2010 Media & Entertainment Predictions

2009 provided the best non-documentary film of the year in “The Hurt Locker” – it seems timely to take a few heroic stabs at predicting where media will be in the new year. Before 2009 times out in Los Angeles, a breakout of Media & Entertainment possibilities:

1. DVD - “Hurt Locker” is an apt metaphor for the film studios’ DVD departments, who had a substantial off-year, given the rise of online video distribution, gaming, rival HD dvd players and an economy that rewards a cheap theatrical ticket versus waiting for the long tail/queue of home video. Where they go next: Expect more depletion as consumers realize more and more that they really “can wait” for films to open in cheaper and more on-demand windows. Good Ron Grover/Business Week article on Netflix v. The Big Studios with colleague Ted Sarandos.
2. Consolidation – with Comcast finally getting its content networks in NBC/Universal, expect other big communication fish, who want to play in cable, to step up acquisition efforts, especially as traditional media joint ventures like Fox/NBC’s Hulu are growing stronger in online video. Hulu’s growth disrupts the tech hierarchy, so expect Microsoft and potentially Verizon to make a play that strengthens their content platforms while also giving them access to revenue-bearing cable networks. Where they go next: Verizon is definitely in talks around Viacom (who also should buy(back) Summit Entertainment fwiw), which would put AT&T in play – and anti-trust play for that matter – with potentially Viacom or some form of JV with Sony; or rolling up the mini-majors, Microsoft doubles down on its XBox audience with a Fox (a stretch) or Lionsgate (a good fit) acquisition. And yes, Microsoft and the others have shown little interest in owning content versus distribution, but with Google tied into Vevo + YouTube, and Comcast with NBC/Uni, it starts to make sense to own a production/distribution media co entity as a block or future trade in the ongoing consortium wars. Expect Discovery Channels and Fox to continue to buy while things are relatively cheap, with Liberty Media involved for guidance, and Peter Chernin potentially overseeing NBC/Uni or any one of the other consolidations.
3. Hollywood Talent – As written up in the past on “starpower brown-out,” entertainment and most media is moving away from the individual artist scenario and into the filmmaker stage. From the $500 production of “Panic Attack” which became a $30M film greenlight to the Stephenie Meyer “Twilight” Summit saga to Paramount’s “Paranormal Activity” grosses and “Star Trek,” Sony’s “District 9,” etc. – everyone is looking for the next big thing before it hits, but on the storytelling side instead of the usual talent/talking head side. If Tiger Woods is any example with his sponsor withdrawals, brands and big studios, will be looking for genuine or authentic (or ensemble) films that tell a good story well. Where they go next: They go to the agencies and structure  some form of bargaining position with less upfront and pay-or-play deals, including more backend equity and merchandising rights. Talent – including the J.J. Abrams and Tim Kring of “Heroes” – also begin creating more original IP that they can sell independently of their studio overhead deals. More Mel Gibsons, fewer Eddie Murphys – if that makes sense – going forward.
4. Personalized Content withinTechnology - With Apple’s highly expected iGuide or iTablet, Google Nexus One Phones and faster/stronger/better Wii’s, XBoxes and PS3/4s, consumers will find themselves spending more than 40% of their time online when not at work. The FiOS or U-Verse will offer more content than ever available, which will change consumer behavior – they simply will not have time for 5 much less 500 channels, and will turn to online to sort, niche and program their viewing around what their like-peers enjoy – think Boxee model here, which Comcast, DirecTV or TiVo buys. Where they go next: With all of these content inputs coming primary out of the tech space, traditional programming and brand advertising will change their models (slowly, although good to see Pepsi pull out of the Superbowl recently) to connect with the interactive or hyperinteractive crowds. To those who still favor a lean-back, couch potato lifestyle, it will still exist, but its metamorphosis will be personalized programming with either lean back or forward approaches.  If you think advertising CPMs/analytics online is a hearty business for Google, look forward to a bigger market when full-form content gets extremely searchable and programmable.
5. Content Windows – fewer theatrical releases and more pressure from all of the things that have been hurting DVD are going to force tighter windows, which will equate to lower initial returns, throwing off first run and second run/home entertainment revenues further. All of these predictions basically integrate together: consolidation, technology and talent reductions will reduce production costs, forcing films and series to perform immediately as content drivers, then be pushed into much less lucrative library pools. Where they go next: Consumers will see films and tv pilots as snapshots, unless like “The Dark Knight,” there are ARG’s supporting long-term audience capture. Content windows will ultimately be less important than content niches, whose niche audiences protect the media they like by buying it in every form available. Think “South Park,” “Family Guy” and the sinkholes of activity between the X-Men films. Hollywood or M&E will finally realize that they should have been actively trying to aggregate their audiences instead of dropping them between films, sequels and DVD windows. The labels’ 360 mentality will become a living/breathing habit for studios who want their brands – i.e., their films, not their corporate names – to have staying power.

That wraps up 2009 for New Medici – to newfound success and innovation in 2010!