Can Data Save the Studios in the Age of Social Media?
By Nick DeMartino - Warner’s acquisition of Flixster is Hollywood’s savviest move yet to survive a wrenching transition into the age of social media.
It’s not just that Flixster is the leading social movie site on the iOS, Android and Blackberry mobile platforms with 35 million downloads to date – or that its sister site, review aggregator Rotten Tomatoes, attracts 12 million monthly visitors – or that Flixster powers Facebook’s Movies app, also the market leader.
No, this is about more than traffic and traction. It is about data. Data is the secret sauce of social media that will empower Hollywood to take control of its own business, rather than to cede it to intermediaries, e.g., the disruptors from Silicon Valley.
With this deal, Warner gains direct access to millions of movie fans, and to the data generated by their social interactions around movies – both essential ingredients to build a direct-to-consumer movie business owned and operated by Hollywood.
All this, at less than the cost of a single comic-book movie!
Social media fosters a flood of consumer interaction and generates massive streams of data, enriching companies that collect the data, and penalizing those who don’t.
This is a very different model than Hollywood (or anyone else) has ever known. It’s worth billions, because data can be tracked, measured, mined, parsed and monetized in countless inventive ways. All of which are counter to Hollywood’s old model.
To wit: Studios have been wholesalers who sell to retailers, not end-users, e.g., individual humans. Hollywood’s biggest customers have been theatre chains, TV and cable networks, and big-box stores – and now digital distributors like Netflix, iTunes, and Amazon. All of which have been very busy building a consumer ecosystem powered by data.
To reach customers directly, studios will have to build new businesses to distribute movies and leverage behavioral data. Which means Hollywood must compete with the best-in-class e-retailers like Amazon and Apple. Are they up to this daunting task? Studios have tried before, and failed. (WB’s Entertaindom and NewsCorp’s MySpace debacle come to mind.) Read more >>
Netflix’s Rise, Infographic Style
Via NYT’s DealB%k, a great Online MBA Program infographic on Netflix’s meteoric growth in the DVD and VOD space – chasing Blockbuster then moving past their brick-and-mortar storefronts into how the movie service eats into the pay tv and cable models.
With strong leadership, a great recommendation engine and a service which is considered a “utility” by many, Netflix will need to move internationally and optimize for the social networks to stay ahead of the Amazon Prime VOD bundle.
Groupon: Start in Physical, Get to Digital
Groupon is on an incredible tear, so we’re not buying the “inevitable fall” question in today’s infographic). We’ve recently started helping the daily deal company navigate the M&E space – and their phenomenal growth is well-timed to reinvigorate social commerce across most verticals. On background: thePoint.com first landed on our ‘social good’ radar at Participant)
With Amazon’s relationship with LivingSocial and xxx hundred copycats (remind any of the early Facebook, niche social network days?), it will be very interesting to see Groupon grow beyond daily emails into other discounted merch models.
One potential trend, companies like Groupon, Netflix and Amazon are smartly rooting themselves in physical goods, but as with Amazon and Netflix, will eventually scale to soft, aka digital, goods: hosting, streaming movies, email packages and the like.
Once you presumably own a category, it then becomes time to optimize customer relationships and these three have established their user experience satisfaction levels well. Simple, easy and physical product-based moves to digital products very easily.
New Medici 2011 Predictions
- Cords will be cut – cable and satellite companies will have to package internet bandwidth with channel programming to keep sub fees north of $100. Cable and other triple players will move to provide bandwidth to all devices – think Mifi for everything as an upsell with loss of cable. In 2012, all television programming will be available day and date via web/mobile.
- Netflix will double (or more) its sub base with streaming model, and become an even higher value acquisition target; it now currently needs to figure out social media to close all gaps with Amazon.
- Resurfacing of digital media IPOs (or accretive acquisitions): think Spotify with US penetration, Facebook, Zynga, Groupon, Flipboard and possibly Pandora.
- Music and media discovery will be most valuable digital utility, with people programming their lives – and transparently tracking their consumption (personal CRM or our “time clock” theory), which will be shared, of course, via social media.
- 3D will rise at home, decrease in theaters – more television programming and surplus of high quality 3DTVs with many ITV channels also moving into 3D to differentiate.
- Apple will ditch optical drives on all but highest end laptops (wireless/Bluetooth SuperDrives to follow; Apple to move into 5TB home networks servers and own cloud ecosystem) and desktops. iPad 2 with 3G/4G package will sell 1.5x original unit and knock out all touch players save Android. iPad 2 will merge video UGC with ARG successfully, e.g., users will connect via video conference to engage with branded content. Video conferences will become programming when edited right.
- Film studios will drift away from traditional sequels/remakes and renaissance with new franchises – think next Harry Potter, Dark Knight, Hangover.
- Ad agencies and major lifestyle/consumer brands will dive into social media acquisitions, create more innovation incubators and buy consumer content/video sites to roll-up audiences. Think Y Combinator owned by Adidas. Similarly, talent agencies will launch incubators to find next production/distribution efficiencies and create more and more backend strategies versus faltering pay or play.
- In the gaming world, “Angry Birds” success will be remodeled (usually badly), but will also create new initiatives to merchandise media on a 360 level, i.e., games, films, tv will finally leverage their assets fully outside of release windows. Pop-up events will be “demanded” as exclusive media and merch will be next big thing.
- Digital content will become vastly more personalized. Once discovered (see #4), smartly aggregated and tied into social (e.g., Flipboard), users will start visiting fewer and fewer niche sites, plus heavy Facebook…
A Tale of Two Netflix Strategy Decks
In a world where CEOs eschew social media sharing, Netflix’s Reed Hastings likes to share. Two recent strategy decks speak to Netflix’s desire to lead by standalone example: via company culture and the business opportunity that Netflix’s longtail and tv-driven consumption model with streaming has created.
The first deck on Netflix Business Opportunity was published to Slideshare five days ago and has 8.6k views; the second on Freedom and Responsibility Culture was published 10 months ago and has 404k views (here’s hoping a lot of HR directors use SlideShare). Read more >>
Netflix’s Winning, Innovative Culture
Netflix became more transparent recently, by posting its internal company culture preso, i.e., how it inspires great hires, values context not control, and rewards adequate performance with severance. Given that Twitter had its internal documents hacked and sent to many blogs, it’s a welcome blast of fresh air when a next-gen, New Medici-like company like Netflix shares its values.
Anti-Studio: Theatrical Drives Theatrical, Not DVD As Usual
Is DVD on the downturn? During a recent lunch with one of my favorite studio digital media chiefs, we discussed the future of home entertainment – DVDs, Blu-Ray, Netflix, hulu, On Demand, digital downloads, you get the basic idea. We mused what the return would be in the next year or two when more of the consumer world is looking for at-home (“digital home”) entertainment, and not tuned into buying packaged DVDs or renting from brick-and-mortars like Blockbuster. Do people actually still buy and rent this way still, you ask? Yes, but they’re moving towards the $4 on-demand, 24-hour window rental – which is 1/4 what studios are used to based on the current retail environment. So how do they survive? Read more >>
Wii Shall Overcome
A great panel at CES today – “Wii Shall Overcome: The Triumph of Simplicity and the Lessons We Can Learn from Nintendo.” The panel were Wii believers in the clean, simple design which changed the physical gaming home environment; rough meaning, it was inclusive of all family generations. Wii was bigger than just Mii.