This is the first session from the Futures of Entertainment conference taking place at MIT this weekend. THis has been corrected for spelling not for sense.
Andy Hunter, Mark Warshaw, Josh Bernoff, Betsy Morgan
Set the scene:
Josh: speaking from a perspective of thinkers..people who
have ideas about media. analysed this for 10 years…has
some advice on ways t think about it.
1. do not assume that nothing is going to change – there is real change, all the
online and offline stuff. money is now shifting.
2. do not
assume that everything will change. you may not be able to
see everything you want all the time. Still will be telly
in 10 years.
3. do not assume that its about the ideas and
not about the business. still about the business, the
changes that happen come about due to complex
relationships challenge the ability of ideas to happens. 4.
do no assume that business drives everything. Start with
consumers and consumers behaviours, when people want things
and the tech is there, they take it into their own hands.
and business has to catch up somewhere in the middle of that lot
something will happen. trends: 16-17% of US population have DVR, 20% HD TV, >25% VOD cable, (about half of them using it). By end of this year. It’s
making a difference now. 1.DVR tend to watch more than half
recorded, and skoip80-90 % commercials. The TV networks say
it is not a problem,,,therefore it is!!!! A Survey of
advertisers – and they are shifting investment from TV to
web. 2.Video in multiple formats – companies do this, eg
cbs, discovery. this is a big shift in industry..they look
to move across the media. 3.TV is broader now and
tiered…top tier, generally watched at the time, 2nd tier of
cable content, also repeated, in VOD, =on web, extensive
syndication. 3rd tier independent producers, those who
aspire to be professional and place content where people can
be, and finally the real amateur, anyone can be there.
every element of the pyramid can make money, but not necessarily
in the same way. all have own economics and business
Betsy: in the last 18 months, there has been a growing
interest in opening minds and cheque books to put content in
a lot of places. traditional companies find it hard to embrace
disruptive technologies. the rules are changing and the
execs have to change. .the construct is getting blown up.
everyone is asking what does it mean using these techs.
what does it mean to have csi on cbs, Google video etc.
the networks still follow structure, have seasons, have an
upfront. this year they have a couple months of data looking
at the new stuff, model this fall has been to put it out there
and see what people are consuming and there is a great
interest in what is happening., they are experimenting and
seeing how well or poorly it does. get the data and let it
inform the next steps. On the news side, the cbsnews.com is
doing ok and is growing. My business is not just to put
the content on the site, but on a lot of different
platforms..other vides, cell , etc. lots of relationships.
I thinks about all the different ways when thinking
about the reach of her brand. going forward looking at more
commercialising it, will have ads to it and be able to
Mark: it is about putting it out there. put on net and see
what happens. all collecting data. putting it on AOL firsr
– the samllville fan was not a AOL user.. but it
attractedpeople to AOl to ewatch it. tinnes of peopel came
from all over the world. t hat changed their thinking, shpwed
when they were big, showed wher ethe fans were. talkign
about it and putting on sites and starting to activate
people. it moves fast,..this influenced the way the next
series was built/rolled out. adjust all the time. change
the dvds etc. this year will be putting on phones and
on the web after that. still at beginning, still learning,
no clue where it will go.
Andy; we have a very tuff job. as the world changes, the
model of how we go to business has turned 180. we are looking
for a big bang for the buck, mass speaking through conduit of
tv, all metrics and market economy all based on tv, how they
think about things. what you are seeing is the move away
from the tv at the top to being equalised, so everything sits
on a paralllel. the networks business folks change what
they are dong, but the background still the same form the tv
business side. most of the revenue comes form trading floor
of buying selling media – 30dec commercials, and as that
changes, the business models need to changes. it’s a slow
change. We would love to tell the stories walk
away from a single TV spot and sell transmedia stories.
clients uncomfortable as there is no metric tied into it and
we can’t tie them all together,…all the metrics based on
mass audience, then precarious position selling to clients.
last thing is about coming up with ideas. the creative
industry is driven from 30sec films that have a single
message, and now we need to tell stories in chapters across
media and that is a far more difficult job and the creative
folks hold some of the burden but changing the way they think
is very very difficult. excellent position for the fact far
more channels to work with, ways to try things new, we are
but clients not necessarily there yet, have to be able to take risk.
Josh: so why don’t they just change? The media buyers have to
be very efficient as the margins are small, there is
market as all the good in the tv market are the same..30
secs…they are all interchangeable. the sameness makes it
easy to skip..the sameness makes them vulnerable. they
can’t just change it..the market provides inertia.
Betsy: one of the reasons the media company are willing to
experiment, as the old model is not in immediate jeopardy
due to the consistency of the model, the web makes it more
difficult to get the data and the roi,,,all the different ways of
measuring etc..it’s a lot easier to buy the 30sec slot.
4.5billion tv adverts on cbs. all together do 13billion in
30secs slots. that a pretty big engine to disrupt quickly.
the model will change, the cracks are there, the curve ill
flatten out but not immediate.
Mark – they are trying to change things, it is a learning
curve, online etc, they can offend the fan easily, need to
meet fans objectives and tell the story. they work with
brands to bring them in and brands are coming back to work
with them in a different way.
Betsy – looking at different ways..to do story line, on web,
digital. Mark, are the writers getting paid for webisodes?
Mark: the unions are going to have to figure out the payment
structure for this. the fans want tit the advertisers want to
part of it. can’t not have it anymore, if the actors don’t
do it, how can you tell the story. moving from fear to
greed. unions need to structure this.
Betsy – the networks need to change their budget structures
to allow the influence of web to come on. all of a sudden
you have to do digital, and other things, and things become
more expensive so that is changing that budget model. the
actors ask for more money, the writers do and this disrupts
the existing model
What happens to appointment based tv in a world of on demand.
Josh: the scheduling is the largest change that has happened
to tv.. the VOD etc means people don’t watch tv at the time
broadcast. the ratings of the broadcast times go down, but
still people watching. there will still be some of the
appointment stuff…they will become more valuable, the rest
of tv is moving away from the schedule…and that makes the
tv ads more difficult as they are no longer timebound. the
good thing is that the audience has now a longer life. the
schedulers themselves are going to have to change – they will
have less power. the power is in promoting and bankrolling
programmes overall, not about who will own Thursday night.
Betsy: not immediate; there is still a role for them. they
put nights together…has been historically to get the
audience to a new show. now the impact on marketing 0 how
do I tell people about a new show as you can’t assume that you
can thread people through the night. nbc said a few weeks
ago not necessarily going to think about leadins etc.
Andy – NBC doing some interesting things…their business sis
being challenged, so having to change. appointment tv is
starting to dissolve. sports is still appointment tv and
always will be. participatory media will drive app tv and
will continue. you want to know the story and follow the
people. Murdoch is looking at creating cgm for tv
programming, embedding technology so people can mash up
content in set top box. relevance will get bigger.
Josh: some companies looking at doing set top boxes that
deliver internet tv, announced in CES. all january you will
here about boxes bringing internet content to the tv. cbs
announced this week that they have done a deal. believes
that apple will come out with a hardrive on their new set top
box…move away from streaming..thinks 50/50 chance there will
be a tv tuner in it, they own the interface – impact tivo
etc. they have all 4 tiers of content on the tv. the future of
tivo is intimately connected to the deals. the service
becomes important rather than the box.
Betsy: on doing the itunes deals..the apple guy was just
thinking about the consumer. the cbs were thinking about all
the business issues.
Andy: these things challenge the networks – if I can go to
apple/setbox etc, what is the reason to go to a network
anymore. what does the brand stand for. of everything is
transactional.. I’m attached to content, not to the network.
so ads should look at attaching to properties etc.
Betsy: cbs is in the business they are in and gets great
content is that the financial model still does work where the
big networks can bankroll the biggest shows, have a strong
structure in place, see the relationships to see the good
stuff etc. there is value in the big networks.. you may not
be threading people through a night there is still value and
power in the networks and if they do everything right and
get stuff on other platform they are still gatekeepers and
content producers. If apples sell devices they do not necessarily
want to bankroll producers in hollywood
Andy: outside of the network space, when you look at Google
etc becoming an aggregator for content having the money and
the power may not ness be as important. look at Revver, you can
attach ads to the content that you are creating..as that
model grows and independents figure ways to sustain their
process the model will change.
Henry: how long until a producer (eg jjabrams) goes direct to
market and not through networks.
Josh: Fish put concerts on their site and allowed people to
download unprotected content. fish said we had a
relationship with our fans, we will make money from the stuff
we put out. they were not ness interested in working with
big labels. when you are an artist, it is easier to
delegate distribution and marketing to the publishers than
do it yourself. most producers, even if a direct
relationship, would still delegate the work and distribution
to someone who does this professionally.
Andy: can an artist walk away from the distribution networks.
it is happening and will happen more, but slow approach.
yesterday morgan freeman was talking about his own studio and
will be distributing over the web. lucas is not going to do
blockbusters and changing the way he is producing, he is
doing 30-50 short films over the year distributed digitally.
Q: what do you think about kids on line (AOL kids stuff).
digital stuff moving onto networks.
Josh: it is very expensive to find good tv shows. cbs have a
facility in las Vegas to screen pilots, spends lots of money
doing the research etc. it’s all a lot easier if you can
sit and wait for stuff to trickle up through internet and
become popular and then networks can see them. the lower
tiers will generate talent and will go up if great, and the
opposite way as well as things go down and not a broad
enough audience. the tiers give the flexibility for things
to move up and down.
Mark: studies are looking a the web as a farm system, put
stuff out there and see if people react to it and see what
the audience is.
Josh: the cost of tv production has been reduced, you can make
stuff pretty good on a computer., the cost of distribution
is 0. but mass distribution is very expensive. where costs
are low is where people try things out. there; has always
been more talent than success..the cheap stuff allows people
Q: a lot of what you are talking about are disintermediation,
where a lot of the power of the gatekeepers are changing.
the power gets split. comments on whether the trend is true
or if there is a missing piece and we have to move to a
different level of intermediary, gatekeeper. do we end up
with new forms, new services in a fractionalised advertising
Betsy: there’s an economic system that has not caught up with
the tech yet. people consume in lots of places.
advertisers have a different way of thinking about it. needs
to simply distribution. research has not caught up yet.
want to be able to say to the advertisers how many watched the
show in the different forms. they need a system that is
robust enough so that the agencies understand the numbers and
can share with clients and they can understand. youtube
will start to introduce more commercials in their products.
a lot of feedback about preroll..people don’t like the 30sec
ad just shoved on. do people disappear from yt once
commercials on the video. it is happening, you can’t stop
it, so how do you respond to it.
Josh. in 1995, walmart and tower records were the most
powerful music companies. Now apple and myspace are power
mongers. there are new companies that do it – the player
changes, not the role. if you want big money you need big
audiences. google buying yt is about creating a big
gatekeeper/intermediator. Brightcove put adverts across the
videos and send money tot eh content providers. they are a
new gatekeeper. the role stays the same. he sees this all
the time. the rise and fall of power. efficiency needs
someone in the middle
Andy: from the ad industry, looking for integration. you
have media traders for the different silos. thinks you will
begin to see buys across the silos, more like a mutual fund
manager, what is the portfolio, what’s the model across the
different categories. need to get the skill and the people.
the agencies become an aggregator as well.
Josh: the devices will have to change to allow you to
navigate across the large amount of content. so the service
provider, and set top box will start to curate and point
people. and people will have to pay to be on the top of the
Betsy: it happens now with mobile phone companies. they
curate what they display. the channel position is on the
cell, you have to negotiate this. you have to think about
channel position on multiple media routes. 60mins have had
a successful partnerships with yahoo, they get outtakes and
additional video etc. on Mondays when on yahoo homepage, the
traffic numbers spike. 82million come through this
page..this drives a lot of traffic. the pole position is
very valuable. when on youtube homepage, on directors cut
loop, does a lot better, so on the home pages, they are the
gatekepers, and this is a market to manage.
Q: in 2009, the fcc is saying that over the air will all be
digital. the number of channels could increase
dramatically, further fragmentizes the audience. undermines
the regulatory authority (as will as the advertising base),
undermines the compelling state interest in treating broadcast
as a right. the position is based on the scarcity rationale.
so what kind of tv will exist this, will networks be group
owners etc monopolies
Josh: forester is surveying at the moment, and hopes to be
able to prove that the average consumer has no clue what is
going to happen. so what happens when the 20% (who only get
over the air)or so people discover that their telly won’t
work. the scarcity rationale is already blown, it’s based on
those people who only have over the air and this reduces all
the same most people will not give up their cable. the fcc
continues to try and get public interest etc, the networks
are looking at multicasting, but think their survival is
still dependent on having one high quality channel..so the big
ones still likely to exist.
Andy: we hope we do not have another 17000 channels with
noting on it. as we move into the hd world, it is an
opportunity. they can be more relevant etc on the radio.
on the TV side it is not just channels but about relevance,
you need that filter to fins what they want. the companies
will be a filter.
Q: josh thought that vivo etc have to force advertisers to
look at other manners. challenge that advertisers are going
with their consumers. so going this as opposed to TV losing
its effectiveness. advertisers are not saying TV is not
working, but looking at others. and Betsy – is Google
friend or foe. does Google want to become the advertising
OS. to sell real-time, relevant advertising
Josh: did a survey in conjunction with assoc with national
advertisers – asked them if they were planning on shifting
money away from telly..a clear majority said yes (60% or so)
reducing TV by at least 20%, it is going to web. Presented
to the advertising conference. they asked the audience to
poll..what is biggest threat to TV advertising..they picked
clutter – too many ads on the TV. that’s monopoly thinking
as the networks add more ads to the programmes as they make
more money. there is a clear rumbling in the industry.
Andy: advertising is TV focused, to a degree where they may be
in a state of denial. peoples media usage has completely
changed. they are still looking at TV as pinnacle and this is
wrong. its not saying that it is ineffective but that role
and importance has been put on a plane. we have to create
the ecosystems where there are several channels speaking
together and creating a story. we do a lots of research for
18-24 yo and all you need to look at the anecdotes. TV is
not important, still watch it and not as relevant, they are
doing lots of other things all the time, their engagement is
very different as a marketing industry have to get out of
that state of denial and we are in a media neutral world.
Josh: all the big companies are saying they will move
significant proportions out of TV.
Andy: one of the reasons why not an immediate shift is
because the metrics not there to track effectiveness.
Josh: on record that 2007 is the year of change.
Betsy: Google friend or foe? it’s both. co-opetition. you
can both. you can be a partner and a competitor. we know
the Google guys well and working with them. we want to
understand what they are doing. trying to understand them..
they are trying to understand what the networks are doing,
Eric Schmidt is clear that they do not want to be a content
company and has stated that in meetings. they are clear they
are engineering companies and focusing on the ads. the
business are looking at the way the media planners buy the
media – its a human capital intense business to sell
advertising. Google comes in and thinks about making this
far more efficient for the advertisers. can’t you make that
a far more efficient process. wouldn’t the advertisers be
pleased with far more technological answers with lots of
numbers. they are looking at this really seriously. thinks
we will end up in the middle. it is less intense, and not
fully tech. if the media company is smart will embrace the
tech but do not give up their strengths. need to understand
what the agencies want and what the advertisers want. as a
distributors in the same positions. abscond get 30million
Unique/month. we look at the information distribution, how
you can find the info. think about the content going out in
tiny bits bites and now think about 30second bites that can
be bucketed and searched and tracked. trends is a great
product and working with this..plugging a word and see how
people are searching, geo, layer this on census and maps etc.
gives a tools for journalists etc to find out what people
are interested in etc. products that Google are creating
can be really helpful for media companies and news
information, in the business of reporting and telling
stories..the tech can help us report and find stories.
Q: entertainment can include informational content is served
up in the right way, eg MLB site…was wondering who stands
to win fro the putting stuff out there strategy. is it the
independents, or the aggregators. can you create a
community. or is it a mater of luck. does this mean the
aggregators win again in the long run. can you apply Google
to TV to find stuff as lots of content. now I’ve just
goggled josh and found presentation from 1997 about how
people would get TV in 10 years. so what would your
predictions now be!!
Josh. there are breakthroughs. Hillcrest homes. a remote
control that looks like a bagel, three button and a scroll
wheel, a TV remote, interacts with TV. a high level of
precision, like wii remote. combined with graphical
interface. this is a way you can get access. one of the CES
announcements will include this interface. does for telly
want the mouse does for computer. there is still an
important role for aggregators. who has the power in
ebay..comsumers has the power and not really great for
retailers as they buy stuff form each other. communities is
not just luck.,.there are certain qualities that help it take
off. just in brazil and everyone uses orkut. always about
empowering the community..can;t create too much rules..they
go elsewhere to carry on the conversation. there will be
winners..so more viewing on demand, all different content
tiers, looking at anything you want when you want.
advertising still central to delivery. form of advertisements
will have greater variety. move away from 30sec to
interactive, branded entertainment etc.
Andy: you should not ask about creating of community but the
fostering of a community. but clients do not like the idea
of fostering they want to control it. you are not in the
position now..you can help manage. you can foster, and it is
doable, but getting the client to that point is difficult.
Mark: it’s about the story and your relationship with your
fans., from that place you foster out your community and it
starts to build up on itself. as TV gets closer to internet
you will start at aggregators places to get the message out
and then you take the story deeper and the fans can go down
the rabbit hole. deepen and let people get time to explore.
people male more of an investment in their
entertainment. gets deeper, erg lost is perfect example. so
what other community am I going to dive now, heroes has won
this year., you can dig deeper. you get the novel, the
website etc. you put Easter egg out there. more things
you give your fans to talk about the stronger your community.
Q: people do watch sporting events after the fact…you said
that apple make devices, but are the major distributor of
music..as there any indications they want to move into
Josh: is being on the board of Disney not enough for apple? 2
years ago the songs sold on itunes has been 20 songs/iPod.
there are 4x ipods and the ratio is still the same. the
profit from itunes is tiny; they sold 8million ipods last
quarter. you have to make the de vice experience great but
happy to let the content people take all the risks with the
content. with the risks about the content choice. in the
content business you are only as good as your last hit.
Henry: what is the role of neilson ratings? they have just
added tivo ratings..and some shows have been way
Betsy: how much is based on diaries?
Josh: people meters are the key things. sweeps are a bit
diary based becoming a lot more automated. trying to fix
the problems. there are 8000 in their national panel.. they
move very slowly in adjusting to the tech.. the methodology is
base don home and not tracking the new stuff. they
announced a plan to monitor the new devices. they only came
up with dvr ratings in 2004, 5 years after they came
out. and had to retool for 6 months. now just doing vod
ratings. in any given month 95% of a VOD programme gets
watched. at least once. the sampling methodology does not
work with this distribution model. Rentrack track video on
demand..they give direct numbers on who downloads. the
problem is how to take all the different measures and assess
the value of the different flows. advertisers do not think
the metrics work.
Betsy: neilson web analytics not good as well for the sales.
so cbs go to home grown analytics and everyone uses
different ones so cannot compare across.
Andy: would like to see what happens if neilson disappears
for 6 months. it’s a crutch and a life-support. people are
looking for an absolute metric and does not know if they will
ever exist we have to aggregate info and look at
holistically and try and figure what it means. we are
stepping back from where and trying to understand how and
why. giving context to engagement, to connect back to the
brand. so the brand picks up something form the content
Josh: it costs nothing to put an ad on Google until someone
clicks though and engages. TV ads need to get to this..
Q: what may be the repercussions of the discussion in more
abstract terms, from a cultural perspective. scholars have
been interested in the changing forms of communities with the
changing technologies. the tech may have led to the waning
of other forms of communities, eg the erosion of appointment
viewing, reduction in mass audiences, the evening ritual of
watching the news, this has been an instrumental component
in citizenship and what bring the nation together. so how do
they see things unfolding on a society
Betsy: we think about this a lot. as a news organizing, the
6pm news is about analysis…so the show is on the web on
demand and there is a growing audience. but will not replace
the lost TV audience. we still have the money and reporters
to analyse and go round the world. what value is that?> it’s
different when broken up into a lot of different places. they
thought if not on TV then not on web so the 6pm is equivalent
of the home page. now half of audience is not through home
page, they come through search to find the story they want –
they are self choosing. so how do you take user and show
them other things and b ring them a bigger perspective. that
is a great frustration in how people look at news and info.
on other hand, the web has bought the 2 way conversation,
this is amazing, we launched the blog 18 months ago, and we
solicited opinions and take in user interest etc. we do better
stories, are more informed as we have that dialogue. we have
changed minds about selection of story etc, on the users etc.
the reporters are not on a pedestal and no longer tell you
what is important..you can see the process and understand why
they say it is important…we want to be engaged and want to
here what the users are interested. the web guys go to the
editorial meeting and the web watching can change the TV
watching by understanding what users want.
Josh: the schedule is not ness for people to have community.
everyone experiences Harry potter separately. you can join
the community through different ways.
Mark: time shifting gives people the time, on your time, not
their time. no watercolor moment, but it goes on through the
day, you communicate with friends allover the worlds.
Andy: there is not that local connectivity with content to
the same extent..but it’s shifting to a larger network. the
social currency thing is coming bigger.
Q: there’s lots of people in the media chain. the social
development of what you 4 represent is fascinating. so, when
you have a structured business, with owned and not owned
stations, so what happens when the content owners own their
own distribution network, eg mlb…they have more power…how
will the content producers and the distributors cope with the
Betsy: sports are really expensive. the leagues charge lots
and lots of money. there is the money for the advertising
which allows the pays. cbs will save money if mlb went
their own way but loses advertising and chance o promote
programmes. think the league will still use the networks as
they do want to aggregate mass audiences for certain games.
mlb has done a great job on building their site as they have
spent their money well, investing back in it. cbs use the
mlb.com backend for some of their stuff. march madness on
demand has been a great success for them. has been worth
every penny. there was a lot of conversation about this, is
this going to cannibalize the TV. but there were a lot of
times when games not at a right time, and the web increased
the TV watching. so shouldn’t they do this them selves
(NCAA)> they may do, in the future. the experience was
great – offering all the opportunities and this generates a
lot more viewers offer what you want get more.
Mark: as a content producers this is far better as so many
different way doing stories an exciting time to be a content
Q: do you worry that piracy will continue to grow as people
find ways around the commercials. will people adjust to
watching things without commercials. #
Betsy – it will persist, and will stay. its not the lawyers.
give the consumers the right choice and give them ways to do
Josh – its a cat and mouse game. in the end if the
advertising gets more tightly couples with content even when
pirated still has value.
Andy: piracy will persist. they’re is an expectation that
people will take things and do things with it. so need to
look at how to get value out of this.
Mark: content takes money. so you have to get advertisers or
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