Archive for January, 2008

The re-invention of TV

Monday, 21 January 2008

Like I said before, reinventing TV is about reinventing the whole value system, from the ground up.

Otherwise you are in trouble, like in South Korea where viewers are re-inventing prime time TV.

What does this mean? Well, people aren’t at home watching video on television screens, watching mid roll adverts and being constrained by international distribution deals and windows.

They are off, in the coffee shops, watching downloaded TV on their laptops.

They are revinenting the TV experience themselves and making the distributors economically irrelevant. The coffee shop owners are making money off bagels and doughnuts while the Studios lose revenue from content.

EMI forgets the other half of economics

Tuesday, 15 January 2008

Guy Hands is laying off big time and talks the talk but so far all he is talking about is increasing supply.

Taking some key facts from FT article;

* 200 of the 14,000 artists EMI deals with each year account for more than half its sales
* Record companies lose money on 85 per cent of new artists, even before overheads
* More than 30 per cent of EMI’s artists have not produced an album. Many never will

What does this tell you about talent and creatively driven media? It’s impossible to predict success.

So his idea, increase A&R! Find more talent. The problem is, they don’t have a shortage of talent, i.e., supply.

EMI (and the rest), have a shortage of demand.

The Institutionalisation of Hollywood

Monday, 14 January 2008

The production of TV and Film around the world faces exactly the same mass media economic problem.

The current model is simple. Studios take the risk. They scout for and fund the investment and reap the majority of the reward through distribution. The talent is paid a little, with a select few receiving much, much more than others. Basically though, the Studio owns it all.

Off the back of the WGA strike, talent is looking at new ways to create content and keep most of the ownership.

“Virtual Artists will offer professional writers deals to develop and produce films, TV shows and shorts for a reduced fee but a larger ownership stake. It will also look to acquire content.”

This is one example of many groups of talent coming together to seek VC investment; Virtual Artists, Hollywood Disrupted and 60 Frames.

The problem is that these new firms are simply replicating the same mass media economic model, the model they have been institutionalised into. If you think about it, these new firms are simply playing the role of the Studio, but on a smaller scale. They face the same transaction costs to find talent and create new programming that the studios do.

My question. When these new ventures grow, will the TV/Film world look any different? The economics are exactly the same, just spread out over more small/niche/focussed Studios. A bigger pack of wolves, different clothing.

Right now, their offering is to ask the talent to take the risk (reduced fees) and in reward be given a larger share of revenues. Who’s the real winner here?

The new wolves…, and they will have the same problems the studios face. They will not be able to scale investment, production and output. They will have to control tightly what is invested in and what isn’t. They will become the new bottlenecks for talent.

Strategic Delusion #1812 / Treating the internet as a distribution platform

Wednesday, 9 January 2008

“A video destination is just really hard to differentiate,” said Verjee. “It’s really far away from a must-buy for an advertiser or a must-go-to for a consumer.” Verjee is not wrong. With mainstream video content it’s not just hard, it’s IMPOSSIBLE.

Every studio views the internet as just A N OTHER distribution platform, an inert pipe, where they can count up more eyeballs and sell or share more advertising. Networks/Broadcasters such as MTV distribute to anyone that asks, as long as they take the lions share of revenue. How do you differentiate when your competitors have the same content?

GoFish like many others are playing into the hands of today’s dominant players. This strategy does not pay off, the studios/labels will increase the take year after year until they bleed the market dry. Economically, this is no different than what’s happeninged in the music business where people like Bolt and very recently Pandora [UK] have given up because of trouble licensing music for distribution. It just becomes too expensive and unviable.

If you want to differentiate, if you want to have a dominant strategy, you have to start again, build from the ground up and rearchitect the value system. It isn’t easy. You need a revolutionary mindset. You need to reinvent TV.

This means revisiting how video is conceived, produced, delivered and experienced by viewers. From an advertising perspective it means reinventing TV marketing altogether. Advertising can no longer mean, “distribute content bundled with ads to its network partners”. Oh let’s just “bundle” some pre-roll, post-roll, mid-roll, banner ads. This adds ZERO value to the viewer experience, in fact it is detrimental, check out the negative comments on Joost’s Forum re: advertising.

We can’t build on the decaying foundations of the current TV business. There are a bunch of very clever writers striking in Hollywood who could really help shape this, they’ve been trying to advance the video experience for years but have always been stifled by the paymasters [networks].

How not to think about Video Online

Tuesday, 8 January 2008

Fox thinks people download pirated TV because it is free. Wrong. People download TV for the following reasons;

  • People don’t want to buy something New because they don’t know if they will like it or not.
  • People don’t like watching advertising every 7-8 minutes on regular TV. Pirated versions rarely contain ads.
  • Pirated versions are easily played on many devices – TVs, portable media players, mobile phones.
  • The TV program is not distributed through regular TV distribution in their country because of distribution windows/deals.
  • People already [think they] pay for the TV program through their Pay TV subscription. Why should they pay twice?

The problem with Fox’s assumption is that it has no strategic meaning. All of the above are nuisance costs to the TV experience. Piracy is an alternative that vapourises the nuisance. Assumptions like this will undoubtedly result in responsive tactics that include publishing free advertising-laden (pre, post, overlay) video online and heavy use of video anti-piracy technology.


With the music industry, DRM (anti-piracy tech) is irrelevant as it only protects a fraction of the music experience and limits exposure of bands. Revolutionaries like RCRD LBL are giving away music for free. Beyond the listening experience, there is so much more value to be created and captured through the community of passionate fans. Merchandise, sponsorships, concerts, exclusives, books, games, interactive media, the list goes on…

The question Fox and others should be asking is,

What experience can I create beyond and around TV viewing?

It’s not easy to solve. It’s hard to do the right thing. It’s easier to keep doing what you do now. But that’s where the money is.

The decline of the music indsutry

Monday, 7 January 2008

Seth Godin posts on the decline of the music industry, “Music is social. Music is current and everchanging. And most of all, music requires musicians. The winners in the music business of tomorrow are individuals and organizations that create communities, connect people, spread ideas and act as the hub of the wheel… indispensable and well-compensated.”

If you replace “Music” for “TV”, we face the same opportunity.  Just a few years behind.  Let’s not leave it to the last minute to do something

We have a choice…

Monday, 7 January 2008

a) continue to use scaffolding to prop up the existing media value system to try to reverse the obvious decay of TV, decay of Film (in theatre, on DVD), and decay of Music.

b) innovate and reinvent the media value system – redesign the way TV / Film / Music is produced and experienced.

The interests of the viewers/listeners, networks and creative talent are not aligned.

We can sit on the sidelines and come up with new products and services to support the incremental and frankly insipid evolution of media. Or we can challenge the fundamental economic principles and architect new foundations.

What would you rather be doing?

The rising quality of video online

Friday, 4 January 2008
Has anyone noticed the improving quality of authentic / UGC / prosumer (delete as you perceive fit) video online?I have come across many videos in the last week that have actually been entertaining. Not just cats jumping on the sofa or whatever.

If some of this stuff ran for more than 2-5 mins, I would definitely watch it in the evening instead of oldteevee (as Om would say)

Youtube has noticed as well.

The tide is rising. The floodgates will not be able to cope.

It’s a product licensing business

Friday, 4 January 2008

so many media technology companies limit themselves.

when people are connected,

when they connect their interaction and their experiences,

when they express their preferences to their friends and to other fans,

when they contribute the content itself,

it isn’t about licensing any more,

it’s about connecting viewers, listeners, creators.

Connected media is about connecting people.

Not licensing products.

DivX options for Stage6

Friday, 4 January 2008

DivX is concerned about the street seeing the capital expenditure of Stage6 and freaking out when there are no revenues.

If they keep Stage6, they would learn a huge amount about delivering community oriented consumer video services. If you think about it, where does DivX go now? It has a great codec, with players in 100 million consumer devices. It has bought MC for it’s H264 capability so effectively it will support industry standards. Video availability is exploding, both professional and amateur and everything in-between.  They are positioning themselves across the entire value system.

But what’s left after they license the codec and codec tools to everyone under the sun?

It’s simple, DivX has to move beyond the codec.

They have to start delivering services to support the video experience for all types of video content. They have to dig deep into the video experience. Hell says the TV is the best device on which to watch video. If so, DivX should do something about it. That means keeping Stage6. Sure, DivX wants to enable one hundred or even one thousand stage6’s, but they can’t do this if they don’t learn by doing one themselves.

Unless they have learned enough already! i.e., what does it take to make a video community?

If so, I reckon we will see DivX announce a sale, not a spin-off. Companies that are trying to solve the last-20 feet problem (Sandisk, D-link et al) have a huge opportunity to hit the ground running. Imagine if they acquired stage6. I can think of many cool services to deliver internet video to TV’s. And with a community of 10 million viewers, they’d have a kick start.