online and offline connection:
consumer behavior mapping / media will be emotionally
intelligent;
- Multi Sided platform and technologies (ex. screens
becoming even more fluid);
- Digital inclusion (ex. Google Balloons);
- Increase in use of data.

14. 1972: founded by Time.Inc;
1975: 1st american cable channel;
1980: Cinemax - brand extension with lower price;
1991: extensions for cinemax and HBO;
2010: internet-streaming service.
Content:
- Buy from the Distributors the broadcast rights for featuring
the content;
- Finance content in exchange for the broadcast rights;
- Produce its own content.
Business model: stickered to the familiar, delayed participation on
streaming and no fully commitment
- TV operator: premium channel the option of
internet-streaming service
- HBO Go standalone subscription: only in selected countries.
INCUMBENT: Home Box Office Inc.
Producer, exhibitor or distributor?
Source: https://www.britannica.com/topic/HBO
http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-time-warner-hbo-20140923-story.html

15. SCENARIO FRAMEWORK CONTENT PRODUCTION
CONTENT CONSUMPTION
Scenario 1:
STAR WARS: THE
EMPIRE STRIKES BACK
Centralized production
Dispersed production
Paid content Free content
Scenario 2:
HUNGER GAMES
Scenario 3:
BREAKING BAD
Scenario 4:
THE BEACH

16. 1. Implications:
- Customers looking for
customized experience when
consuming content;
- Few producers and distributors
of content: due to high cost and
high technology;
- Improvement of internet
connection: increase in the
consumption of data usage.
2. Early warnings:
- Increase in the number
of super productions,
with an increase in the
rate of adopters;
- Advent of new
technologies regarding
audiovisual consumer
experience.
3. Action Plan:
Incremental innovation
- HBO would have to
improve even more it's
production: HD and AI,
for instance;
- HBO would gain both
with Advertisement and
subscription.
Star Wars - The Empire Strikes Back: High Centralized Production & Paid Content

17. Hunger Games: High Centralized Production & Free Content
1. Implications
- Consumers are not willing
to pay for content, but are
looking for a high
experience consumer;
- Few producers and
distributors of content: due
to high cost and high
technology.
2. Early warnings
- Number of subscriptions
of cable tv providers and
paid streaming services
sliding down.
3. Action Plan
- HBO should focus in a
free format to distribute
its content, using
advertising and other
tools to leverage its
revenues, for instance,
product placement with
live marketplace.

18. Breaking Bad: Dispersed Production & Paid Content
1. Implications
- Consumers and independent producers
would being moviemakers;
- Celebrities, athletes, actors and
musicians would share daily life in
exchange for crowdfunded
sponsorship;
- Multi Sided Platforms would abound.
2. Early warnings
- Increase in the number of platforms
using blockchain technology to
connect creators directly with
consumers;
- Platforms that reward contributors
who post content that goes viral.
3. Action Plan
- HBO would differentiate itself
by producing quality content.
- Track consumers preferences
and select a number of
content producers for buying
their copyrights and
broadcast it.

19. The Beach: Dispersed Production & Free Content
1. Implications
- Low budget productions/
crowdfunding;
- Product Placement, content
market financing;
- Open Source / Copyleft.
2. Early warnings
- The increase in number of free online stream
platforms like Youtube, Instagram and
Facebook;
- The decrease in number of people going to
the cinema or watching big studios
platforms like Netflix or Amazon Prime;
- Platforms that reward contributors who
post content that goes viral.
3. Action Plan
- In the free model HBO needs
to capitalize using media;
- Users buy things related to
the content being watched;
- HBO can sponsor independent
content. Ex: The Lego Model.

20. HBO Mainstream Content: Series, Movies, etc.
Emerging Technologies:
- HBO needs to adapt to AI, Virtual Reality, etc.
Devices & Applications:
- Stream Applications: How to compete with Netflix,
Amazon Prime, etc?
User Generated Content:
- HBO needs to adapt to new business models:
Advertising, Content Marketing, Public Dataset
Main conclusion

21. Who will win the Game of
Thrones war?
Thank You!