ONE OF THE MOST WIDELY quoted reports on the world wide media outlook for the next four years was Pricewaterhousecoopers’ Global Entertainment and Media Outlook: No hiding from the digital transition.
Depending on your point of view, the report presented an exhilarating, scary, or some combination of both, future for those of us working in media.
Jerry Brown, associate partner, advisory services, for the company’s Canada entertainment and media practice, is a 23-year veteran of the industry and notes that the 2009 study placed its emphasis on advertiser and consumer spending to determine where the revenue is coming from.
“Through a combination of technological and personal habit changes, consumers increasingly have the ability now and over next five years, of getting the content they want, in the format they want, at any given time,” he says. So, where will the revenue come from in that near future?
The report says while there are likely changes in growth rates, advertising and consumer spending by segment, the major money remains in traditional media. But what will change is how the content is managed and how rights are managed, within those businesses.
MediaINTELLIGENCE.ca president Mitch Nadon recently interviewed Brown and what follows is an edited transcript
Mitch Nadon: Can you comment on how the digital migration involves greater customer service in order to succeed?
Jerry Brown: It seems that during 2010-2013 there’s somewhat of a stabilization of advertising revenues and executives being more comfortable with forward-looking forecasts. Consumer spending in the meantime continues, and we’re forecasting the rate of recovery and consumer spending will be faster than advertising.
Part of the challenge for management teams is how do they get their hands on that consumer spending? If they wait for advertising to come back – it’ll be a longer wait. It’s somewhat of a dichotomy with the Google economy: Consumers will be spending on things like mobile and video games and the need is therefore to work out how one can try to drive payment for content either directly or indirectly. If you look within the layers of content, you start to see ways you can do it. International and national news are, by and large these days, a commodity. There are enough public broadcasters or agencies that are mandated to get news out – look at CBC, BBC, and public broadcasting in the United States. People can get their basic stories for free over the web and that fulfills the mandates of those organizations.
However, if you look at analysis of specialized content, for those people who’ve got their feet on the ground, whether business or sports, that has value. If you look at hyper local content, it should be monetizable. For example, Sky and Rupert Murdoch: a subsidiary in the UK competing with one of the world’s best broadcasters, Sky still has many subscribers because they specifically bought up the rights to major sporting events. So if you want to see that soccer game you really want to see, you have to be a Sky subscriber. Well, the same model can be thought through in many forms.
MN: Can you also comment on how the digital migration will cause greater fragmentation and require greater collaboration for companies to succeed?
JB: Large scale or small scale…. there’s always room for the individual, bright entrepreneurs. Years ago Bill Gates was asked if he feared IBM but his response was “I fear two guys in a garage…” If you are bright, and you’ve got a good idea for a new service or content, local interconnectivity now allows you to reach a massive market very, very quickly. It’s a collaborative model and an entrepreneurial model, based on the fact that most countries have wide access to the consumer. The old story was “content is king”. These days, content originators are king. You can get wrinkles like in Canada where you have to be Canadian to distribute, but by and large, you need to be a content originator and then you work with the people who own the pipes to get to the consumer.
The contra-to-that-challenge over next five-plus years, is in the traditional world where you’ve had all your content held digitally in a system geared to shipping it once down a given pipe, watching it on cable and over the air, films up in theatres, that is, purposing it once. Nowadays, content is much more amorphous. The meta-tagging of content that works for a broadcaster, doesn’t (necessarily) work for print, mobile, etc. so you end up doing a massive repurposing for each. Nowadays, you’re going to need to hold content somewhere, whether it’s in print, web, TV, mobile – it’s best to create it once and shoot it down many pipes.
For example, if you’re being paid for product placement in the traditional movie model, you’d make the movie, you’d do a version for North American markets and the product placer will be paying you based on number of frames the product appears in. Now, if you now do a different version, you probably have to change the cut, retag the whole thing and count frame changes. If you held all the content in a central repository, every time you repurpose it in a central database the tagging applies to each, and you send a different bill or invoice to the product placer for each cut.
In the same way today if you are a traditional broadcaster and you are either producing and selling or buying and broadcasting, you have multiple rights contracts, every one of them is unique in terms of the rights held, as well as the way the contract is written. Every transition involves paralegals and spreadsheets – you need to get that to the point where you can manage this in databases automatically, so that your cost per transaction comes down dramatically. That’s the challenge that’s going to come – how do you create the digital management systems, not only the digital product, and manage both factors internally within the company, and externally with all stakeholders, so that your cost per transaction is sustainable.
That’s the way things are heading. So within traditional broadcast, it’s going to be a very different world in the tape room. If you’re a producer, you’re going to be thinking from the very beginning, about what you want to be doing with all the different elements including a mobile version, a web version, associated merchandise, etc. (As a producer) you’ll be thinking of holding all of the creative elements centrally – what rights you are selling, to whom and for how long? You have to think through different ways of ensuring you have lasting value for the consumer, and for content originators or distributors.
MN: What is the best advice PWC would give someone building a career in media and entertainment that might be sustainable for next 5-10 yrs?
JB: In a digital world, the creative, the business and the technology really come together very closely – that’s the strategy of the Stratford Institute and other educational establishments who are trying to work out what they should be doing for graduates and undergraduates going forward. An educated industry is one that is going to create a better and more competitive marketplace. For anyone in his or her career – only streaming down technical or creative or business is unlikely to give you the flexibility you need for a lifelong career in this industry. Understand the technology, be able to use it proactively for whatever ideas you’re having, and study traditional and non-traditional business models.
MN: In a web address, Marcel Fenex, Global Leader of the PWC Media and Entertainment practice states it’s time to be bold when looking at the sector and opportunities for work in the sector. Do you think Canada can get back in the ring?
JB: Canada is not a lost cause. First, Canada, for many years, has punched above its weight creatively: painters, producers, rock bands, artistic endeavors – and we have reached the global market. That’s the starting point.
Second, if you look at start-up businesses that have gone on to be great, using animation and Cirque de Soleil as examples, we go there. Government is beginning to increasingly understand what needs to be done at all levels, federal, provincial, municipal, supporting the University of Waterloo as they did, the Emily Carr Institute, as well as great new funding from the Ontario government contributing to real time production getting off the ground.
There are lots of hopeful signs. We have great creative people in this country. If you have that, it’s going to enable an over-advantage for all the other business and technology elements. Canadians really have something to work with that’s unique, if they want to use it.
