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The central theme of this edition of the M&E Journal is â€śConnecting the Dots:Â Collaboration and Connectivity in Media & Entertainment.â€ť 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 â€“ 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. Googleâ€™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 Appleâ€™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-Martâ€™s Vudu and Best Buyâ€™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, â€śmost Americans own a device that allows them to easily connect to the Web â€“ 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.â€ť 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 deviceâ€”personal computer, laptop, smartphone, or tabletâ€”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 â€“ sourcing, manufacturing and distribution;Â (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 â€śInnovatorâ€™s Dilemma,â€ť presents the bitter truth that, â€śWell managed companies that have their competitive antennae up, listen astutely to their customers, invest aggressively in new technologies, and yet still lose the market dominanceâ€¦.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.Â Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently more convenient to use.Â Managers faced with disruptive technologies fail their companies when organizational forces overpower them. â€ť
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.Â 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.Â 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.April 22, 2012
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 â€” film, TV, games, Blu-ray discs, and DVDs â€” 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.Â Â Â Â Capture of big data of social media and enabling near real time decision making;
2.Â Â Â Â Analysis of social media data to influence purchases of products and services for enhanced entertainment experiences;
3.Â Â Â Â Establishment of standards for unique product and service identification and metadata to be used by trading partners;
4.Â Â Â Â Security and privacy requirements in the network;
5.Â Â Â Â Development of consumer-centric content for the web;
6.Â Â Â Â Establishment of B2B networks among the growing number of supply chain partners in the digital world; and
7.Â Â Â Â 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.August 26, 2010
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 townâ€™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, â€śWho is going to bell the catâ€ť?
Not familiar with that saying? Itâ€™s an English colloquialism that comes from an Aesopâ€™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.Â Itâ€™s a good idea.Â But no mouse is willing to step forward to take on this dangerous task â€” 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 â€“ PC, TV, cell phone, smart phone, PDA, set-top box, game consoles â€” 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 â€“ since thatâ€™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 â€“ telecom carriers, CDNs and technology service providesâ€”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 â€“ one in which the device itself replaces traditional physical media by becoming the new physical media.Â The souls of each of these new devices is software and, letâ€™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.Â The studiosâ€™ 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.Â And clearly last yearâ€™s announcements of the industry consortium Digital Entertainment Content Ecosystem (now UltraViolet) and Disneyâ€™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.
Thereâ€™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 timeÂ (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.August 12, 2009
Tesco and Borders Execs to Address Changing Product Lifecycle
Andy Adamson, Merchandise & Supply Chain Manager, Borders UK
Rob Salter, Category Director for Entertainment, Tesco
Leading entertainment retail executives will come together on Day 2 of this year’s ESCA Europe to share their experiences and views on the changes impacting the way they do business. A range of panelists will discuss what the home entertainment industry needs to do to respond to the changing product lifecycle, shifting consumer preferences and the migration to BD and online content delivery. So far, the session will feature insights and contributions by: Andy Adamson, Merchandise & Supply Chain Manager, Borders UK and Rob Salter, Category Director for Entertainment, Tesco.
ESCA Europe, the entertainment retailing and supply chain conference, arrives in London this September with a focused, expert program centred on the European marketplace, designed to help build efficiencies in the delivery of physical media and forge the future for the delivery of digital media.
HEREâ€™S A QUICK SUMMARY OF THE PROGRAM SO FAR:
â€˘ Understanding the Current Challenges in the Entertainment Supply Chain
â€˘ Analysing Consumer Behaviour and Expenditure Patterns
â€˘ In Search of Supply Chain Excellence
â€˘ Taking Retail Effectiveness to a New Level
â€˘ Going Green Has Financial Gains
â€˘ Getting the Blu-ray Message Across in Europe
â€˘ Keeping Pace with Growing Blu-ray Demand
â€˘ Getting Ready for Market: The Lifecycle of a Blu-ray Project
â€˘ Successful Anti-Piracy Measures Help Legitimate Business Growth!
â€˘ Panel Discussion Amongst Wholesalers & Distributors
â€˘ Technology and Innovation Will Drive Future Market Growth
â€˘ Changing Retailer Wants & Needs
â€˘ Panel Discussion on Emerging Markets
â€˘ Itâ€™s More Than A Game – Understanding the Supply Chain Characteristics
HEREâ€™S A PRELIMINARY LIST OF PANELISTS & PRESENTERS:
Andy Adamson, Merchandise & Supply Chain Manager, Borders UK
Riccardo Benedetti, Head of Business Strategy and Digital Development , Nu Metro Entertainment
Jonathan Brayshaw, Administrator DEG: The Digital Entertainment Group Europe
Jim Cardwell, Entertainment Industry Consultant
Lavinia Carey, Director General, British Video Association
Paul Chesney, Vice President, International Operations, Universal Pictures International Entertainment
Aodan Coburn, Executive Vice President, Worldwide Operations of Sony Pictures Home Entertainment
Julian Day, Managing Director, DGP Post Production
Garry Elwood, Home Entertainment Business Director, Gardners Books
Seth Hallen, President, Testronic Laboratories U.S.
Halli Kristinsson, Vice President, Anti-Piracy Operations for EMEA, MPA
Darren Linton, Vice President, International Marketing, Universal Pictures International
Ron Lund, CEO, Silk Route Global
Edwin van der Meerendonk, Vice President of European Supply Chain, Walt Disney Studios Home Entertainment
Dan Miron, Executive Vice President, Worldwide Supply Chain Management, Warner Home Video
John Quinn, Executive Vice President, Worldwide Operations, Warner Bros. Interactive Entertainment
Rob Salter, Category Director for Entertainment, Tesco
Chris Skarratt, Managing Director, Petrol Digital Media
Antony Smith, Business Director, Nimbus Disc & Print Services
Amy Jo Smith, Executive Director, DEG: The Digital Entertainment Group
Barry Smith, Director of Sales, West10 Entertainment
Peter Staddon, Executive Vice President, Deluxe Digital Studios
Andreas Thran, CEO Creative Services, Imagion AG
Dave Warrick, General Manager, Entertainment and Devices Manufacturing and Supply Chain Group, Microsoft
C. J. Wehlage, Director of Research, Hi-Tech and M&E, AMR Research
Larry Wilk, Vice President, Worldwide Operations, Walt Disney Studios Home Entertainment
REGISTER NOW AND GET TWO CONFERENCES FOR THE PRICE OF ONE
All attendees who register before September 1 will receive exclusive password access to all audio files, Powerpoint presentations and videos from last June’s ESCA USA — it’s like getting two conferences for the price of one.
CALL FOR SPONSORS
Prime sponsorship opportunities are selling fast.
In Europe contact:
+44 1582 500169
In the US contact:
Linda Buckley Bruno
+1 (323) 617-9429
To see the Part 1 of my blog click here
To see Part 2 of my blog click here
At G3 after the Wal-Mart executive articulated the retailerâ€™s goals for sustainability and the NGO BSR spokesman painted the overall landscape for corporate social responsibility, the publisher Warner Brothers Interactive Entertainment, the Packaging and Media supplier AGI and the Distribution Company Ditan came together to begin a dialog to understand the challenges and explore solutions in a unique environment organized by MESA and EMA.
The video game industry panel consisted of Lisa Lake-Fernandez, National Sales Manager, AGI Polymatrix; John Quinn, Executive Vice President, Worldwide Operations, Warner Interactive; and, Jeff Leitman, Vice President, Business Development, Ditan Distribution. Moderating the panel was Cody Sisco, Manager, Advisory Services, Business For Social Responsibility (BSR).
Â The supply chain was represented by the following enterprises:
AGI Media, a unit of MeadWestVacoâ€™s Consumer Solutions Group, is a global provider of media packaging and services.
Warner bros. Interactive Entertainment over a decade has produced franchises like Harry Potter, The Matrix, Scooby-Doo, The Powerful Girls and Looney Toons to name a few.
Ditan Corporation has been an agile and responsive logistics management solutions provider specializing in Retail Product Lifecycle Management since 1994.
The potential to pluck a low hanging fruit is always a powerful energizer in any formidable pursuit and Darin Dickson provided one very compelling one. Based on video game industry software sales of about 268 million units in 2008, Dickson pointed out that a case weight of 60 grams (under 50 grams for NDS/PSP) or representing an average weight reduction of 5 grams per case, savings in plastics (Polypropylene) would amount to 1,700 Metric Tons per year or the equivalent weight of 316 African elephants. This will generate $3.5 million in material cost reduction and yield additional benefits in transportation cost and carbon footprint reduction.
Lisa Lake-Fernandez mentioned that the focus of AGI Polymatrix is to â€śachieve 20% reduction in the weight of DVD packaging in a cost-effective and timely manner so that the automated machines at the replicators run seamlessly.â€ť She continued, â€śWe have been named to the Wall Street Sustainability Index for 5 years in arrow and adjudged the best of breed last year. In search of new products we are guided by the realization that heavier is not always better. Polypropylene purchase last year was reduced by 9.2 million pounds, reducing carbon emissions significantly. New controls incorporated in molding machines have reduced energy consumption by nearly 20%. Furthermore, the addition of a natural enzyme has made the plastic packages biodegradable in a landfill where the micro-organisms unlock its activity.â€ť AGI is engaged in studies to utilize PLAs for lower weight packaging but the brittleness of the living hinge poses a serious detriment after 100 uses.
Jeff Leitman stated that Ditan Distribution has three specific goals for the enhancement of sustainability. â€śHaving been a Starbucks supplier has enabled us to adopt corrugation which is 90% recycled for many years. Optimization and standardization of the master carton configuration promises to be a major effort for the company, going from a 12-count to a 30-countâ€ť, explained Leitman. Furthermore, â€śretrofitting automated packaging machines for thinner Amaray cases, proceduralizing lights turn-offs and retrofitting light bulbs with energy-saving ones have yielded significant benefitsâ€ť, added Leitman.
Â John Quinn, a former veteran of the DVD industry, explained how the DVD industry had launched six task forces to address the issues of Metrics, Replication and Distribution, Packaging, Retail POS packaging, Transportation and Education/Communication. Darin Dickson had earlier pointed out that defining the relevant supply chain for the measurement of the carbon footprint was necessary as the DVD industry had done, as defined in Exhibit 1 (Source: Wal-Mart and 20th Century Fox). While the DVD industry excluded film production in their carbon footprint analysis, the video game industry could also exclude game development and production.
John Quinn, head of EMAâ€™s Operations Committee, explained that â€śstandardization of shipping cartons and optimization of inner packs is an initiative being pursued comprehensively by addressing every part of the supply chain of the video game industryâ€ť. This certainly augurs well for positively impacting the carbon footprint of video games. He pointed out the favorable impact on the carbon footprint if shipments of video games could be combined with DVDs and Music to a retail store or distribution center where practical in case of one supplier or multiple ones from the point of distribution. Warner Bros. Interactive Entertainment is already consolidating games with DVDs. Obviously systems and business practices have to be re-engineered in the total supply chain to achieve consolidation of products.
Lisa Lake reminded us â€śthe risk is not partnering with our customers to provide sustainable packaging solutionsâ€ť. Mark Fisher expressed the secret of successful innovation being the 3 Cs â€“ CoCompetition, Collaboration and Cooperationâ€ť. When you recall the Wal-Mart fact disclosed by Darin Dickson that â€śtheir direct impact on the total carbon footprint is only 8% while the rest (indirect â€“ water, marine, agriculture, packaging and factories) have a 92% share, leads to the inference that no one company can solve the problem of sustainability in the supply chainâ€ť.
I left G3 realizing that the question Lee Scott, Chairman of the Executive Committee of the Board of Directors, Wal-Mart Stores, Inc. had asked in his 21st Century Leadership Speech in 2005 has us pondering as well, â€śWhat would it take for Wal-Mart to be that company, at our best, all the time? What if we used our size and resources to make this country and this earth an even better place for all of us: customers, associates, our children, and generations unborn?â€ť
There are many more unanswered questions that you can help answer.
How will the top leadership, the CEOs, of the companies attending, the stakeholders of the video game industry, make it their priority to consider the pursuit of sustainability as a strategic objective?
Considering the parents of the two major first party suppliers of video games, Sony and Nintendo, are in Japan, how will a bridge be built across the Pacific to achieve end-to-end alignment.
If it makes economic sense to determine the carbon footprint of the video game platforms, how do we get publishers to engage in a collaborative effort for efficiency?
Knowing Wal-Martâ€™s Packaging Scorecard Goals, do we need goals for individual companies or for the industry as a whole?
Realizing that the enormous task of sustainability best begins with employees within an enterprise, how do we tap into it? Do we have to have the equivalent of hurricane Katrina?
How do we educate ourselves to deal with this enormous challenge?
I believe G3 has produced a culture of â€śTranscendent Leadershipâ€ť as a willingness by those with functional or company responsibilities to explore solutions that benefit those far beyond the decision makersâ€™ own departments or companies. What a relief to be told by the wise and experienced that we do not need to reinvent the wheel or increase our costs. So let the dialog continue with a commitment to leave a better world for future generations.
Chief Strategist, MESA
To seeÂ the first partÂ of my blog about the Greening of the Gaming Industry click here
Defining the broad issue of Corporate Social Responsibility (CSR), Cody Sisco, manager of Advisory Services of Business for Social Responsibility (BSR), focused on sustainability in terms of how the video game industry can learn from collaborative endeavors in other industries, such as software, consumer electronics, computers, sporting goods, retail and transportation.
At the G3 Summit, publishers, distribution companies, packaging companies, in store merchandisers, media, management consultants, academia and a retailer received an insight from an NGO as they search for the steps that need to be undertaken to develop sustainability as a core competency.
In the last decade I have noticed the transformation of Non-Government Organizations from waging a war on the profit of motive to one where profit is the driver of broad social objectives. And in case of the emerging business strategy of sustainability, NGOs are playing a very constructive role, such as BSR, Carbon Disclosure Project (CDP), Environmental Defense, National Audubon Society, Sierra Club, The Conservation Fund, to name a few from the hundreds of such pioneering organizations. In addition to be a resource for knowledge and case studies, an NGO has become a catalytic agent for certain global initiatives.
BSR, a leader in corporate responsibility since 1992,works with its global network of more than 250 members to develop sustainable business strategies and solutions through consulting research and cross-sector collaboration. With six offices in Asia, Europe, and North America, BSR leverages its expertise in environment, human rights, economic development, and transparency and accountability to guide global companies toward creating a just and sustainable world.
Sisco minced no words in pointing out that Sustainability is a critical element of the overall Corporate Strategy Responsibility (CSR) of an enterprise. â€śEnvironmental management is becoming a business priorityâ€ť, he stressed, in a world where there is a compelling â€śneed to balance social expectationsâ€ť. He stressed that anticipating shifting attitudes related to media / content issues (privacy and free expression, protection of minors, diversity, negative / positive impacts of use) are essential. Building a case for sustainability, Sisco impressed on the gathering that â€śan enterprise has to respond to new regulation, customer requirements and cost pressuresâ€ť. He further emphasized, â€śBenefits of employee engagement will promote attracting, retaining and motivating a talented workforceâ€ť. The ultimate benefit becomes â€śbrand protection: ensuring responsible marketing practicesâ€ť, he said.
Presenting a business case for pursuing sustainability in the gaming industry, Sisco analyzed the CR Trends in the Technology Industry, which have enormous implications and are receiving favorable response. Sisco believes, â€śConvergence in consumer products has increased the need for greater industry and supply chain collaboration and opportunities exist to advance economic development and expansion to new markets.
Intersection between ICT and energy is enabling industry collaboration to understand and reduce climate change impacts and shift from environmental risk to performance and innovation. The growing phenomenon of excess packaging and e-waste is challenging product stewardship, design for environment and raising questions around producer responsibility. Product use & media impacts have been realized to be broad when you consider 1. Risks and opportunities of media issue advocacy, 2. Censorship and/or voluntary content standards, and 3. Safety standards around issues such as driving while texting.â€ť
Sisco suggested that human rights in the supply chain require that we address internal worker issues such as safety & hours/wages, collective bargaining, and child labor, apply lessons learned from other sectors (e.g. retail) and engage with local communities.
He described supply chain collaboration initiatives in several industries in terms of tools, sample participants, impact, electronic tools for Accountable Supply Chains, standardized codes. Highlights of such initiatives are the following:
EICC, Electronic Tool for Accountable Supply Chains has achieved a standardized code and implementation for labor and environment in the electronics supply chain.Â Â EICC companies also participate in Project De-Carbonizing, approaching the supply chain using the Carbon Footprint Tool that has established standardized carbon footprint data for electronics suppliers. Members of this EICC consortium are CISCO, Dell, Flextronics, IBM and Intel.
Clean Cargo, Marketing Group of Nike, Maersk, UPS and Hapag Lloyd has conducted an Environmental Performance Survey and established Standardized environmental performance data for ocean carriers.
Beyond Monitoring, a collaborative group of Nordstrom, Dell, HP, Gap and Wal-Mart, is using the tool of Continuous Improvement Diagnostic to standardize approach to assessing supplier management systems for working conditions and environment.
Project Her, consisting of Nordstrom, Timberland, Columbus and HP is focused on a Training Curriculum and is pursuing establishing a Flexible Project to improve women factory workersâ€™ general and reproductive health with demonstrated ROI.
Here are the questions Sisco challenged us all to answer:
1. What are the most important sustainability issues for your company? Why?
2. What are your plans to become more energy efficient / “low carbonâ€ť?
3. What are your plans to reduce packaging or use renewable materials?
4. Have you thought about the sustainability risks and opportunities that arise from changing business models? and
5. Have you thought about your company’s responsibilities to respect human rights?
So are you Reactive, Engaged or a Leader in the journey for Sustainability?Â Let the Q&A begin!
Chief Strategist, MESA
G3 â€“ The Green Gaming Gathering, proved to be an unprecedented summit of the video game industry publishers, retailers, service providers, NGO, packaging companies, research organizations, management consultants and thought leaders. The stakeholders of the industry who had come together on June 1 in Burbank under the auspices of MESA and EMA, exchanged ways to collaborate to address the unprecedented challenge of ensuring the sustainability of the environment for our natural assets are depreciating and global warming threatens our long term quality of life. The prevailing consideration was that the business world and the natural world are inextricably linked.
Darin Dickson, buyer of video games and PC software for the Wal-Mart, reminded the executives of the commitment the former President and CEO of Wal-Mart Lee Scott had made in 2005 “to be supplied 100 percent by renewable energy; to create zero waste; and to sell products that sustain our resources and the environment”. I remember the pioneer of sustainability; Lee Scott had argued that “being a good steward of the environment and being profitable are not mutually exclusive. They are one and the same.” A 15-year veteran of the retailer, having handled DVDs and video games, Dickson explained how the employee response to the Katrina hurricane at a grassroots level inspired the CEO of the behemoth mass merchant to make â€śSustainabilityâ€ť the cornerstone of the 21st Century Leadership of the enterprise.
Dickson enumerated the specific goals of Wal-Mart as:
* Double our fleet efficiency by 2015 from 2005 levels
* Reduce GHG from existing stores, clubs and DCâ€™s by 20% by 2012
* Send zero waste to landfill in the US by 2025
* Reduce global plastic shopping bag waste by an average of 33% by 2013
* 5% packaging reduction by 2013
* Make the most energy intensive products 25% more efficient, and
* Create scalable end-of-life programs for used electronics”
In his illuminating and solution-driven speech, Dickson suggested considerations for the video game industry in the broad areas of hardware, software and accessories. He demonstrated how Energy Star Standards, RoHS compliance, product size optimization and packaging reconfiguration could lead to significant impact on sustainability. Citing specific successes achieved in the DVD industry, in the area of software he recommended examination of case and printed material weight reduction, recycled materials and sustainable materials usage, slip sleeves and adoption of guides/instructions. From his holistic approach, he identified that accessories offer major improvement opportunities when you address package size, “Vampire” energy chargers, elimination of protective master packaging and utilization of recycled materials.
A major take away for attendees was the acknowledgement made the Wal-Mart executive that achieving sustainability cannot be the sole responsibility or opportunity of an enterprise and low hanging fruits exist today where solutions exist and costs of change do not have to increase. As a matter of fact the creation and support of Sustainable Value Networks by the retailer is an overwhelming testimony to the pursuit in 12 areas to address, namely
1. Greenhouse Gas, 2. Sustainable Buildings, 3. Global Logistics, 4. Alternative Fuels, 5. Waste, 6. Packaging, 7. Textiles, 8. Electronics, 9. Agriculture and Seafood, 10. Wood and Paper, 11. Chemicals, and 12. Jewelry.
G3 will be specially remembered for the commitment, direction, solutions and support provided by the Wal-Mart executive who believes in the profitable growth of video games in a sustainable World we leave behind for generations.
The spirit of the Gathering imbibed what Dan Estyâ€™s had written in his book, Gold To Green, that by building environmental thinking into the business strategies, companies can generate lasting value cut costs, reduce risk, increase revenues, and create strong brands. Let nothing stop us from collaborating for the benefit of our individual companies, the betterment of our industry, as well as for the greater good of mankind.
Chief Strategy Officer
Media and Entertainment Supply Alliance (MESA)
On April 2nd, MESA held a meeting for the packaging community at the Variety offices in Los Angeles.Â Companies who attended the meeting, either in-person or online, included:
AGI Media Packaging, Bert Company, Carthuplas, EAM, Infiniti Media, Information Packaging Corporation, Milliken & Company, Motivating Graphics, Multi Packaging Solutions, Nexpak, Ross-Ellis, Scanavo, Shorewood, Utopia Green, Viva, Wynalda Litho, and Inkwell Productions.
After an update on the DEG Green Webinar held earlier that morning, by Mike MacDonald of Sony Picture Home Entertainment, the group engaged in a robust discussion on sustainability and Blu-ray packaging.
Regarding sustainability, it was agreed that a concerted, coordinated industry effort should be organized addressing the recycling of materials (polypropylene). Studios, replicators, packagers and printers could participate and provide input. QuestionsÂ discussed included: Is paper actually ahead of plastics (what is the level of plastics recyclability?) but in many instances the cost to produce these alternatives is more expensive than original material. Could it be an initiative where recycling is addressed with or within other industries?
The subject of Blu-ray packaging was introduced with the idea of paper v. plastic being the starting point for discussion.Â Solutions based discussions ensued with a focus on weight reduction and workable materials and processes.
At the close of the meeting all attendees agfreed that this MESA meeting was a step in the right direction for the industry It was also announced that there would be special sections of the upcoming ESCA show that address this community’s concerns. Also announced was the next MESA meeting for packagers, the G3 – Greener Gaming Gathering. This event would help the interactive entertainment/video game industry acheive similar goals that have been reached with the Hollywood home entertainment industry.
Look to the MESA site for updates on the next MESA packaging meeting.February 16, 2009
GameSupply, the first ever supply chainÂ academy forÂ the video game industry,Â brought together the publishers, retailers, service providers, research organizations, management consultants and thought leaders in the interactive entertainment industry! It is certainly very opportune that the stakeholders of the industryÂ were there to explore how we can collaborate, particularly to address the unprecedented challenges of the current somber and turbulent times. After all supply chain strategies are fundamental to improving liquidity of enterprises and enhancing earnings.
Pundits assure us that theÂ interactive entertainment industry is poised for continued growth, albeit at a more modest pace than what we saw the last two years. While the industry is expected to continue to capitalize on technology, and its creativity and innovation on the content side, a proactive approach to pursuing elimination of waste, increasing efficiency and growing the category is a mandate.
The conference programÂ was designed to bring the experience and knowledge of industry executives and research organizations, focus on technology-driven solutions to reduce stock outs and in-store product shrinkage, embrace the emerging digital and online gaming, understand the execution challenges in the last 100 feet of retail, and address our responsibility to ensure sustainability of the environment in a profitable manner.
ItÂ is our collective quest for the shortest, fastest and greatest results throughout the supply chain that will usher in a healthier industry and a greener planet. The conference marked the first steps where work has only just begun. It is our mission to establish task forces to address opportunities in the supply chain, based on your support and ongoing commitment. As a participant, attendee or sponsor,Â you have a unique opportunity to join an online community specifically created byÂ MESA, MediaÂ & Entertainment Services Alliance, which is designed toÂ facilitate collaborative efforts.
Striving forÂ the greater good will transform the corporate mindset, establish new business bench marks for success, and create an inseparable bond between content creators, suppliers, vendors, retailers and the consumers demanding interactive entertainment. Let us collaborate for the benefit of our individual companies, the betterment of our industry, as well as for the greater good of mankind.
The over-capacityÂ attendance demonstrated that supply chain management is everyoneâ€™s business.Â In the coming days we invite you to join our cause,Â participate, ask a question andÂ continue networkingÂ for a better tomorrow.
Conference Co-Chairman, GameSupply;
Chief Strategy Officer, MESA; and
Professor, Decision Sciences
Graziadio School of Business and Management
NPD reported a record year for the video game industry for 2008 with sales of $21.33 billion, a 19% increase from 2007. Software sales of $10.96 billion registered a 26% increase, hardware of $7.81 billion with an 11% increase and accessories of $2.57 billion with a 14% increase. Pundits assure us that the industry is poised for continued growth, albeit at a more modest pace than what we saw the last two years. With the existing installed platform systems at an all-time high, optimism about growth prevails.
The GameSupply Conference, which is gathering publishers, retailers and service providers for the first time, appears to be positioned strategically to anticipate and address the challenges to be faced in the current turbulent and somber times.
While the industry is expected to continue to capitalize on technology and its creativity and innovation on the content side, a proactive approach to pursue collaboration, cost reduction and efficiency in the supply chain, from end to end, is going to be the cornerstone for the coming together of all the stakeholders of the interactive entertainment industry.
When you register for GameSupply, you have a unique opportunity to participate in an online community specifically created for attendees of this conference.Â When registering for the event, please be sure to say “YES” to the community question on the registration page.Â Once registered, please submit your questions to ask the panelists of operations and supply chain executives, the retailers and service providers in the last 100 feet at the upcoming conference on the 11th of February in Burbank.
In addition, I welcome your discussions on some of the following subjects, which I believe have the potential of ensuring the continued profitability of the industry:
The loss of sales to competitors due to out of stocks measures about $800 million.Â How can collaborative sales planning, enhanced store execution and B2B connectivity with POS data reduce the loss?
Considering that the industry has no returns policy, are the open to buy dollars constrained, forcing suppliers to replenish in a characteristically volatile market?
Is the level of resource deployed by the retailers adequate and qualified to manage a category that is unpredictable and short-lived?
Do we have something to learn from direct to store delivery and vendor managed inventory, successful a practice of the home entertainment industry?
Is unavailability of store-level POS data a serious detriment to allocating and managing store-level inventory?
How can business intelligence and real time, in-store inventory visibility reduce markdowns?
Both from the viewpoint of sustainability of the environment and overall cost, how effective is packaging of video games?
What can be done to alleviate the product theft and the loss of potential sales due to merchandising constraints?
I believe that supply chain practitioners, who are coming to the GameSupply Conference, are executives who play a pivotal role in improving liquidity by reducing inventories while ensuring decent earnings by reducing waste, particularly in recessionary times. So let us hear from you.
Chief Strategist, MESA;Â
Conference Co-Chairman, GameSupply;Â and
Professor, Decision Sciences
Graziadio School of Business and Management
A decade ago we heard the prophesies of convergence of technologies for data, voice and video. Today with theÂ iPod and the web-enabled Blu-ray formatÂ we have come to realize that dream and more. While the question whether content software drives hardware or vice-versa has become moot, the worldwide web has enabled the synergistic deployment of both. Furthermore, the emerging digital world which has begun to deliver entertainment in a ubiquitous manner on mobile devices, cell phones, PCs, set top boxes, game consoles and playback devices, is altering consumer behavior.
This combination of human creativity and technology has impacted the supply chain of the two primary industries – entertainment and consumer electronics. The Consumer Electronics Supply Chain Academy (CESCA), which we launched three years ago, has sought to build a bridge between the hardware and software industries. Content is deemed to be a driver of conventional CE businesses and emerging business models. New challenging opportunities face us in this regard where we need to cross the bridge and find solutions to grow the consumer market. The annual CESCA Conference on the 9th of January in Las Vegas will address “Managing the CE Supply Chain in the Turbulent Times: Minimizing Risk and Maximizing Efficiencies”.
Many questions arise for us at MESA that represent the vagaries of building the bridge between the two industries that have most to gain in the future, such as:
- How can interactivity be achieved with Blu-ray where multiple delivery devices are deployed in a social network?
- How should the digital infrastructure be architected?
- What should be the metadata standards?
- How will the business processes of the physical media be transported to the digital media?
- How will the economic objectives of retail be fulfilled in the digital distribution world?
- How can digital storage promote the growth of software and hardware?
- How can the industry-pioneered direct to store delivery of DVDs be implemented for certain CE products?
- How can the proven systems of VMI yield benefits for the plethora of CE products?
- How can we learn from each other the efficient management of product life cycle, promotional marketing and price markdowns, sustainability of the environment, etc.?
- How can RFID provide visibility for real time decision-making?
Let the dialog begin!
A Bridge-Builder Aspirant