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EDITORS NOTE: Connecting the C’s (As in CTO, CIO, CBO and CMO)

The central theme of this edition of the M&E Journal is “Connecting the Dots:  Collaboration and Connectivity in Media & Entertainment.” Never in the history of the entertainment industry have we faced a storm of disruptive technologies that explode the number of new dots to be connected. Digital technology, internet infrastructure, broadband network, smart telephony, cloud storage, kiosks and web-enabled consumer electronics devices have upended the supply chain of the industry. The result is that the number of dots connecting Consumers with the content-producing studios has undergone a Draconian change. The recipient of content wants it now, anywhere and on any device. The fixed, limited menu for content consumption is being replaced with a smorgasbord of personal tastes where numerous Web-enabled devices draw content from a plethora of emerging suppliers – aggregators, e-retailers, ecommerce companies, social networks, studios, telecom carriers and terrestrial service providers.

The effort required by the content creator to deliver content to consumers is difficult in the brick and mortar world where production, warehousing and distribution, retail, reverse logistics, credit/collections and marketing require significant amounts of inventory, lead time, cash and synchronization of demand and supply. While stock outs is a necessary evil, the supplier of the physical content does not directly know who the purchaser is since the point-of-sale information usually belongs to someone else. On the other hand, with the magic digital wand, delivery of digital content is virtually instantaneous and a direct and personal relationship can be created directly with the consumer, while the fulfillment of demand is no longer as resource-intensive as it is in the physical world.

Explosion of Trading Partners

The traditional, linear B2B networks of studios with distributors of digital content are expanding immeasurably where actually B2B2C has become the vital link in a demand-driven marketplace. Introduction of video streaming by Netflix created access to 24 million subscribers and growing, offering 20,000 movies and television shows. Google’s YouTube is ramping up its video-on-demand movie rental service with titles from major Hollywood studios to compete with the established services already offered by Apple’s iTunes and Amazon. Enabling the purchase of content once and its enjoyment seamlessly on any device and anywhere is the new constitutional right. A cloud-based Internet infrastructure is making the digital locker a compelling value proposition for ubiquitous digital entertainment.

In the brick and mortar world of retail, Wal-Mart’s Vudu and Best Buy’s CinemaNow are exploring moving away from pay-per-view to subscription. Best Buy has set a goal of doubling its $2 billion in annual online revenues within five years through stores, over mobile and in homes. Wal-Mart will soon have a social media technology platform developed by Kosmix to filter and organize content in social networks to connect people with relevant real-time information to deliver highly personalized insights.

The cable companies, like HBO, Time Warner, Cox Communications and Comcast, are developing their subscription services while Dish Networks acquires Blockbuster to expand VOD.

On the consumer electronics side, according to a Deloitte survey, “most Americans own a device that allows them to easily connect to the Web – 85 percent of consumers own a desktop computer, 68 percent own a laptop/netbook computer and 41 percent access the Internet on their mobile phone.” Furthermore, the consumer now has a streaming Cloud Player, a media management and play-back application not unlike Windows Media Player and any number of other media management applications that let customers manage and play their content.

Finally, the next generation of the Internet standard will allow programs to run through a Web browser rather than a specific operating system, enabling consumers to access the same programs and cloud-based content from any device—personal computer, laptop, smartphone, or tablet—because the browser is the common platform. This ability to work seamlessly anytime, anywhere, on any device is changing consumer behavior and shifting the balance of power in the mobile-telecommunications, media, and technology industries.

Rewiring the Entertainment Supply Chain

In order to address this changing distribution landscape, the entertainment supply chain must be connected between basic functional segments of (1) Supply Management – sourcing, manufacturing and distribution;  (2) Demand Management – marketing, sales and customer service; (3) Product Management – Research and Development – engineering and product development, and (4) System of technologies and processes that senses and responds to virtual real-time demand signals across a network of customers, suppliers and service providers. The result of responding to consumer demand signals requires a network rather than the traditional linear approach to global supply of entertainment.

Clayton Christensen, in explaining the “Innovator’s Dilemma,” presents the bitter truth that, “Well managed companies that have their competitive antennae up, listen astutely to their customers, invest aggressively in new technologies, and yet still lose the market dominance….Disruptive technologies bring to market a very different value proposition that had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have poorer features that a few fringe (and generally new) customers value.  Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently more convenient to use.  Managers faced with disruptive technologies fail their companies when organizational forces overpower them. ”

As we face the perfect storm of disruptive technologies, it is going to take the Chief Technology Officer (CTO), Chief Information Office (CIO), Chief Business Officer (CBO) and the Chief Marketing Officer (CMO) at the Hollywood studios to work together to shape and drive the digital supply chain for content. Reorganizations and new thinking are required to overcome the intrinsic inertia of legacies of success in the physical media world as defined by Christensen.

While the CTO builds the technology platform and capability for digital asset production, management and delivery, it is the CIO who implements customer relations management solutions and social networking in a secure manner. In addition, gathering together a growing diversity of data for real time decision making, such as POS, blogs, emails, click of the mouse, etc., is becoming the new arsenal of digital marketing for the CIOs. On the other hand, the new Chief Marketing Officer needs to break down business unit silos of Film, TV Networks and Home Entertainment and integrate marketing of content over its product life cycle. Personalization of marketing in a mass customization mode is the new paradigm.  Finally, the Chief Business Officer (COO or the Operations Executive), who understands the business processes in the supply chain from end-to-end, has the unifying responsibility to drive the adoption of digital technology through collaboration with the CTO, CIO and CMO in order to satisfy unprecedented consumer demands.

It is this unprecedented corporate connectivity that will help usher in thebrave new world of digital entertainment.

Editorial Director of the M&E Journal and Chief Strategist for MESA, Mishra is recognized as an eminent thinker and practitioner of supply chain management.  Now an adjunct Professor of Decision Sciences at Pepperdine University, he has previously served as President/COO of such companies as LIVE Entertainment, VCL-Carolco, Lieberman Entertainment, and Technicolor Worldwide Media.

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