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THE NEW WAVE OF FILM & MEDIA MONETIZATION - Technology Disrupts Everything
- 1. ArcInsight PARTNERS The New Wave of Film & Media Monetization: Technology Innovations Change Everything Pras Chaudhuri ArcInsight Partners Sep 27, 2012 San Francisco, CA ArcInsight Tech | Media | Entertainment | PARTNERS | CONVERGENCE | October 2, 2012 © ArcInsight Partners LLC Client Slide 1
- 2. ArcInsight ArcInsight Partners LLC PARTNERS An Introduction Provides strategic advisory services focused on monetization opportunities created by the convergence of technology, media & entertainment business models. Conducts ongoing research into global media-consumption patterns at country-levels, positioning of major M&E players, impact of consumer-devices, formats, technology- enablers, viewer-experience design, eCommerce/mCommerce, Film & TV industry developments in key countries (N.America, India & China, Europe to be initiated 2012). Target clients include content-creators, distributors, aggregators, service-providers, and technology-enablers. Operates virtually from three strategic locations - United States (Silicon Valley & Hollywood); India (Bangalore & Bollywood); Europe (Budapest, UK & France/TBD) October 2, 2012 © ArcInsight Partners LLC Client Slide 2
- 3. ArcInsight Convergence Dynamics PARTNERS Convergence Dynamics In The Technology, Media & Entertainment Industry TRENDS & INSIGHTS FROM RESEARCH, INTERVIEWS AND CLIENT STRATEGY SESSIONS CONDUCTED BY ARCINSIGHT PARTNERS October 2, 2012 © ArcInsight Partners LLC Client Slide 3
- 4. ArcInsight The Media Industry Is In A Period Of Extreme Turbulence PARTNERS Content creation • User generated content Content aggregation and packaging • eTailers and “infinite inventory” players Content distribution • Multiple distribution channels and screens (theatre, TV, laptop, phone, special devices) • Revenue models (ad sponsored, subscription, pay-per-view) Consumer behavior and devices Government mandated conversions to digital television • Broadcast television was impacted by government mandates to convert to digital television transmission. While incumbents incurred heavy conversion costs, new entrants leveraged existing digital technologies. New entrants effectively attacking the middle and distribution-end of the media value chain using technology. • Among innovations available to current industry participants, new & potential entrants are new technologies that are less vertically integrated and more componentized technologies (SOA, File-based workflow, shared-resource technologies (Cloud computing and cloud platform), collaborative business models (Analytics, Digital supply chain management, Agile methodology) New media entrants leveraging disruptive capabilities • digital media technical knowledge and skills to reduce barriers and compete with traditional media companies, particularly in content aggregation, packaging and distribution pieces of value chain. New entrants are building end-to-end digital supply chains • that provide on-demand video using subscription and ad sponsored delivery based business-models. Media industry understands the urgency. • Broadcast & movie studios are investing in technological innovations (such as digitization) and architectural innovations specially in the aggregation ad distribution ends of the value chain to be more competitive. October 2, 2012 © ArcInsight Partners LLC Client Slide 4
- 5. ArcInsight Technology Changes Everything….Ultimately PARTNERS Technology Disrupted The Film-making Profession Lowered barriers to entry (equipment cost, technical-training, experience) for new film-makers (A DSLR camera, an Apple laptop loaded with editing software can make a full-length feature today) Technology Is Disrupting Traditional Film-financing Crowd-sourcing for ideas, talent & financing Technology Is Disrupting The Film Marketing & Distribution Process Traditional physical distribution & monetization channels for are under attack. • Theatricals have been declining steadily as a revenue driver for film-studios. • Physical sell-through (the largest revenue source in the most recent past) has started its declining trend • Replaced by physical rentals, which is declining too New electronic distribution channels that replaced physical are changing too • Electronic sell-through (downloads) • Electronic on-demand rentals / Transaction VOD • Being supplanted by Subscription VOD Streaming is now in. • Seems like a race to the bottom for the movie industry. Release windows disrupted too October 2, 2012 © ArcInsight Partners LLC Client Slide 5
- 6. ArcInsight Changing Leverage Of PayTV Content Distributors PARTNERS The Incumbents - PayTV Players (Cable / Satellite / Telcos) • The largest partners for content-owners in the aggregation space • Pay the best price for film content • Vast distribution platform to target large subscriber-base Rapidly Rising Content-Creation Costs Rising PayTV Carriage-Fees Escalating PayTV Subscription-Costs 70%-80% of all PayTV package content are channels controlled by major studio players • “TWC-owned channels are now in all Top-10 & Top-20 channel-packages of all cable providers” (Jeff Bewkes, Chairman Time Warner) New “Over-The-Top” distribution technology has finally broken PayTV’s stranglehold on end- consumers • Other technology standards today will soon approach the quality of viewer-experience once delivered only for PayTV PayTV providers hemorraging subscribers to lower cost OTT-based subscriber platforms • Subscriber churn, cord-shaving & falling video-ARPU is a huge concern • New subscriber increase & revenue coming from other services Opportunity for smaller content-makers to attract/capture emerging viewers - showcasing alternate content, delivered via lower-cost channels - YouTube, Netflix, Hulu, others sponsoring content-creation - YouTube channel content makes its way to a new TV series - Possibility of sustainable business models finally emerging October 2, 2012 © ArcInsight Partners LLC Client Slide 6
- 7. ArcInsight Film Audiences Are Changing Too…..Seduced by Technology PARTNERS Changing Consumption-Patterns • Film viewers are not consuming content in the same manner as they used to. • While theaters and televisions will continue to exist, more of the newly emerging film audience won't be present there. • They do not care for TV guides or advertisements to tell them the best movies to watch. They mostly trust recommendations from their friends, they share their opinions real time and they are willing to pay for the privilege. Place-Shifting • The next generation of viewers are online accessing the world through the window of their computer screens, gaming consoles, tablets and smart-phones. • They want to watch content wherever they are. Time-Shifting • They do not wait to watch film scheduled on their TV Guides. • They want to watch on their own time. More Content-Consumption. Higher Content-Engagement • They are spending more time with television, and are often more engaged with film content than previously imagined. Attractive Demo • And they are the most coveted demographic for any marketer. How does one find out who they are and what they like?. October 2, 2012 © ArcInsight Partners LLC Client Slide 7
- 8. ArcInsight What Is Driving Today’s Market Growth In Online Video? PARTNERS October 2, 2012 © ArcInsight Partners LLC Client Slide 8
- 9. ArcInsight What Is Driving Today’s Market Growth In Online Video? PARTNERS Unit Sales of Internet-connectable Consumer Electronics (Millions of Units, Annually) 800 Digital Video Media Players (#M) Game Consoles (#M) 600 Blu-ray Disc Players (#M) Smart TVs (#M) 400 Media Tablets (#M) 200 M H o n d h u e # s f ) ( 0 i l 2011 2012 2013 2014 2015 2016 Source: Connected Consumer Electronics: Market Update © 2012 Parks Associates Content Owners Service Providers CE Manufacturers October 2, 2012 © ArcInsight Partners LLC Client Slide 9
- 10. ArcInsight New Technology PlatformsConnect Film-makers Directly To Their Audience PARTNERS Support Wider/Deeper Communication • Share information with stakeholders • Online focus-groups & social networks for Pre-release testing of content Support Monetization • Plug-and-Play technology Payment processing • Social inputs for product placement decisions • Social & metadata inputs for viewer profiling; Targeted marketing & advertising Support Direct Viewer-consumption • Allow direct purchase of content • Allow streaming of content without the need for large local computing overheads • Physical DVD creation on demand Manage Delivery Of Content • TV Everywhere and Over-the-Top (OTT) video, including Comcast Xfinity, HBO Go, Netflix, iPlayer, and Sky Go are growing rapidly • Making this possible are several groups of companies responsible for video delivery and management. Each offers a unique piece of the solution - Online Video Platforms (OVPs): Smaller content owners and those wanting social media integration and simple platforms - Managed Video Platforms (MVPs): Operators without technical expertise to deliver video service. Want turnkey solution. - Content Management Systems (CMS): Largest operators with diverse assets, desire to manage video centrally. - Content Delivery Networks (CDNs) : Handle logistics of video delivery for nearly all the players. October 2, 2012 © ArcInsight Partners LLC Client Slide 10
- 11. ArcInsight Tech.,Media & Entertainment Industry: Convergence Dynamics PARTNERS Viewer Access Viewer-Experience Delivery Viewer Monetization Multi-screen rights / Original Content $ Retrans rights User-generated Content Curation Content Release Windows PayTV/Broadcast/OTT Subscription Paywalls $ Anytime Anywhere TV Connected TV-as-a- $ Connected TV Platform Apps. Devices Search/EPG Viewership Tracking Apps. Social Media Dynamic In-video Social Media $ Cloud-based Delivery Advertising Digital-Lockers Virtual Goods $ Recommendation Engines Hybrid STBs Infrastructure Technologies MPEG DASH Dynamic VOD Ad-Insertion Media-Assets Storage Context-based Search CDNs Digital Lockers Cloud-based Transcoding Workflow-Mgt. Authentication Adaptive Streaming Content Fingerprinting Rights & Royalty Mgt. Metadata Industry Registry Metadata Mgt. Regulatory AllVid CableCard Privacy Rules October 2, 2012 © ArcInsight Partners LLC Client Slide 11
- 12. ArcInsight What Should A Film-Maker Do To Prepare? PARTNERS ATTENTION Is The Scarcest Commodity Out There ! Multitude of audience segments • Understand consumption habits & preferences of the new audience Multitude of technology solutions out there • Understand technology and their implications in the context of distribution Multitude of distribution platforms & business models • Understand economics of various online platforms as a basis for picking the most appropriate ones to consider Multitude of consumption points & devices • Understand the diversity of devices, their characteristics and usage patterns • Understand strategies for creating viewer-experience on these diverse devices • Leverage these devices to differentiate your content from the rest of the pack Think Like An Agile Business • Avoid the mindset that separates Film-Making & Film-Marketing as independent silo-ed sequential activities • Identify, connect and engage target audiences throughout the film-making process RENEW / UPGRADE / AWARENESS PURCHASE PAY & INSTALL USE & SUPPORT DISCONNECT • Digital Payment Mgt • Digital Advertising • Billing • Digital Customer Mgt. • Recommendation • Order & Contract Mgt. • Payments • Service • Real-time Marketing • Social Media & Mktg. • Digital Pricing • Refunds • Returns • Churn Management • Bundling • Adjustment • Support •Usage Management • Activation • Social Media CustomerCare • Digital ID & Security October 2, 2012 © ArcInsight Partners LLC Client Slide 12
- 13. ArcInsight Additional Supporting Data PARTNERS October 2, 2012 © ArcInsight Partners LLC Client Slide 13