The last set of meetings for the Interactive Mission were visits to three very different Hollywood Studios - Warner Bros., 20 Century Fox and Lionsgate - each facing very similar challenges and each taking very different approaches.
The movie studio business used to be all about windows. The first window was the theatrical release. The second window was the DVD sale. The third window was the rental release. The fourth window the pay TV airing. The fifth window being the free to air TV premier. Warner’s told us, “you could set your watch by our revenue streams….” (All you had to do was look out the window.) “now all that has changed.”
Thank you technology. The emerging ubiquity of proper broadband made the streaming experience first bearable and then possible in HD giving a better than DVD quality. Secondly, convergence. A TV is now a PC and a PC is now a TV. And thirdly, and in many respects the most interesting from a social perspective, there seems to have been a complete recalibration of the concept of ownership. People seemed to awake from a collective deep sleep and ask themselves why do I need to own the DVD of the movie? What additional value does ownership actually yield? This is not simply explained by the migration from physical to digital media where content is available instantly anywhere, anytime on any device, but is evidence of something more psychological in the zeitgeist. Something akin to the phenomena of a whole generation of city dwellers who see car ownership not as a status symbol but as a burden leading to zip car usage as the default option.
Fox told us that the movie industry tried to fight back with technology. Most notably 3D. An attendance and revenue spike followed. Not least as ticket prices were hiked. But apparently the novelty is wearing off. Mainly because beyond novelty, 3D did not add substantively to the idea or the experience. It is now only in certain international markets where the phenomenon continues apace. Markets like Russia where the introduction of the technology required new or significantly refurbished theatres. So even there it is difficult to say whether the 3D movie or the new environment in the driver.
Fox seems to be less innovative in the development of new creative IP than the other two studios, but reeled off a long and impressive list of digital marketing firsts. Sensibly they are not looking for digital ideas per se but ideas that utilise digital. Therefore digital has ceased to be a foreign department within marketing and has been naturalised as "just the way we do things around here".
Warner’s still see themselves as a “content creation and distribution company” but now the rules have changed. Warner’s used to rely on channels, now they see that direct to consumer is the future. Warner is now “a service business and as such need to develop an unbelievable supply chain”. They are renting movies through Facebook. They acquired Flixster. They are now the world’s eighth largest game developer with 1,800 developers on staff.
They admit that “we’re not getting rich but we’re getting learning”. This change is creates stresses. There is a huge organisation change. From clockwork to chaos. One of their senior marketing team admitted to a Twitter slip up the previous night “and I feel 90 this morning – that’s how fast it moves.’ Ultimately, Warner’s aren’t scared by the fact that “not one thing has remained static in our business”, rather they “can’t recall a time that is as dynamic as now.”
Lionsgate told us that “you have to be experimenting in these areas because no one knows how it will turn out.” One such experiment for Lionsgate is Facebook. “We thought that Facebook was a marketing channel now we think it could be a monitisation channel.” They referenced Dirty Dancing which went from 1.5m fans to over 11m fans in one year with no marketing. The Dirty Dancing social game on Facebook attracted a 1m players in a month. And yes you can rent or buy the movie through Facebook. Watch out for the integration of Facebook with the remake of the movie slated for a summer 2013 release.
Lionsgate came across as the fastest moving and most innovative of the studios. This is probably a function of it being a “mini major’. They see a major shift in the strategy of studios from “moving the IP across platforms to developing new IP for new platforms.’ They see this “huge opportunity” emanating from the explosion in the number of screens consumers have and the collapse in the cost of creating professionally produced content.
What shines through is the pace of change and the radical nature of change that is facing a grand old dame of an industry. What also shines through is that the people dealing with the change do not fear it but positively embrace it for the creative opportunities that it is creating.