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It's Fall and Back-to-Business in the blog-o-sphere.
This week we're talking about audience building and the digital streaming space.What's happening and why... Here's a report I wrote a recently that celebrates some important changes in consumption patterns and chats about strategy. Launch positioning for digital distribution success. Mitigating short and long term risk through targeted problem definition and strategic responses Firms entering the digital distribution space, whether through licensing acquired content or through new content generation face an increasingly complex market, where a few wrong moves can wash your company up on the shores on the digital deep river. However, very high revenue is available to firms who position their launch strategies in line with controllable infrastructure cost, accurately predict consumer behavior and partner effectively with marketing teams, dialed into the triad of past trends, current opportunities and future consumption drivers, across short and long term time horizons. This 3 part white paper series discusses the digital distribution environment in 2016, analyzes major consumption drivers across live action and animated sectors and discusses a combination of factors that lead to maximum success and mitigated risk. It discusses common mistakes made that can lead to poor alignment between licensors and consumers, and de-mystifies the digital distribution pipeline for new firms. Each week we will review an aspect of the digital distribution eco-system and report on current trends. Week 1 Overview Expected continued growth in the digital eco-system – High revenue upside Market Factors to Watch: Changing gender trends, fan-based audiences, brand bias / blinders High upside profit remains a big driver for firms currently in and entering the digital distribution environment. Changing consumer profiles, less focused on ad-generated revenue and more focused on building and maintaining an audience eco-system, define current trends. Girls Girls Girls Tomorrow’s E&M landscape is most visible today on your teenage daughter’s smartphone, where users spend two out of every three minutes of their digital media time and where apps dominate. (http://www.strategyand.pwc.com/perspectives/2016-entertainment-media-industry-trends) Failure to pay attention to the girls markets and its early adoption of phone based media delivery is a current common mistake. For years firms have targeted the boys 18 to 24 market as the consumer space with the highest ROI. The gender landscape for high consumption is shifting significantly, both in the US and abroad. (http://www.pewinternet.org/2015/04/09/teens-social-media-technology-2015/) Consumption follows the fan trend. Audiences are coalescing, becoming more integrated and less fragmented. Girls and girl centered social networks are emerging as leading trend edges. From Pokémon to Mattel, the girl market is driving strategy. http://www.sfchronicle.com/entertainment/article/That-s-Ms-Pikachu-to-you-Pokemon-Go-9197882.php While playing, my husband noticed some Pokémon were listed as male or female. Curious, he consulted an online encyclopedia of all things related to the characters and determined that Pikachu—the bright yellow, rosy-cheeked rabbit-like creature that’s the face of the franchise—was a girl. Mattel Toys pivots in marketing strategy towards girls. http://fortune.com/2016/05/23/dc-super-hero-girls-diane-nelson/ Former Pixar technology leader, Oren Jacob, recently pivoted his start up firm ToyTalk away from the Mattel’s Talking Barbie in response to changes in the consumption trends of girls, consumer response, girl empowerment as well as shifting attitudes and market preferences, including parental aversion to technology and recording children’s conversations. ToyTalk has re-branded to become PullString bot authoring. The significance of this pivot is that ToyTalk course-corrected and re-aligned towards the bot market. A nimble start up, ToyTalk re-branded, didn’t apologize for the pivot and is on track. (https://techcrunch.com/2016/04/26/pullstring-bot-authoring/) Barbie, the doll, is about to become Barbie, the techno-conversationalist. And one livid consumer advocacy group says — for the sake of kids —Mattel must quash the new toy before it hits shelves for the holidays. At issue: Should a kid's conversation with a Barbie doll — or any play thing — be private? "Hello Barbie" is a $74.99, Wi-Fi-connected doll that uses a microphone embedded in Barbie's belt buckle to record children's voices and transmit them to cloud servers where they will be stored for up to two years. Mattel's tech partner, ToyTalk, leverages speech recognition with pre-programmed responses to key words or phrases, so that kids can feel like Barbie is "responding" to them. Mattel says it's simply doing what kids have been asking it to do for years. "The No. 1 request we receive from girls globally is to have a conversation with Barbie, and with Hello Barbie we are making that request a reality," says Stephanie Cota, Mattel's senior vice president of global communications, in an e-mailed statement. What's more, for kids to use the techno-doll, parents must sign on — and ultimately will have access to their kids' recorded conversations. But Wednesday, officials at Campaign for a Commercial-Free Childhood, the advocacy group, posted a petition on their site, demanding that Mattel abandon the project. "This is really about Mattel eavesdropping on a child's heart and soul — and the most intimate things about their lives," says Susan Linn executive director of the group, in a phone interview. http://www.strategyand.pwc.com/perspectives/2016-entertainment-media-industry-trends If you are an executive in E&M, your formula for success is already shifting radically. No longer is it enough to develop content solely to attract eyeballs, seeking the largest audiences possible for advertising and subscription revenues. Now, you must create fans: active users united by shared ideas, interests, and experiences, who will return every day to your brands and properties. As a fan-centric business, buoyed by the loyalty of passionate users, you will command substantial strategic advantages. You will know more about who your users are, what they want, and how to deliver what they want. This will enable you to monetize your products and experiences more effectively and more broadly. Current fans recruit new fans. Best of all, fans spend more per capita and are less likely to churn. In every E&M sector, disruptive companies are racing against incumbents to drive fan value — to be the first to deliver what users want, perhaps even before it is clear they want it. In 2016, the pace will accelerate. Any companies hoping to join the fray will need to be better than the competition at locking up fan engagement, loyalty, and spending, and at investing in efforts that drive fan value. To succeed in this evolving video ecosystem, studios, networks, and distributors must embrace separate strategies. Studios have benefited the most from the proliferation of streaming services, whose thirst for unique, high-quality content does not show any signs of abating. To maintain this advantage, studios must aggressively invest in intellectual property, development, and production to build deep rosters of branded, repeatable content aimed at multiple revenue streams, including domestic sales to networks or streaming services, international sales, and licensing for video games, consumer products, and other categories. Common mistakes – Gender Bias and Brand Blinders Three common mistakes firms make are: 1) Overlooking the girls market 2) “I like this so you will like it too” brand bias 3) confusing artistic or creative success with market performance and revenue upside potential. Girls Market - For years firms have tracked the boys consumption market and aligned strategies to that demographic. Recent media consumption and technology adoption trends point firmly towards girls as setting new norms. Through social apps and cell phones, new audience eco-systems are rapidly coalescing. Much of the audience formation patterns can be traced to girls and their communities and patterns of communication. Smart digital marketing teams no longer leave girls out of the reach and build equation. In fact, girl behavior drives new market patterns and upside potential. (http://www.europarl.europa.eu/RegData/etudes/etudes/join/2013/474442/IPOL-FEMM_ET(2013)474442_EN.pdf) New data from the measurement company comScore has given us fresh insights into a number of key US media markets. As their report shows, “longstanding consumer habits continue to be upended.” (https://www.themediabriefing.com/article/nine-trends-in-us-media-consumption-in-charts) Brand bias - Many firms enter media markets driven by the personal passion of inspired founders. However brand bias and blinders can result in widely mis-targeted media releases. While personal tastes and passion are a great entry point for endeavors, success in the extremely competitive, rapidly changing media market requires a level of detachment that can rankle passionate lovers of media. Consumers fall in love with media and media personalities. Consumers fall in love with stories. Passion leads to brand loyalty and long tail franchises. Binge watching and ancillary purchasing. All good. However, passionate loyalty to a brand can blind marketers and executives to the realities of consumption. A fact-based analytic approach to positioning can offset this bias. “I like this so you will like it too - Live Action Example: Andrew Stanton and the John Carter failure. Many opinions exist around this colossal failure, but a key element that no one disputes is that being in love with a title doesn’t give enough voice to the kind of market reality that assures revenue success. (http://www.vulture.com/2012/03/john-carter-doomed-by-first-trailer.html), Eight months of indifferent and often confused chatter culminated in Disney's John Carter — which cost just shy of $250 million to make — grossing only $30.6 million domestically. Stanton had been waiting 30 years for someone to make a movie about his favorite character, and when he was given carte blanche to make his first live-action film, this was what he picked. But he had very specific and faithful ideas of how it had to be done. John Lasseter, the head of the Disney-owned Pixar, had convinced then-Disney studio chairman Dick Cook to buy the Burroughs series for Stanton, and also successfully made the case that the enormous past profits of the director's animated work earned him the right to full creative control. As a Burroughs purist, Stanton was determined to make the film in a way that completely honored the source material. In an interview with the aptly titled online movie site Badass Digest late last month, Stanton said he “felt like if anybody had a chance of making this without it being fucked up by the studio, it might be me. They’re too afraid of me – they want me happy at Pixar. So I thought, ‘I should use this for good, and make the movie the way I always thought it should be made.’ If at any one of these points [Disney] were going to push back, I would have pulled out. It’s the best way to buy a car — I don’t mind walking away.” The solution to the brand bias is to be willing to construct market studies with statistically significant sampling numbers across your expected consumers. This is relatively easy to achieve through SurveyMonkey and social media platforms. In this day and age of connected social worlds, there’s no excuse for firms that ignore the vital step of polling their intended target market for preferences. Marketing teams who fail to construct strategic questionnaires that can provide valuable data to position media releases increase risk. Forgetting to ask what people want is common for firms early in the development and launch cycle. Confusing market performance goals with artistic or creative success – and past success doesn’t ensure future success, critical failure but revenue performer. Animation Example: The Secret Life of Pets Falls Flat, or does it? (http://rockrivertimes.com/2016/07/06/secret-life-of-pets-falls-flat/) The main issue is the script which lacks the wit to make up for its generic plot. There’s a few laugh out loud moments but the film feels flat for the most part and never gets out of second gear. It’s difficult to look at the film without comparing it to the recent, and far superior, Zootopia. The comparisons are evident but the films aren’t in the same league. The Flushed Pets cult explores some social commentary but never goes into any depth, instead the story flounders into the third act failing to end on the euphoric high it promises despite its happy ending. There is little value for the parents in the audience with this film so maybe it’s best just waiting for the DVD release. However, the film had long legs in the digital market, after a reasonable opening. Illumination Entertainment and Universal's The Secret Life of Pets debuted to a bigger-than-expected $103.2 million from 4,370 theaters at the North American box office — delivering Chris Meledandri's Illumination its first new franchise after Despicable Me/Minions and eclipsing Pixar's Inside Out ($90.4 million) to score the best start ever for an original animated property, not accounting for inflation. It's also the No. 6 opening ever for any animated film, and Illumination's second-best start after last summer's Minions ($115.7 million). http://www.hollywoodreporter.com/news/box-office-secret-life-pets-909620 People who create media and people who sell it for them have to steel themselves for having difficult conversations. Bridging the wide gap in perspective and goal setting is a vital part of the C-Suite task. Many executive / artistic partnerships have foundered on these rocks of discord, as directors accuse marketing executives of co-opting their vision and marketing and sales executives throw up their hands at temperamental or worse, aggressively uncooperative directors. Finding the sweet spot can yield well aligned, beautiful story telling with long market performance and year over year revenue growth. Week 1 Take-Aways for Content / Media Firms Prepping Strategy & Position
Next week: Part 2 The allure of high ad based revenue, Myth or Reality? Build it or Buy it? Should firms create their own digital streaming infrastructure? Technical options and alternatives.  It started out slowly.... innocently enough... arriving home to Oakland, after a long work day in Mountain View, sitting on the couch while my daughter cheered on the Golden State Warriors mid-season with a friend. The next deceptively simple step was to attend a game in person, on Easter Sunday with our good friends Terry and Katie - incredibly fun, including selfies, beer, food, cheering Steph Curry, Draymond Green and Klay Thompson on to the Warriors epic win record of 73 games, watching in awe as Klay made basket after basket from "downtown", then "waaaaay downtown". (I can say that now). The learning curve of writing "Clay" instead of "Klay" and getting smacked for that on Facebook. *After that things really picked up steam. After seeing my Facebook posts people at work started talking to me about sports, not just basketball but hockey, skiing, snowboarding, whatever, any sport. I was suddenly "sporty". 
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Julie M McDonaldArchives
October 2022
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