Content is not King
In the Media world the saying goes “Content is King”. The idea is: build it and they will come. Yet the kings of content, the movie studios, lose huge sums on most projects. Why? If asked most successful business people they will tell you success is a blend of hard work, luck, and controlling the controllables. Movie studios are well run corporate machines, their workers work hard, and management controls what it can. But they’ve lost control of distribution. At one time, movie distribution meant one thing: movie theaters. Own the theaters, and you control distribution. No longer. The battle is what happens with the content once it is released.
Distribution has never been so easy and the trends in technology suggest it’s going to get even easier. But across the world, content creators are filing for bankruptcy. And it’s not just movie studios, all content creators are struggling. The content creation business under assault from all quarters.
Two industries were the big winners in the Dot Com Boom and Bust. Porn and Gambling made huge sums and increased their market share while others floundered. Today, the Gambling companies have largely been shut down by the US Government and Porn is having to reinvent itself. Lack of control over their content has pretty much destroyed the Adult Industry. And you would be hard pressed to find anyone on Capitol Hill pushing for Piracy law revision for them.
You used to hear adult film stars say porn was a vehicle to launch a mainstream career and some of them actually accomplished that goal. Today most performers use the industry to subsidize their income. It is well known that many in the adult industry now derive their income from hooking and use their porn exposure simply as advertising.
Female performers have seen the pay decrease from around $3000 a scene (naughty time) now earn closer to $650 per scene (still good money if you are doing what you love). The male performers now earn about $150 per scene (I know some of you are saying where do I sign). The decrease in earnings is a direct result of the piracy, ease of distribution (DIY), and the low barrier of entry that allowed for mass-quantity and low quality films that flood the net. Yet the amount of Adult Production studios has gone from the hundred to just a few remaining production companies.
The adult industry business is on the verge of extinction. The blame? The same thing that gave the industry it’s prolific rise, The Internet. The Internet makes controlling content next to impossible. Even mainstream creators of content are struggling. The advertisers that pay for some of the content creation are struggling. The non-internet based distribution platforms tap into the Internet and give the target consumer the ability to buy the content and watch it when they want without commercial interruption. Devices like Boxee, Ruku, Apple TV and others allows the target consumer to stream the content they want when they want it.
Choices, on top of choices: you do not just have the ability to watch it when you want or how you want, you can also watch what you want. You prefer BBC to CBS? No trip to England required. Want to see a guy do the Cinnamon Challenge? Content creation and distribution is cheaper and easier than ever before. There are 60 hours videos uploaded every minute on YouTube alone. There is more content added to the Internet in a day than the average person will be able to consume in a lifetime. And the trend is accelerating.
What we can learn from the changes is that control is king. If your content becomes a part of a Peer to Peer (P2P) platform. If you cannot control and protect where it goes or get paid when it goes you lose.
A decent digital video camera costs under $150.00. Most Televisions sold today, come with the ability to watch YouTube and other user generated content. Most cell phones, tablets and computers come with the ability to shoot, edit and upload content.
Those numbers are a fraction of the budgets of the major production studios. Lionsgate who by all accounts is considered to have “modest” production budgets, is spending $80 million to make ‘The Hunger Game’ movie series (just over $15M per movie). While most would view a $15 million dollar investment that has already returned over $400 million a wise investment. When you are up against the commoditization of content it only takes a few misplaced $15 million dollar projects to sink a company.
So the creators are finding creative ways to protect themselves. You don’t have to look much farther then the UFC to see how creators of content are using both new and traditional ways to distribute their media. The parent company Zuffa, is a leader the legal fight to fight piracy or control where their content ends up.
Lionsgate pre-sold ‘The Hunger Games’ international film rights before the film was finished. Many view this as a risky venture, surely they could have got more based on the success of the movie right? Wrong, there is even less control in the International market. It is better to lock in a set amount Vs. running the risk of not ever really knowing what you made. The success of the first movie will drive up the International pre-sales in the future. Plus do not forget the global merchandise opportunities that come from a successful project like ‘The Hunger Games”. Building on the Hunger Games success, Lionsgate, through acquisitions, built a library with over 13,000 titles — which generates $150 million in annual cash flow.
Lionsgate will continue to produce content for the various platforms that the consumers are gravitating towards. Yet, to truly control the content you need to own the platform and be able to monetize the platform. Just look at the adult industry and the lack of control of the platforms used to distribute their content. They have zero control and their industry is dying. The barrier of entry has become non-existent. They are not using 3-D (most are not), 15 million dollar budgets or best selling books to help sell their content. Bottom line, Control is king.
Jason Genet
The iTV Movement
By now everyone has seen a Apple TV or Google TV device. My under $2000 dollar LED TV came with WiFi and streaming content from over 100 TV channels, access to new release movies as they are available and a whole host of other contents at my fingertips pumped into my living room. I am the captain of my content. I have my DVR recording my TV shows and I still buy the occasional TV series on DVD. I have spent a lot of time and money making sure I can watch what I want when I want.
The cheapest gadget is my cable set top box provided by Cox Cable. This baby cost me $5.00 a month and I can record what I want and watch it when I want. I can record it and keep it and best of all I am not a slave to the commercials. As a matter of fact I am usually drawn into commercials when I am watching non-modern TV set ups. I am surprised by the amazing quality of the ads and yet it is too little to late. If I am viewing your commercial on TV I am likely too cheap to buy your product. It only cost $5.00 a month to avoid the ads of those who helped fund the content I am enjoying. I sometimes have to stop myself from complaining about the crappy level of TV shows we have on TV these days. I am then quickly reminded that I just skipped past the persons message who is paying for the content to be created. I am a part of the problem or movement.
I am not alone, I am just a lot older then most of those involved in the movement and they rarely talk to us “old guys”. The iTV movement is upon us. In a recent independent study (away from Nielsen ratings etc.) of how those 34 years of age and younger Social Media users how they watch TV and Videos online. The results are conclusive that the Movement has begun.
-Only 12% do not subscribe to some form of Cable or Satellite Service. Of the 12% it was reported that 8% of them used open air antenna’s to receive a TV signal (primitive).
-58% of the users watch more online TV then they did last year.
-75% of the users are using some sort of DVR device to record their TV shows.
-64% of users rely on YouTube, 47% rely on Hulu (which is owned by the networks and currently considering a business model change), 33% on Netflix (which is now surging and will likely pass Hulu next year), iTunes represents 15% and the rest is spread out amongst other online solutions. User generated content followed by Network created content.
-80% of those surveyed, who were 18 years old and younger watch TV online, those 18-24 were at 79%, and even the 55 and older crowd came in at 31%. A stunning 72% of those aged 34 years and younger watch their TV online.
-55% even recorded live TV
The iTV movement is upon us, particularly for those 34 years of age and younger, who are willing to watch their TV online. The majority of respondents are recording their content on DVR’s such as TiVo. With over 72% those aged 34 and younger are watching their TV shows online. With Twitter and Social Media being so real-time it is surprising to see how many really watch the content on their time.
We think the online community is set to quadruple in size by 2014. This will mainly be impart to the iTV Movement.
Jason Genet
Ingrained Media, Inc. 