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Monetizing the 2nd Screen – the debate continues with "Cost per Touch" introduced

A few weeks ago in a blog post on the same subject, I presented the current approaches to monetizing second screen companion and converged viewing experiences in the market place.

Last Thursday, we had the opportunity to put the heart of the discussion to a live debate (audio available here) at the Jefferies 2013 Global Technology, Media & Telecom Conference held in NYC.  We had a "Star-Studded 2nd Screen panel" including Jesse Redness (@JesseRedniss) from USA Network, Tara Maitra (@TiVo) from TiVo, Adam Rymer (@MLB) from MLB, AJ McGowan (@UnicornMedia) from Unicorn Media and Rick Liebling (@RickLiebling) from Young & Rubicam.


We kicked off the panel in discussion with Adam Rymer, discussing how MLB has pioneered both video streaming and second screen in the industry for more than 10 years.  Adam described not only their content syndication revenue approach ($20 a season for the "data only" second screen experience, $125 a seasons for the converged streaming video experience) as well as their experience with 4 Major League Baseball parks for in-park commerce (tickets, concessions, integration with the jumbotron, etc).

Jesse Redniss and Tara Maitra spent a good deal of time discussing display ads on second screen, with Tivo surprising the room as Tara discussed their ad network approach for on demand viewing including "Tune-in" links for major shows (ironic for a product that is often thought of as an ad killer).  Jesse discussed USA Network's approach to metadata syndication, giving them the ability to push their brand and synchronized ads to multiple 3rd party second screen apps.

As we started to discuss interactive advertising and how the market is reacting to a CPM model on the first screen and whether the sync'd ad on the second screen will be monetized in a CPM approach (i.e. a 10% uplift on the CPM) or a CPC model (web ads attract $0.50 - $1.00 per click-thru), Jesse coined the phrase "Cost per Touch".  He illuminated the investor-packed room by describing not only the power of measurement of the clicks themselves, but that we will soon be able to truly understand how consumers are engaging with the brand and content on the first screen (are they switching apps, are they clicking into the actors or the sync'd content, etc).

Rick Liebling did a great job reminding all of us that this is still a very nascent market and the both ad agencies and their brand advertising customers need to be educated on what is possible and what is working for this to continue to gain momentum and achieve real scale in the market place.

AJ McGowan brought us full circle between the analog and digital video worlds, describing why it has been so hard for the last few years for brands and TV networks to monetize their video content in mobile in the same way they have been monetizing broadcast streams.  Essentially, until very recently, video links shared via Twitter and Facebook or even email have been challenged by the need for a client-side app (to count streams for the advertiser, etc), resulting in very low viewing rates as consumers either have to hunt for and download the app or become frustrated while the device switches from streaming the ad to streaming the actual content.  Now that the technology exists to stitch the ad and the content together "on the fly" combined with an industry recognition of matching the pre-roll to the size of the content (ie no 30-second pre-rolls for 30-second videos), networks are starting to see their ad stream viewing rates climb and their resulting effective CPMs climb (they only get paid for completed ad views).  With ad targeting servers from companies like FreeWheel and VideoPlaza targeting consumers in real-time with more and more personalized information, we should expect to see CPMs meet and exceed those of the analog broadcasting world...soon.

So, while I expect this to continue to be the most popular debate in the industry, one thing is for sure--the entire industry is focused on figuring out a way to monetize those consumers we have been smart / lucky enough to engage in second screen companion and converged viewing experiences.

Interested in discussing this with us further?
Check out our Webinar on May 23rd on 2nd Screen Strategy Basics or join us live in NYC at the Chelsea Clearview Cinemas on June 27th for our 2nd Screen Summit NYC @ CE Week where will will continue the discussion on monetization strategies in addition to engagement and the challenges companies large and small face in the industry.

Send us your feedback on this blog or on Twitter
@ChuckParkerTech
@S32Day

Big Data Boondoggles: NAB and UCLA Shine the Spotlight on TV’s Platinum Era

By Colleen Quinn

It’s that time of year! Nearly  100,000 of the industry’s best and brightest flock to Sin City for meetings, demos, and debauchery. It’s NAB!  I’m a little wistful writing this from a cold, hard desk in Los Angeles, as pictures of productive-days-turned-long-raucous- nights start to flood into my Inbox.

“Wish you were here!” they scream. Alas, me too. Not so much for the endless hands of blackjack (where I lose every penny to my name), the 36-ounce rib-eyes (“Hey! Who has the most liberal expense account?!), or the dreaded booth-baby-T-shirt.  No.  Those things are nice – and essential to the NAB boondoggle – but mostly, I’d like to be there because I think this year, really, NAB is important.

My mantra for the last 5-years has been “the landscape for media and entertainment is changing.” I hear others talk about “the battle for the living room.”  Well, I’ve got news for all of us. The landscape isn’t changing. It’s changed. And, that battle is over.  Now we’re talking about a war – for the consumer. This month’s WIRED magazine has dubbed this the Platinum era of television.  They’re right.  (See my recent blog post  – was it a premonition to Wired’s new issue?)

NAB – really the community of creators, technologists, and post-production innovators that drive the show– are at the nexus of this platinum age.  The show is still well underway, but already, major themes are resounding: hyper-social content, deeper engagement, precision personalization.

This new age demands that content creators and distributors be able to understand and know an audience-of-one in ever more sophisticated ways. While the applications and services – from TV Everywhere to the Second Screen – may vary, they all share a common, critical foundation: analytics.  Without most of our peers realizing it, the entertainment industry’s biggest currency has become data. Big data.

It’s time for a deeper conversation about the role of analytics in our industry – and many of the most forward-thinking studios and distributors are already starting that dialog. Industry  thought-leaders will be represented at an upcoming industry roundtable on  May 23rd, “Using Analytics to Create, Captivate and Engage” – hosted by UCLA Center for MEMES  and Teradata – to drive that discussion.  If this is the Platinum Age of television, then data is the alchemy that can create it.

Oh. There will also be a cocktail hour. Westwood isn’t quite Vegas, but at least they won’t force you to wear a baby-T.

Viewers Need a Better Way to Find and Watch TV Content in a Multi-Platform World

By Bart Myers, Vice President of Consumer Web Properties, Rovi

Despite the rising number of entertainment options, it’s clear that Americans are watching as much TV as ever. They’re just watching it differently, discovering new ways to enjoy TV on their own terms and on whatever device is available to them.

They are streaming free and premium content to their tablets and smartphones. They are tuning into online services like Hulu and Netflix to watch their favorite shows. They are even paying a few bucks to watch single episodes via services like iTunes and Amazon Prime. And, yes, they still rely on cable and satellite subscriptions.

Still, many people in the television industry are freaking out. They’re obsessed with the same question: “Who’s cutting the cord?” After all, Comcast Corp., the largest U.S. cable provider, said it lost 117,000 video customers in the third quarter of 2012. After decades of steady increase, the number of U.S. households subscribing to pay-TV service is now on the decline, according to the Nielsen Company.

But cord-cutting isn’t the real issue. Instead, content producers should be asking, “What cords are viewers using—and how can we maximize the value of those cords for everyone involved?”

Nielsen recently began tracking the viewing habits of millions of Americans that now connect to entertainment content via the Internet, and not through a cable or satellite service. Nielsen found that more than two-thirds of these “Zero TV” homes get their content from a broad range of devices including personal computers, Internet-connected TVs, smartphones and tablets.

For the content provider industry, there are lessons to be learned from these “Zero TV” homes. The Nielsen study found that nearly half of the “Zero TV” homes now watch shows through online subscription services. Yet, many are finding that the content they love is not readily available in all formats and platforms, which leads them back to a siloed approach to getting their TV content.

The three main use cases in TV watching are:

• The viewer is at home, trying to decide what’s on TV to watch right now.
• The viewer is anywhere, trying to plan what to watch later.
• The viewer is on a connected device and wants to watch whatever is available online.

The problem for content owners, however, is maintaining the relationship with the show’s fan base across multiple siloed platforms.  Content providers should be able to connect to the user where they are watching TV, but the current ecosystem of devices and content rights makes that relationship extremely hard to manage.

Increasingly, viewers need an advanced set of tools and services that can guide them across all the different ways they consume televised entertainment today. For content owners, this means that they need to keep an eye on rapidly evolving TV consumption habits.  To keep up with the changing consumer landscape, content providers need to think differently about how people are planning for and enjoying content.

Consumers, meanwhile, are hungering for televised entertainment content online, but it’s simply too hard to find. They don’t understand why they can’t access their favorite content anytime, anywhere, from any device—especially since the technology exists to make it happen. The maze of blind alleys the viewer must navigate to find that content can be excruciating.

If content providers want to maintain the relationship with viewers in this future world of entertainment on every medium, content discovery needs to be much easier.

As things stand today, there is too much friction in the marketplace. We shouldn’t be cutting consumers off from their favorite shows. Instead, we should be finding new ways to better connect viewers with entertainment content, and helping them understand the appropriate options for enjoying that content—wherever they are and on whatever platform they choose.

About the Author
Bart Myers is Vice President of Consumer Web Properties at digital entertainment innovator, Rovi Corporation. He co-founded SideReel.com in 2006, which was acquired by Rovi in 2011. SideReel.com is a website that helps people watch and track their favorite TV shows online and was one of the early sites to embrace the then emerging trend of cord cutters. For more information, visit www.rovicorp.com or www.sidereel.com. Follow Bart on Twitter, @bartolah.

M&E Journal: The Transformative Effect of User Research On the Consumer Experience

By Seth Hallen, CEO, Testronic Labs

Editorial Contributions By: Graham McAllister, Ph.D., VP of User Research, Testronic Labs

In the home entertainment industry, never before have we seen such rapid and dramatic changes in the way consumers are accessing and viewing content. Broadcast television was the first effective format available to the masses for watching content in the home. It took almost 40 years for the next significant innovation in content delivery to arrive on the scene, videotape, which allowed a consumer to choose when and where to watch a movie or TV show. More than 20 years later, DVD and then Blu-ray improved the quality of in-home content and DVR’s made time-shifting possible. Now, less than 10 years after the introduction of the Blu-ray Disc, we are experiencing a colossal shift towards online digital video consumption.

According to Futuresource Consulting, there were over 485 billion legitimate (not pirated) online video views in the US last year! That is up from 266 billion in 2009. As impressive as that number is, only 1 percent of those views were purchased. Clearly the public is hungry for online access to content. The challenge is offering a value proposition the consumer is willing to pay for.

If core consumption has changed so dramatically, it is only logical to ask how behaviors regarding searching, accessing, cataloging and interacting with content will change. There are already various options available, from simple web interfaces to 2nd screen apps to voice-command interfaces. Which of these, if any, are most compelling to the consumer? How can you determine exactly how consumers like to access and interact with their content? How can you best forecast the trends so that developers can create UIs that will truly engage consumers so that they recognize the value in purchasing content they view online and through all their various devices? How can you ensure an experience that home video consumers love so much that it will yield DVD-caliber success?

Creating a world-class experience that consumers love is the goal of many in the digital content space, but it is achieved by remarkably few. Attempting to understand not only what consumers enjoy, but more importantly why they enjoy it, is the key to success, and in recent years a growing field has developed which focuses on this very issue.

User Research is a discipline which combines elements from psychology, design, computer science and many other fields, with the elemental goal of understanding people. The idea being – if we better understand people, then we can better design products and services which they should enjoy using. It sounds so obvious in retrospect, but it is only in recent years that this has become an important and specific developmental focus.

Creating Enjoyable Experiences

In the past, DVDs, software, and websites were judged on what features they offered. Early consumer devices and websites were often used by technically literate power-users, where ease of use and aesthetics were not the focus. However, the shift in emphasis from features to the user experience has been clear in recent years, with 2 prominent examples standing out.

In 2001, Apple’s iPod was released. It was not the first MP3 player on the market, nor did it offer as many features as its rivals. However it quickly became the best selling MP3 player on the market, a market it still dominates more than 10 years later.

In late 2006, Nintendo released the Wii games console. The new Nintendo console went on to outsell its competitors by approximately 50 percent.

Why did these two products achieve such success against very stiff competition? In both cases, an obvious differentiator was ease of use. They both utilized a simplified interface that made the devices accessible not only to a narrow target market of technophiles and gamers, but also to a broad age and gender range who were not attracted to their competitors’ products. But, was that really the deciding factor?

Change in Focus

At an event in 2006, an Apple representative said that the App Store changed where developers should focus their efforts. He noted that before the App Store, developers were probably putting about 90 percent of their effort into technical features and approximately 10 percent on design and user experience (if even that); after the App Store was launched however, users’ quality expectations of apps increased very quickly. He advised developers that if they were not putting more than 50 percent of their efforts into the user experience, then they should not expect their product to do well. The message was becoming clear, it’s not about the technology, it’s about how people use and experience the technology.

Defining the User Experience

I’ve used the term ‘user experience’ throughout this article, but what does it really mean? It is often used as an umbrella term for two main areas; usability and actual user experience. Usability is concerned with the user’s ability to complete the task that the product or website is designed to do and how many steps it takes to get it done. This is very functional, and it can be quantified in ways such as time taken or clicks required. User experience (or UX) concerns itself with understanding whether or not the user enjoyed doing the task. UX is actually the much more important of the two since usability is essentially a yes/no proposition. Users expect features to work, but the precise details of how they work can turn them into long-term customers. UX is how user loyalty is generated.

Industry Comparisons, Usability and UX

The web and video game industries have understood for a while now that building a website or game that technically works is not good enough; the experience must also be smooth, clean and enjoyable. There is a lot of competition vying for a consumer’s business, and your product has to be better than the next guy’s.

Usability has proven to be extremely important in the development of websites. Many usability firms exist, and they evaluate how users interact with websites with the aim of refining the experience. Even seemingly trivial changes can bring massive increases in revenue. One high-profile case is that of the $300 million button. A large online retailer had a sign-up form which simply asked for a customer’s e-mail address and password before entering a website. This information was also asked for at checkout, so was not essential at the start. Asking users to sign-up before buying created enough initial resistance that some users went elsewhere. Once the change was made, the number of customers making purchases increased by 45 percent, leading to an extra $15 million in revenues in the first month and $300 million extra over the course of the year. The online retailer was not even aware there was an issue. They had simply not put enough effort into understanding their users to realize that a simple tweak to their website could offer users a better experience that would dramatically increase profits.

For video games, however, the focus is more on UX. In gaming it is not about how easy it is to complete a task, and in fact, often times the more difficult it is the better. It is all about the enjoyment the player experiences along the journey.

The New World of UX Testing

So why did the iPod and the Wii outsell their competitors? Usability was certainly an important factor, but UX was likely the key.

To understand how someone feels using a product, when they are enjoying it and when they are not, a new crop of high-end services, such as Biometric Testing, are becoming available. Biometric Testing involves the use of psycho-physiological sensors, such as galvanic skin response (GSR), heart rate, and skin temperature, to ‘read’ the player experience on a second-by-second basis. It is also possible to track eye movements to see where the user is focusing at any given moment. Such approaches to understanding the user experience complement traditional testing and development methods and offer unique insights into what users are really experiencing, rather than what they tell you they are experiencing.

Conclusion

How does the home entertainment industry create the next iPod or Wii? With online digital stores becoming the norm for searching, accessing, and interacting with content, both usability and UX will have key roles to play.  Emerging products seeking to establish a foothold in a market with free access points and significant, established competition must be better, smoother and more enjoyable to use. The facts prove that even when there is content available for free, a cost-based product can rise above as long as it offers a superior experience. By employing Usability and UX testing to understand what users want, experiences that consumers will love can be designed around those expectations, allowing developers to build loyal and long-term relationships. At Testronic Labs, we believe that investing effort in understanding users in this way will bring benefits to all and will help to ensure the healthy proliferation of emerging home entertainment platforms and products well into the future.

About the Author

As Chief Executive Officer of Testronic Labs, a global third party Quality Assurance and Testing Services company with worldwide facilities, Hallen oversees global operations and the execution of Testronic Labs’ strategy in emerging markets. Prior to joining Testronic, he was VP of North American Operations at Lightwork, and oversaw the business development Digital Media Services and DVD Authoring  for Lightning Media. Hallen currently serves as a board member for the Hollywood Post Alliance (HPA), as well as an Advisory Board Member of MESA.

M&E Journal: Using Automatic Content Recognition to Benefit the Fragmented Media Landscape

By Emmanuel Josserand

We are all living in an increasingly fragmented world. And the media world is no different. Consumers are demanding their viewing experience expands to the smartphone and tablet from the primary screen, which is itself becoming much more complex with the propagation of smart TVs. Therefore content distributors need to make their content compatible for distribution in myriad formats. The conundrum, of course, is that the consumer therefore expects more at the same price. The content creators and distributors need to spend more to generate the same price.

Automatic Content Recognition (ACR) helps bridge this disconnection on both ends of the broadcasting experience, offering consumers deeper immersion and interaction with television programming and advertising, while providing rights holders and broadcasters a heightened level of business intelligence through highly granular tracking of how viewers interact with content. ACR, powered by either watermarking or fingerprinting, allows dynamic and seamless interlinking of devices, viewers, content and applications. So it fuses the viewing experience across multiple screens for the viewer, while closing the delivery-feedback loop for the content owner and distributor. The whole process becomes more efficient.

In the multi-screen environment, ACR is a tool that gives a smart device – such as a smartphone or tablet – the ability to become “content-aware.” This awareness allows the smart device to recognize what is being watched on the primary TV screen without the need for direct input from the user. This automatic recognition can then be employed to trigger content on the 2nd screen device that is complementary to that of the primary screen. Television programs, films, advertisements, and other types of main-screen content can therefore extend to the viewer’s 2nd screen, creating an immersive multi-screen viewing experience without the need for the user to manually enter Web site addresses, or search for the relevant information on those sites.

In the single-screen environment, ACR solutions can also be integrated into the chipsets of connected/Smart TVs and smart set-top boxes themselves to enable real-time content identification, and the triggering of events at the device level. As opposed to the multi-screen application described above, this single-screen enhancement enables the Smart TV or smart set-top box itself to become “content-aware,” and therefore offer a host of value-added features for the consumer directly on the primary screen of the TV itself.

This Isn’t Your Grandpa’s Peoplemeter

By Colleen Quinn

Did you hear about eye-tracking technology for the Second Screen?

Yeah. Me neither. But, apparently, Time Warner’s Media Lab – the company’s impressive research center and Ivory Tower – is using eye-tracking technology to determine how viewers use Second Screen apps in complement to actual TV Viewing. No, they won’t be sending 15 MM+ pairs of goggles home for toddlers across the US to destroy. Don’t worry.

In light of LOTS of ambiguity about the Second Screen  – and, to bolster strategy around their recent funding of Social TV service Get Glue -  the Time Warner study should shine some light on how, when, and how supportive (or distracting) the Second Screen is to linear programming (and the advertisers who pay high-price for ad time in their line-ups).

I’m sure I’ll find the results interesting. But, here’s the thing – the opportunity to monetize the Second Screen is moving faster than the speed of Academia. Companies investing in Second Screen initiatives – and, that would be every company with media in its veins – can’t wait for the results.

Here’s the good news. You don’t have to. Much of that data is already at your fingertips. Not to discount the Time Warner research – in much the same way I wouldn’t discount third party enrichment data in general – the fact is, if you have a Second Screen app (and I know you do!), you’ve got equal access. More, maybe.

Sure, you may not be able to tell if my eyes were glued to the Kleenex ad running in the first ad break – or if I was, instead, scrambling to find Tina Fey’s  Jimmy Choo’s through the companion app. But, you’ll be able to tell a whole lot about how, when, where and what I did with your app.

And, if you’re good, you’ll be able to take that insight, and integrate it with what you know about my browsing behavior online.  If you’re really good (and you would be, if you worked with a powerhouse like us, you’ll integrate that with my past transactional behavior through retail.

With that combined analytic insight, you can use the Second Screen as a delivery vehicle for a highly personalized experience – and one that doesn’t detract from the linear experience, I’d add.  And, the value doesn’t stop at the Second Screen.  That same insight can be leveraged across your marketing organization.

I know how I’m using the Second Screen – as my first. Cord-cutters unite! And, I’m sure some guy somewhere is doing meaningful research on that too.

But, the smartest media companies can tap into many of these insights now, with data ready and waiting across the enterprise: from web to-mobile to the set-top box and beyond.  Why would you sit around and wait for stale research or aged data, when the answers are at your fingertips (with the right tools, of course)? What would you do if you knew the answers… now?

Netflix Bets on Disruption

By Rick Liebling, Y&R

Something a little bit different this week. An in-depth look at the all-in bet that Netflix is making to disrupt the current structure of how we watch programming. Ultimately, it’s not the specific company that is of interest, but rather what they are doing. It takes courage to do what they are doing, but I’d argue that there is no better time than right now, regardless of your industry, to try something new and take a risk.

Disruption is one of those words that get thrown around a lot in marketing circles, along with “The Three Cs” – change, complexity and chaos (four Cs in you want to throw in content). But there are very few companies that are truly disruptive. Technology certainly is disruptive, from the printing press to the assembly line to the Internet, technology has been upending the status quo for hundreds of years, but disruptive companies are harder to find. Right now we are witnessing first hand the efforts of such a company as Netflix looks to explode the way we watch quality scripted programming. On February 1^st Netflix made available all 13 episodes of its new program, House of Cards and the resulting discussion amongst the media, and the consumption habits of Netflix subscribers, has been fascinating.

As The Huffington Post notes: Netflix CEO Reed Hastings has a vision for TV that ought to scare studio heads as much as Netflix’s first business — direct-by-mail DVDs — scared Blockbuster. So, what is Netflix’s plan for disruption? The streaming TV network wants to turn into the HBO of Internet TV and as media critic Michael Wolff notes:  It has formally broken channel power.

Disruptive companies often tend to think differently than their competitors. I was somewhat pleasantly surprised to hear that Netflix has a cultural anthropologist on staff, something that will no doubt also please Grant McCracken (who has his concerns about this new direction, something along the lines of while knowledge may by power, absolute power corrupts absolutely).

There are in fact two entrenched systems that Netflix is looking to disrupt – first, the current prison of waiting. A week for a new episode, months (or years) for a new season. Reed Hastings, the CEO of Netflix, has a name for this prison and what it does to the people trapped inside it: managed dissatisfaction. Hastings is smashing this prison by allowing you to watch what you want, on whichever device you want, when you want, and crucially in whatever volume you want. Watch one episode a week or two or three or all 13. He’s also looking to give fans of HBO-type shows the thing they have been crying out for, a cord-cutting option. A frequent conversation amongst my friends and colleagues centers on when we’ll be able to get HBO without having to pay for all the other dreck on cable. Netflix is trying to provide that option.

The early returns? The Huffington Post notes “Capitol Hill thriller “House Of Cards” is the most watched thing on Netflix right now,” and Fast Company named Netflix as one of the Top 3 most innovative entertainment companies in the world.

Of course a disruptive brand will not be welcomed with open arms from all corners. Venerable trade magazine Variety was quick (as in before House of Cards was even streamed) to mount a challenge. Yes, they ask some fair questions, but I don’t believe they understand the true cultural shift that a new generation of content consumers has brought. The publication asks what of the water-cooler talk that Netflix binge programming will miss out on?  The answer is, consumers will adapt.  Perhaps viewers will utilize, or Netflix will partner with, a 2^nd screen app to have binge viewing parties or allow you to chat with people who have only watched the same episodes you have. Maybe there will be Social TV parties starting at midnight when all episodes become available. Or perhaps groups of people will agree to watch shows simultaneously at a designated time.

The demand for something like that is clear already. In a New York Times article, Internet pioneer Dave Winer lamented, “We need to invent new communication systems, where only people who have made it through Episode X can discuss with others who have made it exactly that far.” No doubt that will come.

The Daily Beast, an off-shoot of the equally venerable, and now erstwhile, Newsweek, also unleashed its inner concern troll with this word of caution: “Is House of Cards doing itself a disservice by urging viewers to watch so quickly?” Netflix isn’t worried about the Variety/defunct newsmagazine cohort, they’re much more interested in people who read The Verge, and those people get it: “There’s also the whole “who will be the next HBO” thing going on, and from this couch it certainly feels like Netflix has taken the title.”

Or people who read Mashable, which reported “House of Cards is the most-viewed show on Netflix right now in all of the countries it operates in.” SimilarlyWired.com ran a poll of 1,900 readers who were watching the show and found that an overwhelming amount of them had watched all 13 episodes within days of the shows release (see chart below).

These accolades and results can at least partially be attributed to the fact that Netflix is a thoroughly modern company, and that no doubt perplexes some people, especially in the media industry.  They are indeed data driven, but that’s a far cry from being driven by bean counters, the type of scenario which has seen Hollywood turned into a production line of lowest-common denominator drivel, pumped out for an international audience (Transformers anyone?).  Bean counters are about driving down costs and maximizing profits. Netflix is tapping into something different with data, a deeper understanding of how to make quality programming.

Jesse Hirsh brings up an excellent point regarding how Netflix may be leveraging their massive amount of data to their benefit: “It also allows them to bid on and acquire scripts and content with insights that others may not have.” They have the data to know exactly what type of shows their subscribers are most likely to want to watch (“Aha!” says McCracken. “Here comes the inevitable ‘notes from the suits.’”).

But House of Cards showrunner Beau Willimon laid out the thinking behind the strategy, and may hopefully allay some of McCracken’s fears, when he says: “We eventually arrived at [offering] 13 all at once because that speaks to what Netflix has to offer that really no other network does. Its subscribers watch content when they want to watch it, how they want to watch it, in what chunks they want to watch it. And so it puts the decision in their hands.” With the massive amount of data they have access to, Netflix understands their users and crucially, listened to them, regarding how they want to watch, not how to make the shows. Netflix was hands off with House of Cards, as you imagine they will be with the upcoming fourth season of cult hit Arrested Development, which will also air first-run on Netflix.

Alyssa Rosenberg of thinkprogress.org shares Variety’s concerns, then notes, “One of the things Netflix facilitates is binge viewing, which in my case means watching an entire season of 30 Rock in a single day…” And that is certainly part of the Netflix master plan. Come for House of Cards, stay for some older, great shows we are going to recommend to you until our next original programming comes along in a few weeks. They’ll know when to launch a drama or a comedy or a show aimed at teens (or tweens, or women or…) based on data, not the hunches of some network programming head (how’s that working out for you, NBC?)

The New Yorker lays out what is at stake with the Netflix experiment: Maybe Amazon will go beyond its tentative investments and throw a hundred million at a different A-list series, or maybe Hulu will expand its ambitions for original content, or maybe the next great show will come from someone with a YouTube channel. When that happens, the baton passes, and empire falls—and we will see the first fundamental change in the home-entertainment paradigm in decades. And that perfectly sums up what is really happening. The disruption that Netflix is inflicting on the scripted entertainment industry will have vast and far-reaching effects, not just for Netflix, but for a whole host of companies. When the inevitable disruption comes to your industry, do you want to be the Netflix, or the status quo?

As the Creative Culturalist at Y&R New York, Rick Liebling counsels clients and provides insights on strategic partnerships that drive opportunities for culturally relevant solutions to business objectives. In addition to his own blog at www.rickliebling.com, Rick is a frequent contributor to a variety of industry sites and publications, including Mashable and Digiday. He’s spoken at a variety of conferences on topics such as Gamification and SocialTV. 

Apple Eyeing Revamped Apple TV Set-Top

By Paul Sweeting

Apple has posted an intriguing new job listing on its web site for a Software Engineering Manager on the Apple TV team, which hints strongly that a new push behind the platform is coming:

Job Summary

The Apple TV team is looking for an experienced engineering manager to help deliver the next generation features for Apple TV. Bring your creative energy and engineering discipline, and help us bring the Apple experience to the Living Room [snip].

Description

- Lead a team of engineers working on exciting new features and functionality

- Drive releases from initial concept to completion

– Work closely with cross functional teams, representing Apple TV across Apple

– Develop the engineering plan for upcoming projects

– Communicate status to key stakeholders and senior management

Alas for those expecting Apple to introduce an integrated TV set any day now, the job description would fit comfortably within the current, not-terribly disruptive Apple TV strategy built around existing set-top streaming box.

So what about the “exciting new features and functionality”? One guess would be enhanced gaming capability, probably to be played in tandem with an iPad and perhaps using some sort of new controller. With the current generation game consoles showing their age, and the industry about to make the leap to the cloud, now would be the time for Apple to strike if it means to move beyond mobile gaming into more graphics-intensive in-home play.

Another area where Apple may be looking to add functionality is AirPlay, its technology for porting content wirelessly from an iOS mobile device to the Apple TV set-top. The race to provide enhanced communication and inter-operability among devices in the living room has heated up in recent months, and Apple risks falling behind Microsoft, as well as Netflix and YouTube. Building on and extending the functionality of AirPlay would be a logical avenue for Apple to pursue.

 

5 great reasons to join the 2nd Screen Summit in Beverly Hills on Feb 26th

I was catching up with an old friend today in LA, discussing the latest with second screen, and how the market is growing so quickly.  He made a curious comment, and then asked a pointed question,  "Second screen seems to be only really valuable for ad supported television.  As a home entertainment executive, why should I come to a conference about second screen?"

While I can think of a very long list of reasons as to why I believe second screen matters to both live and on demand content, I thought I would answer this important question with five points:

1. Discovery.  The single most difficult challenge consumers are presented with in today's seemingly infinite choice for viewing is how to find something worthy of their time.  For the majority of their mythical 37 hours, they are in the mode of "find something for me to watch right now", which usually implies no additional fees for their experience.  But for a few of those weekly hours, they are in the "show me something worthy of my invested time" mode (a "date night" experience, Sunday afternoon with the kids, etc).  That is the sweet spot for home entertainment--a premium, time-advantaged position after the theatrical window.  Come and listen to the a discussion surrounding the challenges of leveraging discovery as a tool to help monetize the back catalog of on demand content and to drive digital sell-thru.
2. Creating Added Value.  For years, the industry has been spending money on bonus features for high-end titles, with clear data that demonstrated the more expensive SKUs were being bought as a gifts.  Come join the discussion about finding the best way forward to leverage the value of new companion viewing experiences and debating the best strategies for positioning the content for premium vs. commodity value.
3. An UltraViolet Companion.  UltraViolet continues to gain momentum, but can it join forces with the explosive market forces propelling second screen forward?  Are they together an unstoppable consumer value proposition for home entertainment?
4. Promote Sell-thru.  Can second screen be a catalyst along side UltraViolet to drive buy rates up from the current 7 titles per year to the 10 that the industry needs?  Is there enough differentiation in the current concept of digital ownership to drive the purchase or do we need to sweeten the pot?
5. Engage your Consumer.  If you know that your consumer has something in his hand, that potentially could interact with your content and brand on a regular basis, why wouldn't you want to learn more about it?  And, if that item provided you with insight into your customer's habits, patterns and preferences would the sweeten the deal?  How about if that item created a path or gateway for you to build more meaningful and profitable business relationship with other brands/companies who are interested in the same objective (i.e. engagement)? Oh and did I mention that you can build a direct relationship with that consumer as well?

M&E Journal: Transforming Entertainment Through Technology

By John Crosier      -  

With a dizzying array of devices making their way into the hands of consumers daily, the way in which content is presented and absorbed is rapidly evolving. Today we seek our favorite content in any format at any time on a multitude of devices. From physical to digital and TVs to tablets, consumer appetite is pacing technology nicely and vice versa. In addition to this myriad of consumption options, content owners and creators also benefit from these technological advancements by having increased flexibility during creation, storage and delivery of their products. Technology is allowing the consumer to experience their favorite content in a way that best fits their lifestyle, and the media and entertainment industry is listening as technology takes a leading role.

The Evolving Supply Chain
Behind the growing abundance of connected devices is a constantly evolving supply chain supporting and defining new areas of growth. For instance, solutions providers like us have gone from focusing solely on managing physical content to defining ways in which both physical and digital content can coexist within the supply chain process. By identifying advanced delivery solutions, manufacturing, preparation and distribution of physical and digital products can occur simultaneously and efficiently. We are far past the days where only an automated encoding and transcoding system will suffice. Enhancements to what was once considered core technology are now necessary to stay ahead and allow for further automation and streamlining of content delivery and storage. Centralized databases now house all of our content assets and set the foundation for a streamlined workflow across various product and platform environments. From better management of enhanced content to the quick access of product orders, this level of asset management transcends the needs of both the physical and digital supply chain.

Enhancing Content
As devices get smarter and more feature-rich, so does our expectation of how we consume content. Unique interactivity and enhanced features are becoming common place, which in turn is spawning quickly maturing segments of the entertainment supply chain; one such being “applications development.” With a strong history of creating enhanced content for movies, the development of rich application experiences is a natural fit for our digital media team at 1K/Cinram Studios. Whether we’re developing companion applications or a stand-alone experience, we really enjoy the liberation in creating features that aren’t limited by a traditional remote control with directional arrows. Content for the traditional 10-foot experience is very different than the two-foot experience on an iPad with a reactive touch screen, microphone, gyro, compass, GPS, web connectivity and a beautiful high-resolution glossy display.

Consumers have already widely adopted this latest generation of tablets for consuming entertainment despite its short two-year existence. The ease and convenience coupled with the interactive experience of a tablet is winning consumers over worldwide. The supply chain supporting this two-foot experience also benefits as the content in this medium has fewer touch points thus resulting in narrowed windows of delivery and closer contact with the consumer. Adding, removing, or changing content from the market once it’s released is also much simpler providing a more effective way of keeping the content fresh and consumer engaged.

The publication space is another area where advancements in technology have resulted in new entertainment experiences. Our work includes augmenting literary works via apps like Jack Kerouac’s classic “On the Road.” This version takes an in-depth look at the novel by adding interactive maps that chart his cross country travels, historical documents, audio of Jack Kerouac reading the book, music from his band and video interviews with people close to the author. We also recently launched the MAD Magazine subscription app for the iPad. This new format was a great opportunity to link video from the TV show, never-seen-before footage, and enhanced content to the classic magazine, and present it in a highly interactive digital form. Even the ever popular “fold-in” is represented and with a swipe in from the left and right sides of the screen you experience the popular and iconic “fold-in” feature. Looking at just those two examples demonstrates how new technology has opened up additional distribution channels and how we’ve been combining publications and entertainment to form new products.

The Co-Existence of Physical and Digital
As we embrace these new technologies and the digital mediums that they present, we remain cognizant that physical product still has a big place in the living room. As content owners continue forging direct relationships with their consumers through digital platforms, we believe physical media will also become a more exclusive experience. Distributors will have to service consumers on a more individual basis and we feel that Manufacturing-on-Demand (MOD) will become increasingly important to maintaining efficiency in that physical supply chain. In addition, an MOD solution allows content owners to more effectively satisfy the needs of consumers who want both a physical and digital product. A single hosted site will allow for a myriad of sellthrough options from traditional disc delivery to EST and VOD digital delivery and even more advanced subscription and streaming models simply by incorporating the use of digital lockers. These virtual lockers with allow for consumers to not only have access to the physical media but digital forms as well. Content owners can enjoy the ease of providing discs and digital files to consumers, wholesalers, and distributors alike while cutting down on inventory carrying costs, returns, and out-of-stock or overstock situations, while at the same time having a direct relationship with the consumer, which lends itself to a multitude of CRM benefits and options.

Final Thoughts
As entertainment content continues to become more feature-rich, more digital, more mobile and more individual, new opportunities will continue to arise within our evolving ecosystem.  From digital platforms to connected devices, growth is happening at an all-time high. Tablet sales continue to flourish, global app sales have skyrocketed, and in-app purchases of content and unit downloads are growing steadily. Connected TVs, smartphones, and other means of delivering digital content to consumers are growing just as rapidly. This sudden diversity is driving content owners to innovate new ways of delivering content. The UltraViolet initiative is a great example of enhancing EST opportunities. Subscription services are also adding increased relevancy to the mix as the “all you can consume model” deployed by Netflix and others continues to force the strong foothold of consumer digital adoption.

While the digital playground continues to drive innovation in our existing entertainment supply chain, it will certainly continue to have obstacles. We will likely live though an era where bandwidth limitations temporarily cripple consumer adoption and hinder creative innovation. This will be short-lived however as technology historically overcomes anything which restricts progression. So whether you are a content owner, retailer, consumer, or anyone involved in the process of creating or delivering content, we need to continue to develop and embrace new technology as it continues to support the growing needs of the media and entertainment consumer.

For a PDF version of this article, click here.

About the Author
John Crosier, a 16-year veteran of supply side home entertainment experience, the past seven focused intensely on digital delivery and operations on the studio side, is expanding the design of Cinram’s Digital Media Group – its services, capabilities and delivery solutions.  Based on his breadth of operational experience at Warner Bros., Studio411, among other posts, and his ambassador role for the Digital Entertainment Group where he helped develop universal standards and reporting methods, Crosier seizes on market opportunities to incorporate the company’s extensive expertise in the media, entertainment and digital fields.  Additionally, he oversees the actual mechanics and operations for the Cinram Digital Media Group.

Second Screen market growth evidence: 53m Tablets ship, Twitter wins the Super Bowl and buys BlueFin

So Twitter "won the Super Bowl", bought BlueFin and last Friday we heard that 53m tablets shipped worldwide in Q4 of 2012.  So what?

When a bird breaks through its shell to be born, the world shouts its a market "revolution", but the tiny bird itself has been making progress steadily for a long while--more of a "rapid evolution" with one very publicly acknowledged milestone.


Let's pretend for a moment you believe our research that estimates the current second screen companion experience consumer revenue at $490m in 2012.  Keep in mind this is made up of m-commerce (including Amazon/eBay but also content syndication -- content people purchase like MLB's data-only feed for companion screen experiences) and advertising (the current global mobile/on-line video advertising market is $6B, the current TV advertising market is $200B).

So if you believe that figure, you say to yourself that "it must be being captured by existing large players (CBS, Twitter, MLB) in the market as clearly my company is not getting a huge share of that" (CBS, for example sold $10-12m of second screen advertising in the Super Bowl).

But then you start asking yourself if you believe the market will grow to $5.9B by 2017, and ask yourself if can you find a way to take a share of that market.  If you believe you can, then you will be constantly asking yourself for evidence that the second screen market is moving on that kind of growth trajectory--because if you want for the egg shell to break, it is already too late to invest.

Evidence from the last 3 days:

• Twitter won the Super Bowl.  As discussed in many articles and podcasts yesterday, Twitter was in 26 of 52 nationally televised commercials from kick-off to game ending.  Facebook was mentioned 4 times and Google+ mentioned none.  Why is this significant evidence?  Before you can believe advertising revenue can transition from CPMs (cost per 1000 impressions/views) to CPCs (cost per click or action) you have to first get believe the individual consumer will participate.  Advertisers clearly believe that Social TV, an important component of the second screen experience, is valuable enough to push its message to that platform.  More importantly, it is instantly measurable.  Oreo was smart enough to Tweet "You can still dunk in the dark." during the blackout and while 15,000 retweets are not as valuable at the 100m people reached during their commercial, having their brand be relevant and engaging in real-time with consumers might be.  So the evidence is not only that consumers are grabbing their smartphones and Tweeting during the game, but that advertisers want to engage them in that manner because its engagement is very measurable.
• Twitter bought BlueFin.  Remember the web in the late 1990s?  Many of us sat around pondering the future of banner ads as click-thru ratios dropped from the 90% to 0.5% (where it sits today).  I remember arguing that it was non-sensical for a marketing manager to move advertising dollars from print, radio and TV to the web.  But then AdSense came along (whom Google wisely purchased), and it provided perhaps the most important catalyst to the growth of the online advertising market--measurable results.  So in the first year, most marketing managers experimented and threw 1-2% of their budget "online".  But as they measured the results, they could quickly and scientifically understand the cost of customer acquisition through various channels, only paying when someone was delivered to their store front.  Keeping that in context with the first paragraph above, and you can see Twitter clearly believes they can accelerate the pace of investment from TV advertisers into some form of enhanced second screen or social TV-based experiences by giving them the tools to measure the results.  Ask yourself the question again at the end of the first paragraph above?  What is more valuable, 15k engaged retweets (in theory, from 15k social influencers) or 100m "impressions"?  I guarantee BlueFin has a well-educated opinion on that question.

• 52.5m tablets shipped globally in Q4 2012.  Keep in mind that at least in the forecast presented from the Second Screen Society and the intersection, we don't believe that some amazing consumer experience, some super ad-syncing technology, or some massively developed user base will be the catalyst to the growth of the market from $490m to $5.9B in 5 years (while I am sure some of that will come to pass and be helpful).  We believe that it is the proliferation of tablets and smartphones and the consumer's apparent natural tendency to drift to them during lulls in programming that create the behavioral shift towards second screen companion experiences.  But as intended consequences or not, we are rapidly approaching a day where just about every consumer with cash in their wallet will have a personal second screen device that they are using to engage in and around the first screen (in-sync with programming or not)--and that will drive advertisers and retailers to focus their efforts more and more to driving measure revenue opportunities in the second screen space.

How was your Second Screen Super Bowl 47?

On Thursday, we suggested a few apps you might want to try out during the Super Bowl to see what kind of enhanced and stimulating experiences the market has dream-up for such an event.  How did they stack up?


I did my experiment in a room with about 15 people, using 2 iPads, a Samsung Tab2, and an iPhone.  At times, friends/neighbors handed me their device to help them find one of the apps I was testing (passing around).  For the most part, people were surprised that they enjoyed the experience, usually starting with a "this is a distraction" followed by a "how do I get to that feature again?".

I had high hopes for the CBS Sports iPad app.  I was a little surprised to see their experience push you to an HTML website (rather than perform the experience in side the).  I was disappointed that they had trouble populating the stats and then during the blackout, the experience seemed to vanish (all of us got kicked out and could not find thru their app again).  I was also surprised that the HTML5 app had no social sharing features.  You were able to watch others tweet, but there was no easy way to make comments of your own.  The commercials section in the app (finally populated in the middle of the 2nd quarter) was probably the most used feature in our room.  The camera angles were interesting, but as the video was delayed 20-30 seconds, it just didn't work for the live game.


The room gravitated to the zeebox app the most (surprising even me).  The zeetags gained lots of interest, especially since it was so easy to see the previous commercials seconds after it aired, the big plays from other games they discussed, and key stats from players, the announcers, etc.  I enjoyed chatting to a few people via the app as well (Alan Wolk, for instance).  It was also the only app that we left on which was able to circumvent the auto-shutoff, helping to make it a permanent visible fixture on the coffee table.  The only negative comment was that during the blackout, I went ahead and loaded their Friday update, which re-arranged the UI, confusing those in the room that had already gotten used to the layout.

The other engaging experience we tried was TOK.tv's TOK Football. I was able to open up an audio session with Fabrizio Capo (the CEO of the start-up) in San Francisco, though admittedly it was hard to hear his comments over the rest of our room (he could hear our room quite easily...).  I thought the graphics we as well done as NFL '12 or ESPN ScoreCenter and they even launched a feature to sync the game with your DVR in case you were behind.

I tried Shazam and the audio sync worked.  I was impressed they had live stats, but the UI (from my phone) wasn't really designed to leave it "on" while watching.  Later, when I did see a Shazamable ad, I was able to successfully grab my phone from my pocket and "listen" fast enough to activate--first time ever.  The rest of the room, however, didn't see the point (esp. since it was for a commercial).

I never got Viggle to work during the game.  I thought at first it was ambient noise, by tried Shazam and Yahoo's IntoNow and both worked fine.  I tried "shhh-ing" the room, etc, but no joy.

I felt Yahoo's IntoNow experience was a bit like Shazam's.  It worked, but the UI wasn't conducive to leaving it open during the game--more like a use case of check the stats while in the kitchen grabbing a beer or something.

ConnecTV's new UI/UX is still perplexing.  I let the room play with it, but they thought it was just a Twitter feed (vs. the previous zeebox-like UI).  I will investigate further on my own this week.

We spent about 15 seconds on the Official Superbowl XLVIII Program and the online Guide.  As the room reminded me, that is stuff you read in you seat while you are bored--$9.99 down the drain.

We all really enjoyed the Coke commercial and the Doritos commercials, but no one felt the experience of trying to go online worked--should have been in an app or partnered with an existing app.

Everyone love the brand meter that zeebox had in their experience, surprising the room that the Calvin Klein ad hung onto the top spot for so long.











How did all of this stack up against our graphic from Thursday where we rated these apps against the "Stimulating" feature set for the game itself?  I would leave TOK Football, zeebox, NFL '12, and ESPN ScoreCenter in their "high" rating and move CBS Sports, ConnecTV and Viggle down.  I would probably bring Yahoo's IntoNow up to Medium.  Keep in mind that one game does not define an app, but there you have it.  You can see more about our methodology for app experience segmentation at www.2ndScreenSociety.com/research/.




Enjoy the week!  Grammy's coming up this weekend.

@ChuckParkerTech
@S32Day

Running Scared: Should Cable Worry About the Target On Its Back?

I’m happy to say that after nearly 40 years on this planet, I’ve never truly known what it’s like to have a target on my back. Or, if anyone HAS ever been out to get me, they’ve been sufficiently dulcet about it that I haven’t noticed.

I doubt that the Chiefs at the major MSOs can say the same. January saw two bold “cable-killer” pronouncements – one from the ever-brazen Netflix CEO Reed Hastings ; the other from a far less likely culprit, Intel , whose plans to launch a next-gen set-top-box spins the tale of network unbundling. Um. And, I promise that I’ll one day own a small island in the Caribbean.

But, I digress.

What’s common in both of these edicts – aside from the same-old “we’re coming to get you” message to MSOs – is the emphasis on how these approaches appeal to what audiences expect in the brave new content world. They want:

• Content now
• Content that meets their interests
• Content everywhere

Duh. That’s old news. “That’s TV Everywhere,” shouts the Cable Chief in response. Sort of.

But here’s what’s new. The ante is increasingly being upped against the MSOs, because now the ability to capture, analyze and respond to audience behavior in real-time is possible through an array of alternate channels. As users access apps through mobile devices, log-on to VOD services online, or even through the set-top-box of today, they’re all but screaming out their likes and dislikes. It’s a whole lot of data about what, when and how they’re watching.

The “new” capabilities being unleashed by Netflix and Intel aren’t just the domain of Netflix and Intel. They’re the rightful capabilities of any content creator or distributor (whether you’re OTT or MSO or something in between) who has harnessed the ability to analyze player logs, viewing behavior, Facebook likes, click-stream data and more.

With the right data and analytics in hand, every content-related business decision becomes clearer:

• What content should you license, based on KNOWN consumer demand?
• For a given consumer, what VOD offers or recommendations will drive the greatest engagement?
• Which audience members have the most social influence in their network? And, how can you get real buddy-buddy with that guy as soon as possible

This isn’t just the domain of the “new media” guys, like Netflix. It’s not even just the domain of the “big guys” like the MSOs (who, you guessed it, can combine the data from STB and TV Everywhere into a powerful analytics cocktail). The “little guys” – at least the smart ones – are onto this as well.

Check-out a replay of a recent webinar from Machinima, where COO Nanea Reeves shares content analytics tactics and strategies that have shot Machinima to the top of YouTube’s preferred networks.

In the meantime, I’m off to see about making a few enemies. Life in the hot-seat just might be exciting.

Dijit Acquires Miso, the second screen consolidation continues

Dijit, the company lead by CEO Jeremy Toeman which has developed second screen apps NextGuide and Dijit Remote TV, has announced the acquisition of GoMiso, Inc, developer of the Miso second screen app and its signature SideShows.



While this is an obvious continuation of the consolidation phase of the industry (see our research), what does it really mean for the ecosystem and the consumers?  NextGuide was launched in the fall of 2012 and quickly iterated on its UI and UX, creating a powerful consumer second screen app that provided very strong Seamless, Discovery, and Social features--strong enough that we segmented it as a multi-function app.  While Jeremy had discussed his roadmap for NextGuide in the Simple set of features to control the first screen, there had not been much attention paid to the Stimulating set of features that enhance the users experience while watching a show.  Essentially, consumers could use the app to find what they wanted to watch, launch it to the 2nd screen (and in some cases the 1st screen), and then leverage their social networks for sharing their view of that feature or to help them discover content.

Miso on the other hand was probably the first strong entrant into the Stimulating feature set, clearly being segmented in To Enhance category of apps.  However, they did not consistently create the SideShow experiences for a wide range of shows, and as a result, user interest languished.

The challenges for Jeremy and team going forward seem straight forward:

• how do they maintain their hallmark quality approach to a great UI/UX while integrating the Stimulating set of features into what is already a great Discovery app?
• how do they create SideShow ubiquity the way some of their competitors (zeebox, ConnecTV, etc) have done with their synchronized companion experiences?
• do they integrate the apps entirely or still offer consumers more focused experiences as well?
• how do they monetize all of it?

Are you ready for a Second Screen Super Bowl? (#2ndScreenSB)

The big game is on Sunday and by now everyone has been reading articles about how 36% of viewers plan to use a second screen as a companion to the big game.  With 84% of Americans planning to watch the game from their (or a friend's) house, this is a second screen industry opportunity like no other.  We are even being told that the CBS has sold more than $10-12m of advertising on the second screen alone (forgetting the $3.5m per commercial for the 1st screen).


If you remember last year's Super Bowl second screen experience, there were at least 15 potential experiences for consumers to try, with the NFL delivering a great experience through their own app (NFL'12) and NBC broadcasting the experience live on their web site.  The Coke Polar Bears even got their own show going, and all of that earned NBC an estimated $2m in second screen advertising revenue.

So what experiences are worth of your limited time during the game this year (as you balance trying to enjoy the wings, beer, and friends with your passion about this space)?  We tried to segment the apps based on the kinds of experiences they will deliver for you (click here to see more about our segmentation on second screen apps).

www.2ndScreenSociety.com/research/

• Classic sports companion apps (suggested, not exhaustive).
• NFL '12.  Released a new update for the Super Bowl, with guides to the town, the pre-game line-up, etc.  Great stimulating features to enhance your viewing experience.
• CBS Sports.  A re-vamped interface and the ability to choose camera angles should make this an stimulating experience.
• ESPN ScoreCenter.  Still one of the better sports companions with live stats (stimulating) and decent social features.
• TheScore.  Also a great way to follow the game, with pre-populated posts for your social networks (easier to share).
• TOK Football.  An innovative way to have the stats and graphics on your second screen while being able to talk thru the app to your friends (similar to a Skype voice session)--with buttons to cheer and boo during plays.
• There are dedicated team and game apps.
• Baltimore Ravens.  The latest news on players and game day stats.
• 49ers GameDay Live.  The latest news on players and game day stats.
• NFL Mobile.  The game streamed live, sponsored by Verizon.
• Super Bowl XLVII Guide.  A free guide built for those attending the game in person.
• Super Bowl XLVII Program.  An electronic version of the actual program guide that is available at the game.
• Multi-purpose TV companion apps.
• zeebox.  Deliver a great sports experience and I would expect them to be all over this game on Sunday.
• ConnecTV.  Have delivered decent football experiences in the past and this will be a test to see of their new UI engages fans as much as the old UI.
• Alternative enagement apps.
• Viggle.  Still attracts a large audience of viewers who answer real-time trivia to earn points that result in real-world rewards.
• Yahoo's IntoNow. (Animal Planet's Puppy Bowl Plus)  While the sports experience for IntoNow is ok, they are teaming up with Animal Planet to create a second screen experience for their Puppy Bowl Plus show.
• Browser-based engagement experiences.
• Doritos.  Has been hosting a voting experience to determine which of their ads "Crash the Super Bowl".  http://apps.facebook.com/crashthesuperbowl/
• Pepsi.  Has their own half-time engagement experience.  http://halftime.pepsi.com/
• Coke.  Is letting consumers choose the ending of a series of commercials during the game through this voting app.  http://www.cokechase.com/

M&E Journal: The Media Warehouse Concept for Electronic Media Content Distribution

By Steven Chester

Purchase of consumer media content is rapidly migrating from ownership of physical media (DVD/Blu-ray) to virtual media (files on disk/cloud storage, streaming media). This migration creates the opportunity for new business models which leverage technology innovations for centralized, cloud-based content packaging, storage, and distribution to provide significant benefits to content owners, distributors, retailers, and consumers. These benefits include lower distribution and production costs, simplified content workflows, enhanced security, faster title availability, and richer content management. This article will further describe the concept, and demonstrate how the Akamai Intelligent Platform is uniquely positioned to support it.

The media content distribution chain is in the midst of a strong market shift from physical media to online media consumption. IHS Screen Digest, a media focused research and consulting company, projects that U.S. online video views and transactions will exceed views and transactions of DVDs and Blu-ray Discs in 2012. 2012 unit growth of US online movie consumption is predicted to increase 143 percent over 2011, to 3.4B units, while sales and rentals of physical media (VHS, DVD, and Blu-ray) will fall over 7 percent, to 2.4B units. This trend will only continue, as Gartner research predicts that there will be more than 1 billion network-connected devices capable of consuming media by 2015.

The migration from physical to electronic consumer media (eMedia) promises many benefits to the entire distribution chain, from content producer to consumer. Overall costs can be reduced, content can be accelerated to market and consumers can realize the vision of anywhere/anytime viewing. However, there are a number of technical and business challenges to overcome in order to fully realize these benefits. In this article, we introduce the cloud-based “media warehouse” concept, walk through the various challenges that eMedia distribution presents, and show how the media warehouse can be used to address each of them.

The Media Warehouse Concept

The media warehouse is a cloud-based media storage, processing and distribution facility capable of ingesting and securely storing media content, providing viewer authentication and authorization services, and delivering the highest possible viewing experience to authorized consumers on any given device and network connection across the globe. It facilitates transactions between consumers, retailers, and content providers, and provides delivery services that efficiently address the challenges and unlock the opportunities of eMedia.

To understand the role of the media warehouse in more detail, let’s compare the creation and distribution of disc-based media (“discMedia”) and eMedia, identify the new challenges presented by eMedia, explore where eMedia distribution differs and illustrate the role of the media warehouse in addressing these challenges.

The Content Distribution Chain: Comparing discMedia and eMedia
For discMedia, a single source “mezzanine” master, that can exceed 100GB, is provided by the content owner for creation of the disc masters. This mezzanine is sent through an authoring process to generate a small set of variations– DVD and Blu-ray, Widescreen or Standard screen formats, regional variants, 3D, and more. A master disc is then created for each version, which can then be used for inventory creation.

The eMedia content authoring process for online delivery can be far more complex. In addition to the discMedia variants noted above, there are also variations for different end devices and perhaps more significantly, different bit rates. Multiple bit-rate versions are necessary to deliver the best possible quality to the different devices connected to networks with significantly different performance capacities, from wireless 3G to 4G/LTE to fixed line DSL to optical fiber.

Suddenly, where a half-dozen masters were required for discMedia, more than 100 “renditions” of a single title may be required for on-demand delivery. This adds complexity and additional work not only in the authoring process, but also at multiple points in the distribution chain.

Consider also that each retail distribution licensee may have their own online delivery ecosystem, requiring each retailer to obtain the content owner’s source mezzanine and perform unique authoring activities. This creates significant additional work for both content owners and retailers, and exposes the mezzanine file to a broader population, potentially increasing theft risk.

The media warehouse can reduce the number of renditions required in the authoring process. This smaller set of renditions appropriate for online streaming may be created and uploaded to the media warehouse. The media warehouse performs “in-the-cloud” repackaging and transcoding to address specific needs of different devices and networks, which greatly simplifies content management and reduces the overall storage requirements for a given title.

Once the masters have been created and uploaded to the media warehouse, retail licensees can be provided a URL link to the licensed content, keeping the marginal effort and cost of licensing for each new retailer low.

Retail Purchase and Playback Rights
With discMedia, authorization is straightforward; if a consumer has the disc, they can play it. The disc may be shared with others, but that copy may only be viewed on a single player at a time. The physical media may be protected with encryption mechanisms that frustrate duplication efforts, and access to the original high quality mezzanine is limited to those involved in the original authoring activities.

Unlike discMedia, eMedia viewing rights must be electronically captured at the point of sale. This information can be stored in a “digital locker” such as the DECE’s UltraViolet service.

The media warehouse must have the ability to map consumer viewing requests into queries to the associated digital locker service, and can enforce viewing rights that the digital locker specifies for that consumer’s content, including number of plays, number of authorized end devices, time periods and other rights combinations determined by the content owners and retailers.

Storage
When discMedia is sold, the responsibility for storage shifts to the consumer and the disc is simply stored on a shelf in the consumer’s physical location. When streaming eMedia is purchased, the content storage obligation never shifts to the consumer. When a downloadable eMedia purchase is made, storage responsibility may shift to the consumer, but given the need to play the content anywhere, any time, on multiple device types, consumers continue to expect that the content can be downloaded multiple times over a long time horizon. In both cases, unless explicitly limited, the retailer retains the storage obligation indefinitely.

This storage must be redundant and highly available to support 24/7/365 service, and highly scalable to support the large and ever-growing number of titles offered. In addition, storage must be tightly coupled to the delivery network to minimize distance and delays between content and the viewer in support of a high-quality viewing experience. In addition, the geographic location of storage for a given title may be restricted by the content owner, or may have financial or tax implications.

An effective media warehouse must meet all of these storage needs, while providing the significant benefit of sharing storage costs across the pool of licensed retailers.

The Playback Experience
With discMedia, the playback experience is primarily driven by the quality of the content master and the quality of the consumer’s playback and viewing equipment. Assuming that the quality of the master is consistent with retail market expectations, and barring any disc defects, the primary responsibility for the playback experience resides with consumers. The consumer owns the player, and if it provides a low-quality experience or if it breaks, it is generally understood that player replacement is the consumer’s responsibility, and the content provider’s brand image will not generally be impacted.

In stark contrast, specifically with streaming eMedia, the playback experience is tightly coupled to the retailer, and a poor viewing experience can adversely affect consumer’s perception of the retailer’s brand. Consumers may partially attribute a poor experience to older equipment (an older smartphone, tablet, or PC), or to a poor network connection, but they will expect the retailer to have considered that, and provide technical solutions for these issues. Consumers will expect retailers to provide player software through a web portal or application that is compatible with a broad array of consumer end devices – not only the latest and greatest – and players should be tolerant of minor network disturbances. If improvements are required, consumers expect the retailer to provide them at little to no additional charge.

In order to avoid potential retailer brand impacts, and continue the adoption of eMedia by consumers, the media warehouse must leverage content delivery technologies that provide a high quality viewing experience to the widest possible audience, and address the following variables:

• Multiple viewing platforms: HDTVs, tablets, smartphones, PCs
• Multiple network types
• Broadest possible geographic footprint

Technology Improvements and Future-Proofing
When disc technology shifted from DVD to Blu-ray, industry messaging made it clear to consumers that the higher quality of Blu-ray would require purchasing new hardware and Blu-ray versions of the same titles they owned on DVD. Consumers understood they owned a disc with specific capabilities and limitations. The fact that the discs and players were different provided some tangible, physical evidence that Blu-ray quality required additional purchases.

In an eMedia world, consumers lack this tangible physical barrier to future technology enhancements that yield higher quality experiences. If a higher-quality format, such as Ultra HD, becomes available in the future, consumers expect their owned content library to be upgradeable – if not for free, then for a cost substantially less than the original title purchase price. This expectation is being widely set today. Consider tablet owners migrating to newer versions with higher resolution displays – their applications are being updated at no charge. Vendors who do not take advantage of newer hardware capabilities are perceived as slow or lacking commitment to quality. Since a significant and growing amount of content is being consumed on tablet devices, the market expectation will be set. If an upgrade option is not offered by the original retailer, their brand could be adversely impacted – especially if a competitor offers the upgrade option.

The media warehouse must allow for easy creation and delivery of new content renditions that leverage these new technologies, effectively future-proofing the consumer’s and retailer’s investments, and enhancing the retailer’s brand image.

Audience Insights Gained Through the Media Warehouse
The media warehouse’s cloud-based storage and delivery model provides tremendous opportunities for both content owners and retailers to gain insights about audiences. Content owners can use the media warehouse’s analytics and statistics gathering capabilities to understand purchase and consumption behavior for any given title, by region, retailer, or through a number of other collected parameters. Retailers can identify unique content demand by region or customer demographic and use that for creating targeted promotions.

Media Warehouse: Relationships are the Key
As described above, the media warehouse concept integrates a number of features and capabilities that realize the possible benefits of broad-based eMedia adoption and consumption. Technical challenges, while significant, can be addressed by combining various offerings available today. The more significant challenge lies in building relationships between key, proven technology innovators who can offer media warehouse capabilities, and the broadest possible base of content owners and retailers. By building these relationships around the media warehouse concept, consumers will be provided ever-improving viewing experiences, and both retailers and content providers will benefit from the scale economies that broad media warehouse participation would unlock.

 

For a PDF version of this article, click here

 

About the Author
Steven Chester is Vice President, Film, for Akamai. Chester brings a broad perspective and in-depth expertise to his role at Akamai. In his current position, Chester guides Akamai’s strategic direction in the distribution of digital media by the film industry.  Working closely with the major studios, such as 20th Century Fox, Paramount, Disney and Sony Pictures as well as distribution outlets such as Netflix and Best Buy, Chester guides the development of Akamai solutions that benefit the entire digital distribution workflow from post-production to consumer experience.

Connected TV Ad Revenue, Monetizing the Second Screen

• 25% of all TV's shipped in 2011 were "smart" and the market penetrations is growing at 60%
• 90% of viewers of connected TV notice ads on them
• Ad supported viewing was preferred over subscription and transactional for TV and short form (subscription preferred for movies)
• the average ad viewer is 34
• an overwhelming majority watch from their family room/living room
• more than 50% of consumers are streaming TV and movies at least weekly (half of that is daily)
• short form content that is not available on TV/cable is growing rapidly on the web, garnering 81% viewership from all consumers

Netflix’s DIAL and the Second Screen Ecosystem Battle

One things is certain about the second screen industry--it is rapidly developing.  As we have discussed at conferences, over cocktails, through dinners, and in this blog (recently including 2013 trends, the coming ecosystem war, and our comprehensive industry report), one of the biggest challenges to deploying a second screen app is to create consumer utility.  That means the consumer needs to find more reasons to pickup that second screen with your app than with other devices (eg Harmony One remote) or app options.  While there are a wide range of apps chasing Social and Stimulating feature sets for  companion second screen experiences, there are an equal number of players trying to solve Discovery and Simple control of the first screen.

The real challenge with this approach is getting the content to launch on the first screen.  If you are the Pay TV operator, controlling the first screen is "easy".  If you are the game console or CE device manufacturer, it's also "easy"--you own the protocols.  But if you are a third party app, trying to create consumer utility (and hence value) by allowing him/her to search across multiple video services and launch their chosen content to that service on the first screen--hard.  Today, most of them are becoming adept at launching the video content onto the second screen itself, deep linking into the Hulu, Netflix, YouTube, or Amazon Instant Video app directly, but only a few third parties have mastered multiple devices for the first screen (eg BuddyTV)--and most of them only work with Live TV.  Imagine the complexity in the living room: you have 5 different devices by now that have Netflix or Hulu installed, so even if you could talk to anyone of them, how do you launch the right device and get the main screen to switch to that device?

Enter Netflix and DIAL.


While the analysts are already calling DIAL an "AirPlay" killer feature, it is so much more than that.  AirPlay is about pausing a video on your iOS second screen viewing device and launching it via your Apple TV to your first screen.  DIAL is about enabling many video services (or at least Netflix and YouTube) to detect a first screen device that it creates a link to, and then launching an environment (a "sister" app) that allows it to control that device.  Don't think of this as content mirroring, but as an app master-slave relationship similar to the way movie companion apps work with Blu-ray players or Xbox SmartGlass works with the Xbox itself.  It will enable not only the deep linking of launched videos from 3rd party Discovery apps to the first screen, but will also enable new, bi-directional control experiences that give app makers a chance to have a robust ecosystem without owning the device itself.

“We realized in the fall of 2011 that we could create some potentially useful 2nd screen experiences,” Scott Mirer, director of product management at Netflix, according to Gigaom.

“At about the same time, we learned that the YouTube team was interested in much the same thing – they had already started to do some work on 2nd screen use cases. And so we approached them on collaborating… We also felt that having two major video services define and promote DIAL would help get it more widely adopted as a common solution to a common problem, vs. taking a proprietary approach. It’s been a productive partnership and we’re confident that we’ll get wider adoption because of it.”

But more importantly, “Once apps from the same provider are running on both screens, there are several feasible methods for implementing control protocols either through the cloud or on the local network. And not every service or application is focused on the same kinds of use cases. Rather than try to get universal agreement on these protocols and use cases, it seemed best to leave room for innovation.”

According to Scott Mirer, director of product management at Netflix, “expect to start seeing (other DIAL-enabled devices) in the next several months.” Appadvice

We thought Netflix would follow the Xbox SmartGlass development with something of their own quickly--and this looks promising (if shared beyond themselves).  Now, when will iTunes announce their second screen ecosystem?

Enjoying the conversation?  Join us in LA in late February at our next 2nd Screen Summit or in Las Vegas in early April for our 2nd Screen Summit @ NAB (www.2ndscreensummit.com)

@ChuckParkerTech

Taking Social to the next level – TOK Football

We've been gathering together to watch live sports in the living room for many, many years.  As our society has become busier, travelled further apart, and gotten socially reconnected with our geographically diverse friends, we have used Facebook and Twitter to stay in touch, comment on the score of a game, and even talk some trash.  But nothing replaces live conversation as well as the conversation itself.  If you don't believe that, check the monthly minutes plan on your phone or review Skype's usage explosion.

So if you wanted to watch the playoff games last weekend with your good friends who happen to be in different cities, you can use several sports related second screen apps to post comments on plays and scores or you could open a Skype multi-party session to experience the trash talking, but what if you tried to combine the two experiences?

Meet TOK Football.



I spent part of the game watching the Ravens beat up on the Patriots Sunday while test driving the TOK Football experience.  The sign-up was relatively painless.  I gave it my Facebook credentials and it offered to easily invite people to join me from there or from email.  Once I was connected to Fabrizio Capobianco and Emanuela Zaccone, the CEO and CMO of TOK.tv, I got to enjoy watching the game on the first screen, checking out the graphics of each play on the second screen, and listening to comments, cheers, and pre-recorded sound bytes (from the app) that ranged from "Defense, Defense, Defense" to a loud belch (the effect from the "beer button"--great fun).

The audio was surprisingly good despite the fact that I was in LA, Fabrizio was in San Francisco, and Emanuela was in Rome.  While the app has some low hanging fruit on its development roadmap around leveraging "more classic" social sharing features within Twitter and Facebook as well as making the graphics more interactive (clicking into the players bios for example), the experience was novel and refreshing and I think takes the "social" concept, especially for sports, to new heights.

The stimulating features are great and I think the next version of this app will be giving NFL '12 and ESPN ScoreCenter a run for their money.

Test it out for yourself during the SuperBowl in two weeks and look out for a much improved, ready for prime time experience for TOK Baseball coming in the spring (where many of the second features will be addressed).

Summary:
Simple.  None.
Seamless.  None.
Discovery.  Some ability to what games are on that day in a map view (where the games are being played).  Low.
Stimulating.  A very strong start in this feature set, already in similar ranks with apps like ShoSync and USA Anywhere.  More importantly, it is a fresh take on the sports app and give consumers new options for the experience.  Medium.
Social.  While just on the edge of the low rating, the ability to speak live to your buddies while watching the game is certainly a new social experience and will improve the sports app genre in 2013.

Interested in comparing TOK Football to other sports apps in a detailed research report?  Check out www.2ndscreensociety.com/research/

If you are in San Francisco on Feb 7th, come check us out at AppsWorld.
If you are in LA on Feb 21st, come check our our 2nd Screen Summit (2nd annual in LA).  This is the link to last year's event.

@ChuckParkerTech

M&E Journal: The Main Ingredient

By Paulette Pantoja –

What drives the adoption of a technology or an application? Is it the breakthrough and innovative advancements that the technical gurus come up with? Or is it the large budgets and the creativity that are put into the marketing and advertising of the product to gain mass awareness? Read more

Speaking a common Second Screen Language – Launching the 2nd Screen Lexicon

When we sat down for our first advisory board meeting last June in NYC, we discussed which topics and challenges to try to tackle as a team, where the issues were on one hand not competitive and on the other hand would genuinely help move the entire second screen ecosystem forward.

Within a few short minutes, we were in a heated debate over what second screen was or wasn't.  It is very tough to work together without a common language or lexicon.

So we worked with more than 40 advisory board members to develop an initial set of 25 terms  that we felt like were the "25 Essential 2nd Screen Terms" to deal with the problems facing all of us now.

The terms were made publicly available during our CES event in Las Vegas on January 7th.  You can review them at www.2ndscreensociety.com/lexicon and you can deep link the individual terms (look for my blog to do so going forward).  The terms range from the obvious (what second screen is and what isn't) to the technical (several forms of ACR or Automatic Content Recognition).  We are already working on the next set of 25 advanced terms, so if you have suggestions, feel free to send them to me.

While we are on the subject of the 2nd Screen Summit @ CES, below is a collection of great articles written from press who attended the event.

• Engadget.  The State of the Second Screen
• Reuters.  The Second Screen: Finally Ready for Prime Time
• The Verge.  App makers highlight...[discovery]
• Zatz Not Funny.  DISH Explore Second Screen App Unveiled
• Zatz Not Funny.  The Second Screen Invasion is Upon Us

Already seen the articles?  Check out these video interviews of key industry execs at the event, including Hardie Tankersly from Fox, Ian Aaron from ConnecTV, Alex Terpstra from Civolution, Alan Wolk from Kit Digital, Rob Gellick from CBS Interactive, and our own Guy Finley from the 2nd Screen Society and MESA.

Other 2nd Screen Summit @ CES factoids:

• 47 industry CEOs, 10 CTOs, and numerous marketing professionals flew into Las Vegas on Monday the day before the big show to join
• 357 eager attendees to see
• 59 industry experts enlighten us from 2 stages across 8.5 hours of programming (cocktails not included as programming...)

Members and attendees should be on the look out for an email soon with a userid and password that will give you access to the presentations and video of the sessions from CES.

Look out for us at AppsWorld on February 7th in San Francisco, and then in LA on February 20th for a content focused 2nd Screen Summit.

Then we are back in Vegas for "2nd Screen Sunday @ NAB" on April 7th, focused on TV and sports.

Looking forward to seeing all of you.

@ChuckParkerTech

Second Screen and the 2013 CES

We kicked off the 2013 International CES show last week on Monday with a 5-hour, program-packed 2nd Screen Summit--working hard to get the "right" people on stage and in the audience.

But was CES the "2nd Screen CES" we predicted it would be in mid-December?



Here are some thoughts from my tour of the show room suites and booths "on the floor" from CES:

• Dish Networks (combined with their sister company Sling Media) had one of the most innovative consumer experiences on the market, all leveraged by an amazing, well-designed second screen app that allowed "the Hopper" set top box to record all of the shows each day in prime time and made them accessible for streaming or download in a second screen app (integrating companion screen experiences chalk full of social and stimulating features and allowing viewing screen experiences that rivaled most OTT experiences available today).
• Samsung showed some very sexy-looking second screen apps off in their booth, allowing you to push video to and from their TVs and to gain companion viewing experiences at the same time.
• Nintendo showed off their Wii U with a built in second screen experience, declaring themselves that "TV will never be the same."
• Microsoft continued to display its SmartGlass features with live sport and movies.
• Countless third party developers showed off their apps for to enable Discovery, with one of the B2B providers even demonstrating a UI allowing you to choose (from Facebook) who you plan to watch a show with and getting a suggestion on which shows you would both like.
• In fact, I visited every major CE manufacturer on the floor from Panasonic to Hi-Sense and Toshiba to Haier, and every one of them showed me some sort of second screen companion experience or viewing experience (multi-screen) that was already deployed or would be deployed.  
• Additionally, every Pay TV operator I had time to visit plus Tivo had some experience to demonstrate that included a second screen Discovery element.
• Even Engadget and the Verge wrote something interesting up on second screen during the show.

Watching The Golden Globes with Second Screen or The "multi-function" app vs. the "special purpose" app

If you read the news much, you would have seen E! Entertainment pushing their updated second screen app in a big way for Sunday's Golden Globe awards and you would have seen NBC and others pushing zeebox for their second screen experience.

We thought this would be the perfect opportunity to explore the "multi-function" vs. "special purpose" app debate that we (as an industry) debated last Monday during CES at the Second Screen Summit and that we explore in our recently published market report on second screen, "The 2nd Screen: Transforming Video Consumption".



Honestly, I thought I would be testing the afore mentioned E! Live from the Red Carpet (there was no special Golden Globes app) that I noticed has a new update earlier this week vs. zeebox, TVplus, Viggle, ConnecTV and Shazam as they are clearly leaders in the functional feature set of "Stimulating" and are either segment leaders in either "Multi-Function" or "To Enhance".  But, at least for the Red Carpet, I was mostly disappointed:

• the TVplus "Sync" feature did not work (their consumer facing app is now a "reference" app and does not have an experience for all shows), 
• Viggle allowed me to check-in but did not have an experience ready (for the red carpet), 
• Shazam let me check-in, but only had links to IMDB, etc., and
• ConnectTV launched a new interface which besides being portrait only, seemed  to have no experience setup for the live broadcast either.

2nd Screen Society announces definitive Second Screen market research study

• The technology status and future developments: how ACR and the “system level” 2^nd screen platform from Xbox SmartGlass will have significant impact on the marketplace
• A segmentation of the market and a scoring of hundreds of companion apps: that are used to control, discover, enhance, share and multi-task.
• An analysis of the players in the ecosystem: why studios and TV shows focus on enhancement and pay TV operators focus on control.
• A full-blown usage analysis, business models and market sizing with detailed data to 2017.
• A detailed review of the Top 50 apps:  what works and what doesn’t and identifying key feature sets
• A detailed look at trends and future state of the 2^nd screen market
• An 18-month detailed forecast:  describing trends we believe will have a short-term impact on this emerging marketplace for applications and 2^nd-screen technologies.
• A deep review of second screen as a viewing device

Digital Video By The Numbers, Q4 and 2012 Infographic

It's getting harder and harder to pull apart "Second Screen as a Companion Experience" and "Second Screen as the First Screen Viewing Experience".  The living room and the tablet are converging so quickly.

• UltraViolet has 7m subscribers, but only carries 59% of the Top 100 titles and 50% of currently popular video titles
• Best Buy / CinemaNow launched a Disc-to-Digital beta last week
• Flixster's iPad experience now has download capability--giving UV consumers the opportunity to travel (without a laptop)
• While HBO Go, Hulu, and Amazon Prime are garnering press, the traffic shows that Netflix out streams them nearly 30 to 1
• Netflix has now tied HBO in total subscribers (albeit with some international ones)
• Xbox is the underestimated player in the digital living room with 30m subscribers and a recent commitment to launch 40 new content channels
• The Wii U deployed multi-screen services for its platform and promises to combine it with its second screen controller and then "TV will never be the same"

While everyone know Netflix, Hulu, HBO Go, and Amazon Instant Video (as an app), have you tried Matcha, NextGuide, Flixster, or Plizy?  Interested in case studies on great apps that help consumers discover and watch content on their tablet?    Click here

Join us at the www.2ndscreensummit.com today at the Wynn (1-6pm, cocktails to follow).

Second Screen by the Numbers Q4 and 2012 Infographic

As we head into CES Monday, I thought I would post a teaser of some of the data we will present at the 2nd Screen Summit (held at the Wynn, 1-6pm, cocktails to follow).  2012 was certainly one helluva year for second screen, finishing with a "tablet Christmas" which delivers us into a "second screen CES".

See you Monday.

• In 2012, Social TV grew 363%, ending the year with 800m+ social comments about TV
• 40% of tablet/smartphone owners use a 2^nd screen daily while watching TV
• 40% of tablet owners seek further information about the TV program
• 29% of smart phone owners shop online while watching TV
• 46% of smart phone owners check social networks while watching TV
• Viggle acquires GetGlue with 4 million potential subscribers in total, 61% of Viggle subscribers planned to use Viggle points for Xmas gifts
• 35 million tablets were expected to be sold in the US during the holidays
• The most social TV event was the Grammy's at 13m+ impressions, the most social TV show was The X Factor, with move than 600k average social impressions per show
• Currently, 52% of engagement comes from iOS, 30% from Android

The Future of ACR: A Major Weapon in the Digital Video Ecosystem Arms Race

• Contextual advertising.  The holy grail for interactive advertising, allowing for placement of appropriate brand messaging not only based on demographics of the viewer, but based on what is happening on the first screen, reinforcing brands in immediate fashion.
• Contextual commerce.  The opportunity to finally deliver the “Jennifer Anniston’s Sweater” use case by making buy (or want) clicks presentable with immediacy for the consumer.  
• Enhanced contextual content experiences.  Delivering relevant information to the consumer when it is happening (the background music, explanation of that geeky joke in Bing Bang Theory, links to actor bios and director’s notes, etc) creating a more compelling super-fan experience.
• Contextual and spoiler-proof social feeds.  Imagine being on the West Coast and not knowing the ending to your favorite show just because you are following it on Twitter, and then taking that to the next level and allowing for asynchronous connected experiences where social comments are available at the right time during the programming instead of only working well when the programming is live.

• Advertisers.  They need scale.  Today that means a technology which can span across multiple second screen apps to pool enough potential consumers to have scale.
• Device makers and OTT content distributors.  Would prefer to have a proprietary ACR capability, allowing them to create enough value for themselves in the chain to insert some level of control and attract a fee.
• Operators.  Would prefer to continue to use the same scale systems they use today to manage their subscribers, but are unlikely to reach out to 3^rd party apps and experiences.
• Broadcasters.  Would prefer to team up with their advertising partners and find a way to create scale, focusing on the interactivity and data reporting this technology provides.
• Content creators.  Would prefer to have the best experiences for their content, focusing on fail over techniques when preferred methods are not available and to develop a system that allows them to publish to many ACR systems with as little cost as possible.

• Audio driven ACR will continue to remain the most prevalent.  It is relatively cheap and easy to deploy, even though it is perhaps the least effective at the consumer level.
• Stream capture (NOC) ACR will begin to deploy in the industry.  Advertisers and broadcasters will team up with a few 3^rd party technology and service providers that can create a triggering system that multiple apps can easily adopt and deploy.
• Video driven ACR will begin to deploy, with systems in the devices working to using video finger printing to create event triggers—but this will face the same scale problems in 2013 that multiple second screen apps present today—lack of a large install base.
• “OS level” ACR will create a digital video ecosystem arms race.  The industry will quickly realize that Xbox already has 40m+ active installs in the U.S. and that its SmartGlass platform gives it an immediate capability to deploy “OS level” ACR to any and all content (video, music, games).  Netflix, iTunes, and Google Android will not sit idly by to watch this unfold and will deploy systems of their own in early- to mid-2013.  The majority of Pay TV operators will be caught flat footed, with Comcast and DirecTV leveraging their currently very capable second screen apps to respond by late 2013 or early 2014.  However, the challenge this leg of the ecosystem war presents is that is requires and ability for the platform to work with multitudes of developers through a well-structured SDK and publishing system.  iTunes is already set up for this, as is the Google Android system.  Microsoft has already deployed an SDK and already has a publishing platform for Windows 8 phones, but Netflix will be the most challenged to respond in this fashion.  Additionally, the Pay TV operators will struggle to engage in this manner, preferring to attempt to develop solutions internally and to closely guard APIs as the gatekeepers rather than the marketplace operators they could become.

It’s the End of the World as We Know It

What with the failed Mayan apocalypse and all, I’ve been stuck reminiscing about the end of the world as we know it , at least in the Media & Entertainment industry as we know it today.

Don’t worry, I won’t be too poignant. Read more

10 Predictions for the Second Screen Industry in 2013

1. To Control.  While perhaps the hardest to monetize, this is the most important feature for device makers and those hoping to win the digital video ecosystem war (see 9 and 10 below). Recurring app usage starts with utility.
2. To Discover.  Trying to find content to watch, with many in the ecosystem seeking to influence that decision through some form of advertising.
3. To Enhance.  This will come in the form of a) searching for or receiving additional (perhaps synchronized) related information to the program and b) second screen-based commerce (a subset of M-Commerce).  Just a few weeks ago, Nielsen reported that of consumers using a tablet while watching TV, roughly 40% are using them to check information related to the program and 29% of 25-34 year olds are shopping while watching TV.
4. To Share.  Already hyped in the press to the nth degree, expect to start to see attempts to measure how impression affect viewership across demographics and how they influence others decisions to view content.

2nd Screen expected to dominate the news and exhibits at CES

Already being dubbed the "Tablet Christmas" in London as retailers are seeing tablets fly off the shelves and into shoppers baskets at the rate of 1 per second, there is a large surge expected in tablets this holiday shopping season--so large that IDC has increased their 2012 forecast for tablet sales by 5 million units to 121 million units worldwide.  While the Huffington Post believes the driving force will be the wide spread availability and lower price point of 7-inch Android tablets, one thing is for sure, it is going to be a "2nd Screen CES" as a result, with major TV service providers working hard to attract revenue as more than 70% of table owners use their devices while watching TV.

A Review of The Dark Knight Rises experience on Xbox SmartGlass

Last week, the Dark Knight Rises finally entered the Blu-ray/DVD and digital download window for consumers.  While I am warming-up to the concept of "owning" a digital title on Xbox (portability issues still remain), I was very interested in digging into a premium experience on their new SmartGlass second screen platform.  It delivered premium and then some, offering what I think is currently the best UX to date for a movie companion second screen experience.


When you play the movie after purchasing on Xbox Video marketplace, SmartGlass (on your tablet or smartphone) automatically recognizes the feature that is playing and looks for an enhanced SmartGlass experience (no need to install a movie-specific app on your device).  Similar to Blu-ray experiences for other movies, SmartGlass lets you perform all of the obvious remote control use cases (skipping chapters, pausing, syncing the movie to your point in the SmartGlass or syncing SmartGlass to where the movie is, etc) and has all of the great Stimulating rich, related metadata you would expect (character bios, director interviews, behind the scene videos, etc), but where it really out shines other movie companion experiences is in the UX behind the Enhanced Stimulating experience.  To this point in the industry development, most well-designed experiences have been smart enough not to inundate the consumer with too many synchronous events, usually waiting at least 45-60 seconds in between events, often broken up by scenes.  But the Dark Knight Rises experience took this to the next level, grouping 6 potentially engaging experiences together in a chapter UI, giving the consumer the option of where to explore during the chapter, and then opening 6 new experiences when the next chapter begins (synchronously).  This allows for a few improvements from the consumer's point of view:

1. The consumer gets to choose when and what to explore (within the chapter).  This means he can disengage at different points then potentially anticipated by the experience developers and can choose what interests him.
2. There is not an overwhelming choice of possibilities (6 choices is thought to be potentially optimal in the decision making process for a UX).

Your Sneak Peek into Hollywood’s Future in 83 Minutes

83 minutes is a long time. It’s…

• … eight times longer than my 6-year-old’s attention span;
• … about seven minutes shorter than the average feature film; and
• … not quite twice as long as Bill Clinton’s 2012 DNC speech

83 minutes is also the amount of time that the average Machinima Network viewer spends engaged with content on the exploding YouTube entertainment network – an average engagement that eclipses every other YouTube channel. Machinima isn’t just ANY YouTube channel; it’s become the second most popular channel almost overnight, racking up nearly 200 million unique monthly visitors and more than 2 BILLION monthly video views. (Click here to register for Machinima’s September 19th Webinar, hosted by Teradata)

The numbers are impressive – especially for a relatively new, smallish start-up. But, it’s a start-up we should all be watching with interest, not simply because nearly every person carrying an XY chromosome between the ages of 18 and 35 is hooked, but because the Machinima Network- as executed through the YouTube channel model – showcases the future of our industry. No doubt.
YouTube’s made major investments to launch dozens of channels in the past year, seeding the various networks with an initial infusion of $150 million, and then doubling-down with another $200 million just this summer.

It’s no secret that original content is often the ticket to loyal audiences and large licensing returns. HBO was among the first to define the model. Watch now as Amazon, Netflix and, yes, YouTube fall in line with original content investments. For YouTube – whose attempts to shed its image as the destination for cute UGC baby videos in favor of that of a Hollywood powerhouse have faltered – brands like Machinima will be the lifeblood.

But, there’s more to 83-minutes that a few bucks from Google. Google, YouTube and Machinima are no strangers to understanding the value of deep content analytics in in understanding viewing patterns, and converting those visitors into users. In fact, as content creators of all sorts navigate the new world of multi-platform and direct-to-consumer distribution, the winners will be those who effectively use data to mine user sentiment and behavior. Some companies are in the spaghetti stage for sure – and that is, they throw analytics approaches against the wall to see what sticks. But, there are also clear thought leaders, Machinima and Google among them. Pay attention now – it’s worth more than 83 minutes of your time.

I can’t give you 83 minutes – but, join me and Machinima Network COO, Nanea Reeves for an hour-long webinar to learn more.  Click here to register.

An industry lunging forward – 2nd Screen shows visible progress

I think all of us in attendance last week in NYC at the 2nd Screen Summit were partly excited and partly surprised at how much progress this nascent industry has continued to make.  For example, in February there was some high level discussion about what it would take for the game console market to develop 2nd screen apps and most of the cocktail-hour pundits predicted the gaming segment would move as slow as they produce next generation consoles–at a snail’s pace.  Only a few weeks ago, the entire media industry lamented on why Steve Ballmer would launch yet again another tablet–but all of us were very wrong.  Microsoft’s Xbox team has been quietly but quickly developing concepts for 2nd screen user experiences (aka “SmartGlass”) for the range of consumers who love everything about their gaming consoles.

Opinion: Where’s UV’s guy in the turtle neck (or hoodie)?

I just came off of a day-long UltraViolet download. Eight hours of data and details about the next big Hollywood format. There were 250 of some of the smartest folks in home entertainment, all counting that UV will once again make home entertainment the cash engine that drives the Hollywood machine. Read more

HITS Big Data Breakfast – Calling All “Evolutionaries”

Just about three-and-a-half years ago, I made a pretty big change in ye ole career path, and left a life-time in production, post and digital media to join the rock-star of all data warehousing and analytics companies, Teradata. Yes, my role was to oversee Media & Entertainment go-to-market strategy and marketing – but it still felt like a lifetime away from encoding and transcoding, and content distribution, and DI, and…. To be honest, I wondered for a long time if I might lose my M&E chops.

Life has a funny way of coming full circle. Just last Thursday, I had the privilege of joining some of Hollywood’s best and brightest on a panel to discuss big data analytics in media & entertainment. An event hosted by MESA and the Hollywood IT Society, and sponsored by Teradata (among others), the Big Data Analytics Breakfast marked the first exclusively M&E-focused big data event of its kind.

Flanked by senior execs from Disney, Sony and NBCUniversal (read MESA’s write-up here), our panel spent more than 60-minutes gabbing about the criticality of big data analytics –and analytics in general –  in Media & Entertainment in front of another 70 senior-level technology executives.

The interest and excitement in the room was evident – so evident that we were unceremoniously cut-off and booted when our Q&A threatened to well-exceed our allotted time. It’s not that often I see a new business opportunity incite that kind of interest and engagement. There is so much to be said on the role of big data analytics for our industry.

Here are some gems for big data use that we’ve seen with our customers, and which were echoed throughout the big data event:

• Programming & Scheduling – using Twitter, Facebook and other social media feedback to make ad-hoc scheduling changes
• Ad Effectiveness – using big data to attribute ad engagement (say, via the STB or second screen)
• Theatrical Marketing On-Demand – shifting marketing allocations and spend in near-real-time based on regional box-office outcomes
• Content Recommendations – one word: Netflix
• Site Personalization – understanding your customer’s title, genre and other preferences via big data, and using that insight to tailor their experience with your site, or target them to receive specific marketing communications

For about the last 18 months, I’ve been watching the intensity around analytics skyrocket with studios, OTTs, cable companies, publishers and other Media & Entertainment companies. It’s honestly about time. I really believe analytics are at the core of our industry’s future – particularly as we evolve to have the kinds of deep one-to-one audience relationships that new distribution platforms (like OTT and Second Screen) allow.

As for me? I guess it makes me feel a little smug — confirming for me over and over again that my supposed career-path change wasn’t all that much of a change; it was really nothing more than an evolution. That’s good for all of us!

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.

Big Data – Big Audiences

By Colleen Quinn, Teradata

It seems everywhere I turn, leaders in Media & Entertainment are catching on to the Big Data phenomenon. At the very least, there’s a whole lot of conversation happening about the subject. So, it wasn’t surprising that nearly 800 people registered for a webinar – sponsored by world leader in analytics, Teradata – to hear online auction (and analytics) powerhouse, eBay, share how they’re using Teradata and Hadoop to access Big Data sources , and analyzing them to give eBay speed, power and agility to offer their customers what they want, when they want it. (If you’re still catching-up on what Big Data means exactly, read my earlier blog on the subject.)

The conversation, led by Teradata’s Chris Twogood and eBay architecture and technology rock-star Tom Fastner, outlined a variety of ways that eBay relies on Big Data analytics to touch almost every part of the customer experience, from driving traffic to the site, delivering the most relevant product assortment while there, and by analyzing every step of the final transaction.

Here are a couple of gems from the webinar:

• Paid Key Word Optimization – I don’t think I was the only one whose jaw dropped when Tom mentioned that eBay manages 167 million paid keywords. To put that in perspective, the English language has just over 1 million words. “Keywords” are often combinations of frequently searched words. In eBay’s world, think of phrases like “iPad 2” or “gold diamond ring.” (In the Media and Entertainment industry, you can imagine combinations like “Tom Cruise action movie” or “Harry Potter Lunch Box”). When bidding on key words – no matter how many you manage – the bid process also includes things like geography , and rank/placement (do you want the keyword which appears first, second or third on the list). So, when all said and done, these permutations multiply.

eBay uses Big Data Analytics to identify those keywords most commonly searched on the eBay site, and which drive the most traffic and conversions, and ultimately decide on how much those words are worth when bidding. Across nearly 200 million words, you can imagine the massive cost savings.

• A/B Testing – So, once eBay brings potential buyers to the site through optimized key words (and other significant means, of course), the goal is for those potential buyers to become actual buyers. eBay shared the fundamental role that experimentation and Big Data analysis play in conducting and determining the outcome of those A/B tests. eBay conducts A/B tests on 100 use-cases at a time, resulting in thousands (tens of thousands) of simultaneous A/B tests. They’re able to measure response to those tests and determine the best product assortment , and layout (e.g. do you prefer bigger or smaller pictures?) to match buyers’ search requests, resulting in better matches and more transactions.

If you think this sounds interesting, but are still left wondering what any of this has got to do with us in Media and Entertainment? The parallels are striking:

• So What About Search? – Driving traffic through search – with more content aggregators and distributors competing for the same audiences, you want to make sure your audience finds you first. Understanding and optimizing what drives traffic – even with keyword tallies infinitely smaller than 167 million words – is critical. Conventional wisdom use to hold that you should always bid for the #1 slot, but smart advertisers know that other slots outperform the #1 slot on an ROI basis, so unless you need the volume the first slot drives you’re better off bidding for slots 2 and higher.

• Content is Personal, too – No doubt about it. You know that your movies, episodes and trailers are every bit your product, just like an iPad on eBay. And, for most properties, you have merchandise you can pair. Learning what your audience likes, and what resonates with them , through A/B testing to optimize recommendations and product assortments will only increase site engagement, and ultimately, transactions.

Did these gems pique your interest? Then don’t forget to listen to the webinar replay here in its entirety.

Musings from the Academy on UltraViolet: Big Opportunity with Big Data

Let me start by admitting that I usually abhor industry conferences and summits. I’ll make an exception for NAB and IBC, mostly because of the, um, ancillary activities – but, for the most part, networking, schmoozing and pontificating aren’t my thing. They are, however, a necessary occupational hazard.

So, imagine my surprise and thrill at last week’s Academy on UltraViolet, which brought together 250+ industry thinkers (real players, mind you) to talk about the roll-out, strategy and success-to-date (or not) of the new digital rights locker concept – called UltraViolet – brought to market by a consortium which includes a veritable who’s who of everyone in the industry (except, quite notably, Apple).

I enjoyed this one. I was fascinated by the enthusiasm, hope and tenacity of a roomful of industryites pinning their hopes on the new service as the savior for Home Entertainment’s dwindling DVD revenues. And, while I think UltraViolet has a long way to go – and a daunting set of consumer-facing challenges they need to overcome (namely: what the hell is a rights locker anyway?) – there is no debating that most major studios have bought in. (Note: Check-out Marty’s blog for a great perspective on the Turtleneck/Hoodie Gap here.)

If I had one bit to contribute to the conversation – a bit that I think will be critical for the studios and content creators who have a MAJOR opportunity to finally understand what/how/when/where their audiences are engaging with content – it would be this: what about the data? UV – if it works; if it does all that the studios and retailers hope it will do – will be yet another channel in this new distribution landscape that finally allows the content creators to do what the box office and big box retail did not: learn about the people who consume their content.

With the ability to mine that data –from sources like their own consumer-facing storefronts or their partner retailers- studios will be able to literally read each viewer’s patterns and preferences. Well, read those preferences if they know how. Doing so requires Big Data analytics tools that can tackle the multi-structured data of click-stream, browsing, video engagement, social network analysis and more. And, UV data isn’t the only place this arsenal of analytics can be pointed.

Want to learn more about Big Data Analytics and how you can use it to ramp-up your understanding of viewing behavior and more? Check out this upcoming webinar on May 31st.

It’s Not Big Brother – It’s Big Data!

The “web” seems to know weird things about me. Take my old friend Netflix – just the other day, I was thrilled and shocked to see that Netflix had sifted through the rubble of my son’s nonstop Dora and Diego consumption (you parents understand this) to make a couple of streaming recommendations for moi that, quite simply, made my day.

Don’t get me started on Google, whose creepy and prescient ads – “Never Fly Coach Again” (how do they know?!) — amaze me every time!

And, just the other day, eBay was trying to sell me seriously rad trail running shoes. Now, I shop with eBay a lot – to the tune of Thomas the Train and Kate Spade – but I’ve never once bought anything sport-related from the site. I am a person, by the way, who seriously appreciates rad trail running shoes – and buy them, I did.

What do all of these companies have in common? Besides the fact that they know more nitty-gritty things about me than my own mother, the commonality is that they all use Big Data analytics. Not big data. Big Data. Note the caps. Heard the buzz word, but – like gluten free and OTT – you still don’t quite know what it means, how it works, and how IT organizations can execute?

Let’s start from a simple definition. Big Data refers to the data exhaust that people like us – your audience, viewers and site visitors – leave behind as they navigate through your online services. Take my Netflix scenario – for every search I execute, click that I make, or trailer that I watch, I am leaving fingerprints. The path I take through Netflix – from the moment I log on, to the moment I watch something (or don’t) leaves a trace. Those traces in aggregate – often rendered as multi-structured bits of data in click-streams, or web blogs, or comments on social media sites or social networks – are Big Data.

How do you make sense of Big Data vs. little data (to steal a phrase from Peter Yared’s recent post on CNET)? Well, “little data” – the rows and columns we’re all used to today – focuses on the “what.” What viewers watch; what buyers buy; how many, how much. Big Data – coined such not so much because of its size, but because of its complexity and dynamic-nature (um, dynamo?) – helps us explore why.

Is your interest piqued? Want to know why your content distribution and online publishing friends know so much about you? Want to know more things like this about your audience when you’re distributing your content? Check-out this upcoming FREE, Live Webinar featuring eBay – a company among the titans of Big Data Analytics. You can click here to learn more and register.

Information Technology Enables Transformation of Hollywood

by Devendra Mishra

Adjunct Professor, Decision Sciences and Marketing, Graziadio School of Business and Management, Pepperdine University, and Chief Strategist, MESA

The 2012 HITS Conference was an affirmation of a personal belief that CIOs of the Hollywood studios have an unprecedented role to enable the transformation of the entertainment industry in the wake of the perfect storm of disruptive technologies.

While the studio executives have a vision for addressing the challenges of the disruptive technologies unleashed by digital technology, Internet and broadband, mobility, web-enabled consumer electronics, and social media, the fact remains that the information systems executives are increasingly engaged in meeting the demands of an ever-changing marketplace driven by the consumer. The reason for the unique vantage point of the information systems group is their overarching view of all the functional departments of an enterprise, the flow of information across the enterprise, and their responsibility for B2B relationships with suppliers and customers in the supply chain.

The Emerging, Expanded Role of the CIO

Insatiable demand for content — film, TV, games, Blu-ray discs, and DVDs — finds the consumer at the epicenter of the marketplace. As a result, the interaction with the mobile consumer has become ubiquitous, yielding much needed insight for content owners and involvement of consumers. The result is a game-changing role for the CIO, enabling access to the consumer like never before.

Today the CIOs at studios are addressing a number of key initiatives:

1.     Capture of big data of social media and enabling near real time decision making;

2.     Analysis of social media data to influence purchases of products and services for enhanced entertainment experiences;

3.     Establishment of standards for unique product and service identification and metadata to be used by trading partners;

4.     Security and privacy requirements in the network;

5.     Development of consumer-centric content for the web;

6.     Establishment of B2B networks among the growing number of supply chain partners in the digital world; and

7.     Building data warehouses to support the infrastructure needs of the transformational initiatives.

The digital world has brought the consumer closer to the studio where the Internet has become a universal channel of distribution. While a web presence provides product information, its interactivity yields an unprecedented opportunity to build a relationship with the customer. By integrating customer data from all platforms of emails, social media, web analytics, display networks and publishers, billing systems and search engines, marketing executives are able to better manage global advertising programs for films and subsequently for TV and home entertainment by optimizing media placement for short-term awareness and sentiment. Creation of a repository of marketing campaign metrics by film genre has become a powerful asset.

Utilization of big data to leverage the new media for improved user personalization, analytics for product recommendation, path analysis of web navigational data, and resultant creation of the enhanced entertainment experience is producing additional revenues. The traditional product-driven marketing is being transformed to a consumer-centric strategy.

Partnership of CIOs and CTOs

The technology challenges of production and information systems over the product life cycle are bringing about a new partnership between the CIO and the CTO. Particularly, content digitized at its inception enables an efficient repurposing for growing channels of distribution. Deployment of information systems in various operations of the studio, while recognizing the product life cycle and the shifting windows of exhibition, has led to creating significant value for the overall business. An ongoing IT strategy has been to link with business operations, focus on business processes, modify organizational structures where necessary and apply technology. Alignment of technology with information systems has led to automation efficiency and an ability to scale business value.

On another front, the radically changing business of advertising for films, TV, and home entertainment across numerous channels and devices has become very complex while representing potential streams of revenue. The IT departments have embraced Twitter, Facebook, and the like, to help forever change the world of marketing.

Advanced analytics extracted from customer information for a film, TV show and theme park in an enterprise data warehouse is being utilized for management decision making, both operational as well as strategic. The implications of the system over the product life cycle of studio content are vital in the various channels of distribution for revenue growth, efficiency in the supply chain, and brand building.

Flixster has enabled a film-driven, online business in the environment of social media networking data to drive and capitalize on UltraViolet, which makes purchased content available to the consumer on all the devices seamlessly. The CIOs and CTOs are successfully deploying cloud computing and virtual storage to enable consumers to enjoy content whenever and wherever on whatever personal device they desire.

Restructuring for Digital, Mobile, and Social Media

Certain studios have begun to restructure their businesses to achieve alignment of supporting functions for digital distribution of film, TV, and home entertainment in order to maximize revenue in the global marketplace, reduce time to market, and eliminate redundancies in the divisions of the overall business. The coming together of CIOs and CTOs augurs well for the future. While technology operations from filmmaking to delivering digital content have been deemed a core competency, Information Systems is moving up the value chain. Today one wonders whether the CTO and the CIO should report to the COO of a studio. Traditional management of Information Systems by the CFO has yielded dividends in the past in terms of financial control, cost reduction, earnings predictability, and compliance with governmental requirements. It may be opportune to consider restructuring of organizations in a revenue-driven business model for a consumer-centric marketplace.

Has Entertainment Failed Brian Dunn and Best Buy?

by Marty Porter

Hollywood could have done a lot more to help keep Brian Dunn his job.

You don’t need to be reading this newsletter to find out that the Best Buy CEO was shown the door earlier today amidst lousy financial reports and following a blitzkrieg attack by Wall St. analysts.  Growing online sales (aka digital media) was not enough to make up for a decline in TV and laptop sales (aka physical media).  Meanwhile, Apple is devouring the entire consumer electronics category with their own products and their own stores — even though the blue shirts at Best Buy sell about 13% of their iPhones in North America.

It’s ironic too that the hottest CE category (connected devices) are the very products that are breeding the perceived demise of a big box house living in a commoditized, virtual world of mobile devices, apps and downloadable entertainment.

Probably Dunn was too much of an old-school retail guy anyway — having worked his way up from the store level over 28 years.  If Best Buy is going to survive they’re going to need go Apple-style in their stores while they buy time building a digital strategy that the analysts will buy into — while we all, as a collective industry, figure out what we’re going to do when (not if) what’s happening to Big Blue happens to our  own Big Blu.

Dunn’s ultimate ouster started with an article on Forbes.com entitled “Why Best Buy is Going out of Business…Gradually” Read it here.

This was matched by an equally vicious attack published on AOL Finance entitled “9 CEOs who Need to Get Fired”  Read it here.

Wedbush Securities analyst Michael Pachter explained it best in a Bloomberg.com article late last month when he was quoted as saying: “With the Internet and smartphones, we don’t need to shop at Best Buy to figure out which TV or electronics we want. Their solution may be good for 2011 but will be irrelevant by 2014. Technology is going to pass them by like they’re standing still.”

Pachter should have thrown in a few A-words (Apple and Amazon) while he was at it because there’s where all the money’s going — those are the retailers that are successfully fighting the lowest prices at Costco and Wal-mart with an elegant shopping experience combined with anywhere, anytime entertainment.

But remember — as a collective industry — we had a silent pact with all our retail partners; they’ll sell our discs as long as those discs are driving people into their stores.  The fact that Dunn failed at his job doesn’t exactly make us look very good at holding up our half of the bargain.

Business Insider was the first to spot the role of entertainment in Best Buy’s decline when it reported in a recent posting the fact that its  entertainment category (games, DVD, Blu-ray) had dropped from 14% last Q4 to an ugly 20% decline this Q4.

So what do we do?  A healthy physical retail presence for home entertainment is in everyone’s best interest.  A mission of supply chain experts (digital and physical) need to start camping out in Richfield, Minnesota helping shore up their distribution backbone, while the marketing types need to spend some all-nighters creating a host of event-driven special Hollywood-style events for new releases.  Meanwhile, the digital dudes have to accelerate their roadmap for the future — they need to quickly help Best Buy and all our industry’s retail partners build out their digital entertainment infrastructures so they can drive traffic to their new storefronts on the web.

In a world of where a none-company named Instagram gets $1 billion from Facebook — valuation is all about digital strategy.  With Apple’s retail genius Ron Johnson off the short-list of potential execs as he recreates JC Penney, Best Buy is left nothing else by a digital play.  Don’t be surprised when their new CEO comes knocking on home entertainment doors in Hollywood someday soon asking to know how we’re going to help him build web traffic moving forward — and when that day comes, we better have a really good answer — for our customer and for ourselves.

Finding Deeper Insight into the Customer Journey

Here’s a tale of your average DVD-buying consumer:

She’s a fan – with a longstanding love affair with Harry Potter (sorry, have to pick on someone today. Guess that’s you, Warner Brothers!). You know this because she’s a Facebook fan (nearly 43 million of ‘em and counting); she’s clicked-through to the Harry Potter website thanks to a paid keyword search; and, once there, she registers on the site, opening the door to targeted email after targeted email.

And, then she does it – what you want her to do, that is. She purchases the DVD. Hooray! Your marketing efforts paid off! Or, did they? Trouble is, in today’s concept of marketing attribution, marketers are hard-pressed to understand the sway and significance of each marketing message on the ultimate goal – a transaction.

Recent market research by Forrester found that with online marketing budgets growing the need for tools to understand the complex interplay and attribution of mobile, social media, online ads, search and web visits was a high priority for most marketers.

The complexity of today’s customer journey is a story of Big Data Analytics when viewed through the eyes of a marketer. Understanding Attribution means understanding multi-structured data, in big volumes and being able to use sophisticated algorithms to find key metrics for data driven decisions.

Consider this nugget from Teradata Aster, the Big Data Analytics company. They recently shared customer stories for their digital marketing attribution solution. Leading brands such as Barnes & Noble, Gilt Groupe, Insight Express and Razorfish shared their experiences using Aster’s Attribution solution:

• “It is well-recognized that Barnes & Noble has made a profound transformation from being a physical seller of books to a digital technology company. A key component of that is the ability we have gained to leverage ‘big data’ to derive consumer insights that are deployed multi-channel,” said Marc Parrish, vice president of Retention and Loyalty Marketing, Barnes & Noble. “Our customers benefit from our ability to personalize their interactions. We know them, and it shows.” Parrish also stated that “This shift to multi-touch marketing optimization is changing the vendor landscape. Teradata Aster is clearly a leader in moving the industry from the old world of analytic sampling, to the new big data world of complex, multi-factorial customer intelligence.”

Teradata Aster has published a white paper that looks at these challenges and offers some perspectives on how to solve them… take a look by clicking here!

Some more to say about Sony…

by Martin Porter

I’ve been thinking a lot about Stringer stepping down at Sony and the Game Dude (Kazuo Hirai) now put in charge. This corporate tango could actually revive the brand for a next gen of connected, online entertainment.

If I’m reading this move right, Sony of tomorrow will be a front-end for an insanely deep, personalized, digital archive of the greatest entertainment in history, much of which it already owns. The televisions and mobile devices will become commoditized — valued more for how much they learn your voice patterns and gestures than for the features they tote. In other words, consumer electronics will become nothing more than the new physical media in the eyes of the consumer. Commanding an omnipresent library of socially-networked entertainment will be everything.

The Sony that we knew has always been the television division. It’s now bleeding losses, dependent upon competitors for its components, and unable to compete apparently even in the next gen of OLED TV. Stringer is a television guy — CBS through and through — and in an age of Facebook IPOs, broadcast television is so old school.

The Game Dude is beholden to no legacy brand. He aims to be the master of the Internet, not the airwaves. He just so happens to own a record label, a movie studio, and a megamoney TV team — not to mention the next generation of Hollywood filmmaking (i.e., post-film).

A generation of content consumers has been brought up thinking that the Sony PlayStation is a portal to a wondrous world of online entertainment and interactive gaming. They know nothing about a declining hardware brand. They know that it’s all about the network, not the gear — something Sony finally figured it out for itself.

Good move. This is going to be fun to watch.

What will 2012 bring the Digital Video Space, especially in Second Screen?

For the past 6 weeks on my blog located here, I have been focusing largely on Second Screen apps. I have reviewed 22 of the most written about apps that allow you to watch sports with more data at your finger tips, check-in to a show, share your thoughts with your friends and the wider world, find content from multiple sources, control the first screen, engage in commerce, get extreme videophile content syncrhonized to your viewing experience, and help you discover new and interesting content.

I have covered widely publicized apps such as IntoNow, GetGlue, Yap.tv, Fanhattan, zeebox, Clicker, Miso and Umami. I’ve covered a few operator apps, a few sports apps, and a few Blu-ray title specific apps.

I have tried to summarize these apps based on their ability to provide five major feature sets:

1. Simple. The ability to allow control of the first screen.
2. Social. The ability to share your thoughts with others.
3. Seamless. The ability to integrate multiple sources of content.
4. Stimulating. The ability to provide additional information and to enrich your viewing experience.
5. Discovery. The ability to enable you to find new and interesting content based on your preferences.

As we head into 2012 and into CES in a few weeks, I wanted to give everyone an idea of what I have planned:

- I plan to finish another 10-15 reviews and then to summarize those apps for this audience.
- I plan to present the landscape of players in their supporting ecosystem and how they interact with each other.
- I am hoping that many of those apps will present a major refresh at CES and I will review their improvements.

Post-CES, I am hoping to continue to flesh-out this space (there are more than 75 apps now in this space), providing greater insight to the various segments of apps that are forming to specialize around sports, synchronized content, social communication, etc. If possible, I hope to help bring together a conference specifically on this subject.

I think 2012 will be the year the majority of tech-savvy consumers (esp. 13-24 year olds) look back and say, “That was the year when my TV viewing experience changed.”

Let’s hope we can figure out how to be a part of that and provide more value to our consumers, our content brands, and our shareholders.

Happy New Year!

PHYSIGITAL: Happy Birthday Burbank Home to Hollywood’s digital future.

It was during the first Burbank Think Tank that MESA held at the Burbank Marriott in June.  Maybe it was the cocktails? Or it could have been the anxiety of going on stage later that evening impersonating Neil Diamond.  Still, here was my thought:
“I’m sitting here at the hub of the next global entertainment complex.  The players in this very room are the ones in charge of our industry’s digital future.”

Heavy stuff.  There was Disney on stage, with Warner towards the back; NBC/Uni was there, as were Deluxe, Technicolor and so many others.  It dawned on me that these Burbank “locals” are knee deep in making moves that will ultimately create a sustainable and infinitely scalable (and did I forget highly profitable?) future for the moving images industry for decades to come. And it is all taking place in, of all places, Burbank — the butt of so many jokes by NBC comedians who knew it so well and made it a punch line for everyone, anywhere with a TV set tuned to Johnny Carson or Laugh-in.

Burbank, celebrating its centennial this year, calls itself the “Media Capital of the World.”  And, I’m sure, at one time, that defined it, though the moniker puts Burbank in direct competition with New York and London for the ultimate distinction.  Regardless of who may stake the “media” claim, when movies and home entertainment were invented, Burbank was there.

Now, if anything, Burbank is the “Digital Media & Entertainment Capital of the World.” It’s the junction for an international network of secure digital file exchanges that will link Bangalore to Burbank (not surprisingly a slogan from a Deluxe Digital Studios advertisement a few years back).  All within a quiet community where 100,000 people a day come to work and help create a world that everyone, everywhere calls “Hollywood.”

So what if Hollywood gets all the credit?  Burbank gets the job done!  Not surprisingly, Burbank is home to hundreds of production, creative and technology service providers who are building the backbone for these systems on behalf of their customers.  Burbank maps out the entire digital supply chain and content delivery ecosystem for the studios, their partners and ultimately the consumer.  Sure, Cupertino, Culver and Redmond may hold the last 10 feet through their CE devices but the content that appears so easily in the living room has undoubtedly been conceived, crafted or finished somewhere along the way by a Burbank facility.

Which is where the true opportunity resides.  Because we’re all here (there?) in Burbank we have a chance — a once in a lifetime chance — to really get this thing right.  We can grab a bite at McCormick’s or Morton’s, at Mo’s or historic Bob’s Big Boy on Riverside.  We can have a drink at the next MESA Think Tank.  We can talk, share, interface, brainstorm and connect the dots so that we’re all working lockstep in the same direction — delivering consumers the best entertainment products at the best possible price.
Burbank is the hub.  It’s the hotbed.  It’s home sweet home for our digital future.  Bounded between the Ventura Freeway and I-5 are the best and brightest who are enabling instant and omnipresent entertainment.

First of all we need to figure out is how to tag every digital file with: “Made in Burbank”… though I guess the gang “over the hill”  may have a problem with that, huh?

MESA Executive Director, Guy Finley, is noted for his repertoire of Pink Floyd songs as sung by Neil Diamond.

We Are All Netflix!

By Marty Porter

One of the smartest men in our industry has made a huge public misstep. But don’t be smug. We’re all Reed Hastings. We’re all having a helluva time dealing with digital. We’re all Netflix.

Over the past few months, roughly 14 million Netflix DVD subscribers have been characterized as out of touch and old-fashioned. Those DVD subscribers who also use Netflix’s streaming service felt the company had told them to take a hike in price or just take a hike.

Well, over eight hundred thousand of them took that hike in the last quarter. In an age where the Tea Party has demonstrated the empowerment of a community thanks to social media — at the same time as Wall Street is being Occupied — our industry’s customers are telling us something loud and clear:

“Don’t mess with the DISC!”

And yes, we’re all messing with the DISC. Living in our Hollywood bubble we’re becoming so enamored with the “Next Big Format” that we’ve stopped selling and supporting the only product that can pay the bills to get us across the digital finish line. Let’s be honest, we’ve been screwing up this “format transition” for years. In music we let the CD prematurely kill the audio cassette and we probably could have handled the video cassette to DVD transition a lot more profitably. And when we moved to high definition…well, you know that story all too well.

That’s because (admit the truth) we’re all personally “going digital” so fast that we forget that we’re a minority customer demographic — a fraction of what the market really demands. Admit it — the majority who are reading this article really love getting Netflix streamed (it’s a streaming deal) and more and more of us are leaving those red envelopes unopened for weeks on end before sending them back.

In spite of all of us, Blu-ray is a success. Are we so blinded by our own behavior patterns to not celebrate this fact? It is the only form of physical media that is digital — which will give it legs! Newsletters, magazines, even CDs aren’t connected devices. A Blu-ray player is.

What’s more, cool people are developing cool things that will make the format even cooler. If only we paid a little more attention to it, allocated more resources for innovation and put the studio smarties to work on making it better.

That’s why MESA, in cooperation with DEG, is holding the first Blu-Tech conference on Dec. 7 at the Universal Hilton. It’s time for all of us, once again, to take a reality check of all the smart and innovative things that are going on behind the scenes to serve a product that makes us money — a product that our end customers tell us they enjoy.

Join us at the conference. For one day, at least, let’s Occupy Burbank with the message:

“We are the 14 million. Don’t mess with the DISC!”

Is Steve Jobs The Second Coming? Messianic Visions from a Fever-Induced Haze

By Colleen Quinn

I write this from the room of a lovely hotel, where I’ve just been booted from a customer meeting (for which I busted my tail to prepare) because I am too ill. Ironically, I’ve been ill for a couple of days—like brutally ill—but not ill enough to score a reprieve before making the 120-mile drive. My throat is raw and swollen, fever, chills.

My house is like a Petri dish, so I’m mildly grateful to be away from it at the moment. I’m not the only one sick. And so, until now, there we’ve been, in a classic Spanish-style “bungalow” (read: tiny), all sprawled out. You’d think we’d be miserable. And, we would be— but we’ve been saved from ourselves (again) by a higher power. Steve Jobs.

Let me explain. We are a bit religious about the man in our house for many reasons: 1) He’s adopted—so is my son! We love great role models. While most toddlers could name purple dinosaurs, my two-year-old could name the CEO of Apple; 2) He’s a survivor—we think his brave and sometimes public battle with illness will come to benefit survivors everywhere; and 3) He’s just… insanely… brilliant!

All this said, I had cheaped out on buying a new iPad. I knew the “bottom-of-the-line” wouldn’t have enough storage, but I couldn’t bring myself to fork over the $800+ for the best. So, I did nothing but stew in my own envy as friend after friend took the plunge, while I boasted about my newfound frugality.

Then, on Wednesday, we cracked. Under the auspices of needing to stay on top of new media trends (it’s what we do professionally), we finally bought the darn thing.  And, as if the fates were somehow in the know, the moment we walked through the door of our television-less house with our new Apple baby, it happened. This blanket of fever descended… and within hours, we were all incomprehensibly sick.

Enter Steve. Read more

Is the CTO Hollywood’s New Box Office Star?

The disruptive nature of technology is well known to Hollywood, which reinvents itself every time a new tech star rolls into town. This time around with digital, however, the town’s response from diverse sources is slow, deliberate and even confusing. Why is the entertainment industry so slow to react to a technical revolution that promises mega-billions of new revenues, a direct route to the consumer, and a marketing bonanza in free media coverage?

There are many things contributing to this atypical slow and steady approach. Most significantly, the mode for monetization in the digital world remains a challenge if not a mystery. The ease of digital piracy, particularly P2P, has the content holders on the defensive. The disastrous impact of making the wrong moves (or non-moves) as in the music industry is a potential disaster movie scenario that cannot be shaken and needs no sequel. The structural make up of the entertainment industry, with its segments of motion pictures, TV network, home entertainment, music and video game, and further compounded by the brands or franchises within, have created the proverbial problem, “Who is going to bell the cat”?

Not familiar with that saying? It’s an English colloquialism that comes from an Aesop’s Fable about a group of mice that decide to tie a bell around the neck of a cat so they know when it is near.  It’s a good idea.  But no mouse is willing to step forward to take on this dangerous task — so nothing gets done.

Who is going to put their job on the line with a risky strategic digital move at a time when monetization of digital content remains a major question mark? Who is going to break down the silos within a studio?

The strategic desire of content owners to monetize their assets in the early stages of the product life by licensing it to the delivery mechanisms has led to the formation of the middle party, the content aggregators. Furthermore, delivering content to consumers through a plethora of devices – PC, TV, cell phone, smart phone, PDA, set-top box, game consoles — has given rise to multiple channels of distribution. Suddenly, land-based as well as wireless carriers who already have a direct relationship with consumers but no background in entertainment are taking the lead in enabling consumer gratification in the global digital entertainment marketplace.

Some of the Hollywood studios are overcoming the organizational constraints of their corporations with first-step realignments of their physical and digital businesses. Late last year, former Disney Home Entertainment boss Bob Chapek took on the expanded role of President, Distribution for Walt Disney Studios, where he was made responsible for developing distribution strategy and overseeing the delivery of all motion pictures and television content, across theatrical exhibition, home entertainment, pay TV, digital formats, and other new media. Similar shake ups have taken place at Warner Brothers and Sony Pictures.

Despite this early positioning, there are intrinsic constraints for companies migrating from the physical to the digital delivery of entertainment content. On one hand, extending the life of DVD with Blu-ray has to be the primary focus for home entertainment companies – since that’s a consumer-approved technology that, despite recent sales woes, is still keeping the lights on at the studios. For companies with roots in content distribution – telecom carriers, CDNs and technology service provides—there is nothing to lose in taking bold, immediate steps into the brave new world of digital content management and distribution; moreover, their core competencies enable them to accelerate the transformation relatively easily.

What is most surprising is the early success of consumer electronics companies who, by connecting their devices to the web, have produced an entirely new consumer experience – one in which the device itself replaces traditional physical media by becoming the new physical media.  The souls of each of these new devices is software and, let’s face it, software expertise has never been a strong suit of Hollywood, which is more comfortable dealing with a temperamental actress or director than a brilliant, albeit offbeat, engineer. Customer relations management (CRM) in the Internet world is another challenge for Hollywood.  The studios’ customers have never been the consumer, but the big box houses, movie theatre moguls or broadcast/cable networks.

Monetization will cease being an elusive goal for Hollywood when it focuses on software as a necessary ingredient in the content production process; when it places new-found respect and decision-making powers on the CTO and CIO executives already on staff; when it encourages intra-studio technical collaboration.  And clearly last year’s announcements of the industry consortium Digital Entertainment Content Ecosystem (now UltraViolet) and Disney’s Keychest are steps in the right direction. Further involvement of digital service providers and distribution agents in the establishment of standards and best business processes for the creation of Cloud Hollywood will help achieve the goal driven by these marketing visionaries.

Cloud Hollywood will be characterized by more collaboration than backstabbing. The quintessential take-no-prisoners show biz deal warrior will be replaced by team players schooled in the art of getting along and working together within standards body-making technology consortiums. The industry has to agree on DRM solutions and more CE devices have to incorporate standards for interoperability. The plethora of content titles, formats and devices have exacerbated the workflow of digital service providers, which has to be automated. The proven principles of supply chain management have to be applied to the next-generation digital supply chain without letting the legacy issues become a liability.

There’s simply too much to lose from a digital format war. With the war between Blu-ray and HD DVD still blamed for valuable lost time  (billions) during the sunset years of physical media, reconciliation between DECE and Keychest is inevitable.

So, let the geeks lead the way to digital. This is their turn on the red carpet.

The Truth About Security Audits

With so much to lose doesn’t it make sense for the entertainment industry to agree on a single vendor security auditing standard?

Something is broken in the content security world and nobody has figured out how to fix it.  Ask any post house, replicator in town — anyone who’s handling invaluable pre-release content on behalf of the studios, game companies or record labels.  They’ll tell you that they are being audited ad nauseum by studios, industry associations, consultantcies, etc.  One post house in town told me that it performed over 100 independent security audits last year alone, with serious cost in time, productivity, and auditing fees.  There’s CDSA (which I run), MPAA, Microsoft, ISO, plus studios that also conduct their own review of a vendor’s content security procedures.  A vendor will successfully gain accreditation or review by one body just to be called the next day for another audit by somebody else.

Don’t get me wrong — security audits are essential.  In fact, standards need to get tighter and everyone needs to huddle around best practices and proven solutions that plug the possibility of a costly security breach.

But redundancy simply doesn’t make sense.  It costs everyone money.  And when it comes to security there’s simply no money to waste — especially with the new front exploding in the world of online piracy that could sink the entire ship if we’re not careful and if we’re not spending our money wisely.  Paramount CTO Chris Carey’s presentation on the true cost of Internet piracy at ESCA EDGE last June was a wake-up call for the home entertainment industry.  It made it clear that a decade of trying to put disc pirates out of business and making sure that a colorist doesn’t walk out of the post house with your next blockbuster on a hard-drive in his pocket, needs to advance to the equally (and potentially more) pressing issue of pirate cyberlockers aided by search engines and government agencies who drain the value of our Intellectual Property.

Obama had to make a tough decision.  How did he hold onto Iraq while he moved resources to Afghanistan?  Our industry has to make a similar choice.  How do we secure the pre-release media front while we get our head around putting online pirates out of business?

But there’s more — more vendors than ever before to manage, audit and secure.  It used to be you only needed to audit your post houses and your replicators — large, well-managed international corporations that already had security systems and risk management policies in place.  But the connected world and new, desktop technology tools have led to a proliferation of vendors throughout the world.  Captioning is being done by a specialist in his Eastern European home, while music is being mixed in a basement studio in Brooklyn, and game code is being written in the backwoods of the Canadian rockies.  How do you audit these remote and often small corporate partners?  Electronic Arts CISO Spencer Mott has a solution he describes on page 26 of this Journal.

Consolidated security audits is one way to save. Let’s dump all the standards into a single database, analyze the gaps, delete the overlap and come out with a single checklist that everyone agrees to and that can be executed by a single auditing body that can do the job  best in the most cost–effective way.  And let’s find an acceptable way to share the findings within the parameters of the law.

Let’s finally clean up our act on this still-essential legacy battle so we can focus resources and energies on the troubles ahead.

Watershed Moments In Internet History: Mark Your Calendars. Google Won.

By Colleen Quinn

June 23rd, 2010. 6/23/10. It’s a real shame the numbers don’t have more of a ring to them. A verdict on the 10th of October (e.g. 10/10/10) might be more resonant. But, even if the date doesn’t roll off the tongue, mark my words: this is a date which will live in infamy for content distributors and content owners everywhere.

This is the day Google won. In a potentially landmark decision (though one with many, many appeals in its future), a federal judge in New York threw out Viacom’s $1 billion copyright infringement lawsuit against Google’s YouTube.

It’s a long story—and one made-for-Hollywood with its subterfuge and plot twists. But, in short, Viacom sued Youtube for boat loads of money for copyright infringement– that is, knowingly posting copyrighted materials to the site, without financial remuneration to the rights holders.  In one of the truly major tests of the “safe harbor” provisions of the Digital Millennium Copyright Act, the judge found that YouTube/ Google were not liable. Title II of the DMCA generally protects a Web site from liability for copyrighted material uploaded by its users as long as the operator of the site takes down the material when notified by its rightful owner that it was uploaded without permission.  So, in the judge’s estimation, YouTube met this test.

But, here’s the good stuff: the case evidence dated back to some pretty shady pre-Google-acquisition days, and highlighted alleged tactics that pointed fingers at YouTube’s founders. Equally bad behavior was alleged on the part of Viacom, who was accused of hiring a clan of promotions companies to upload “leaked” Viacom content to the site under pseudonyms. Naughty, naughty.

The fact of the matter is that YouTube—and YouTube-like services—are the way of the future in the eyes of the consumer. And, while no one can say YouTube is perfect in its attempt to “protect” content-owners, they surely seem to meet the DMCA provisions with the processes and technologies they’ve implemented to alert copyright owners. I just listened to a fascinating TED Talk last week from Google’s Margaret Gould Stewart, where she outlined YouTube’s methodologies to alert content owners to rights infringements.

YouTube has created a massive registry for rights holders where they can upload reference copies of their content. Then, YouTube runs EVERY piece of newly uploaded content against that registry—analyzing picture, audio, and more—to identify matches. The system is so sophisticated, allegedly, that it can account for quality degradation, video effects (slow-motion or speed-up), clip-extracts and more. When a match is found, the system alerts the copyright owners, who can then block the content altogether, or monetize it through advertising and product promotion.  It’s a fascinating process—and the technology was so, well, cool that I was awestruck.

Then, I waited a few minutes, and started to scoff at this notion of protection for content owners. Perhaps it’s all my years having been a “content creator” and working for and with content owners. But, I couldn’t beat away the nagging question: why is the burden on the rights holder? And, I assure you, that same question was likely one of the largest on the minds of Viacom execs as they embarked on a now 4-year journey to take-out YouTube.  It’s a large burden indeed.  To protect your content, you must encode, upload and capture metadata about EVERY piece of content you own; you must think through and capture your protection policies about that content; and, you must review notifications when protected content is uploaded to determine the desired response (e.g. remove vs. monetize). Whipping out my calculator here, I see that amounts to a load of operational cost, resources and time for already strapped businesses.  Imagine similar and probably more unwieldy processes taking place across other UGC aggregation sites. I’m not sure how that scales, even in the face of the revenue upside.

So, here I leave you with two sides of the coin. I should say that I am pleased with the verdict. And, I am, for the most part, impressed with YouTube’s processes to screen content, though I hesitate to see YouTube in the same beatific light they themselves suggest. There’s no question that YouTube and rights holders need to be, more than ever, partners in this eco-system. And, I’m not so sure we needed a judge to even confirm that. But, confirm he did. Here’s to 6-2-3. A milestone, indeed.

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