So here we are, it's about an hour past dawn of the information age, and I find myself incredulous. Those best positioned to benefit from such an achievement are unable to get over their old business models.
Television has been the standard mode of communicating fictional properties for the last half of the twentieth century. The audio/visual medium has been refined to an enduring artform. It has revolutionized the way we do business and facilitated the rise of an unprecedented technological culture. It's biggest drawback? It only communicates one way.
Big businesses have relied on TV commercials ever since we saw the successes of Betty Crocker and Lucky Strike Cigarettes in the 50s. If it were not for television it might have taken a bit longer to put a washer and dryer in every home. You wouldn't have a dishwasher let alone Cascade dishwasher detergent. You can positively forget about a Microwave, and your George Foreman grill would be who is George and why do I want his grill?
Now, all of this has been measured through statistical means. If you have a commercial running in a locality you can measure whether orders for your product are up there or not. But what if you are already a common brand? How can you tell if your commercials are reaching their target audience once you are no longer trying to teach consumers that your brand exists? How should Coca Cola know that it's advertising investment is reaching the maximum number of eyeballs per dollar? Well, as far as I can tell, they rely on Nielsen ratings. Nielsen ratings rely on people keeping a diary of their viewing appetites. Knowing how well people maintain their diet diaries should tell you something about how effective this all is. I participated in a study related to a heart condition I have, and I didn't even fill out all the paperwork properly to study a condition that I have which is potentially life threatening. While I am not the most dilligent when it comes to things of this nature, I imagine that I am probably not an isolated demographic.
This brings us to where we are today. A world with DVR and On-Demand, stop-gap measures intended to satisfy the needs of a vestigial TV organ located somewhere in the Frontal Cortex. These are intended for those of us who simply cannot accept the reality of where we are today. Proprietary delivery networks are a thing of the past. They are obsolete. They are not yet extinct but they are outmoded, and unecessary.
They are also the entirety of what makes Hollywood. Hollywood is a distribution system, a brokerage, and little more. It has been one of the most multinational institutions in the world for quite some time now. It has outsourced its filming every chance it got. The greatest example of this are the Mountains behind the Bronx in, "Rumble in the Bronx.", I know, I know that's not really a Hollywood film, but that's a part of my point, the distinction of 'Hollywood' really only matters in terms of the distribution. Where it is filmed is likely not Hollywood, where the actors are from or even live currently is likely not Hollywood. What makes something 'Hollywood' is if the bigwigs behind the scenes decide whether or not to give it access to its distribution networks. Now that's Hollywood. The second thing that it is, is a brokerage. People go there to get funding for a film. It is less necessary to kowtow to Hollywood as a Brokerage than as a distribution system however. Hollywood as a Brokerage will remain more relevant than Hollywood as a distribution system in the long run.
Now Proto-OnDemand video as you see from your cable television will eventually yield to actual On Demand video. Why no major studio is on top of this yet, I do not know. They content themselves to be delivered online by Netflix and iTunes. This makes no sense at all. The reason for this though? They don't know how to 'account' for non-traditional mediums. This is patently ludicrous. There is nothing that allows you to more accurately track your viewership and it's habits, than a website. The amount of data one can glean from the usage statistics available in your standard web server package is far and away more comprehensive than that of a television. We're talking Ox Cart vs Mercedes C-Class here.
Certainly, Hollywood should continue to milk its DVD/Blue Ray distribution system, no reason not to, but it needs to recognize the necessity for it to make every effort to put a bullet in that model as soon as possible. The big studios should be working to own their own distribution networks via the interweb. As it is, the difference between On Demand cable, and internet is a polite fiction. It's about proprietary networks, but the underlying technology is essentially the same. The only advantage that cable companies have is dedicated hardware.
I'll now present you with BBB. The three B's are:
3) Back End
This is the most important aspect of your product. It is the overall view of your product, how do people feel about your product? What does your product do? Does it do it well?
This is currently the second greatest hurdle after the lack of imagination at media conglomerates. This is where you are going to incur the bulk of your fixed costs.
3) Back End
This simply refers to the quality of your web presence. The nuts and bolts that keeps your delivery system up and running.
If you have a solid brand, like Warner Bros, Fox, or Legendary, people will come to you to seek your films. Right now you likely have videos that almost no one is watching. How many sales are you receiving on Gallipoli right about now? Your brand will drive people to your site. There is no good reason why someone should go to the site of a major studio and not be able to have instant access to their entire canon right then and there. Don't withhold parts of your canon, keep the entire canon up for download at any given time. Indulge the whims of your audience. Bring them in with the summer blockbuster, and upsell them on the older film of the same genre.
I'll skip the bandwidth issue as it's being properly addressed and I have no good advice for it. Instead we'll go straight to back end, which will touch on some of the bandwidth issues. Something you need is the ability to have a community on your website, and also to connect to other people's networks. You need to be able to embed your videos on Facebook, MySpace or Blogspot. In fact people should be able to set up to X amount of time of your video, keyframed anywhere they want to display on their blog. Sampling of this nature should be encouraged. It's viral advertising, and will drive traffic to your site, totally free of charge. You should develop a method similar to bittorrent where the content is downloaded from other users who are currently connected to the download seed. This will drastically reduce your needed bandwidth while the users download Act 1 Scene 1 from you, but everything else from the other users who are currently watching the video.
As a quick addendum to back end. You need a warez hacker department. Don't spend so much money on your legal team that goes after piracy. Spend money on your team of College undergraduates who will while away their days for $ 15 an hour seeking ways to foil torrent streams. If 9 out of 10 copies of your video up online illicitly are actually a boring infomercial or scat porn, people will give up and associate piracy with poor quality. If you combine this with a cheap model, they'll come to you first. Take the incentive for piracy out by making it less work to pay for your film than it is to find a decent pirated copy. This cannot be done at a rate of $ 20 per DVD. There is too much incentive for piracy at that price.
Let us return to Brokerage for a moment. Not the kind I was speaking of before, but a new kind. Venues like iTunes and Netflix can be brokerage services. They sell your video for a cut of the profit. This should also apply to your users. Your users should have API access to allow them to earn rewards based on traffic that drives new business to your site. So not only do you not seek to stop them from using your IP on their website, you encourage it, so long as it's not the entire finished product. If you need to understand more about APIs and how they work, consult the models used by Amazon and CCP. CCP is the maker of Eve Online, they have a model that allows you to access personal game data in web applications.
Now this part is to Jesse Alexander and Jeff Gomez, with whom I've had conversations about this sort of thing before.
Don't accept gripes concerning old business models to be equally valid. They are not, and they should not be considered as such. The newer models are not only inevitable, meaning non-negotiable, they are also superior in every way. Nielsen ratings are archaic and primitive compared to the most basic webstat programs. There is no reason you shouldn't be able to get data up to the minute, or even up to the second regarding who is watching what.
If you build a new distribution model, make sure that it's cheap. Don't charge $ 4 a rental for new releases. Charge $ 2 a rental. Make it so cheap that people will think nothing of paying to watch it ten times. Also, have an advertising revenue model. Give people a cheaper account upon which they can watch advertisements rather than pay for the account. Give your back catalogue to people for a monthly subscription cost. $ 20 a month gets you up to 40 movie views. The people that will max out that number are few and far between. It's likely a certain number of your accounts won't even watch one movie some months, and it will all balance out. Make sure you or whoever you represent maintains control over the content delivery. Stop farming it out to distribution systems. After the cost of maintaining the website and the servers, all of the profit stays in house. Don't draw a distinction between hi-def and lo-def in your pricing model. Just give it all for a low price. The distinctions of picture resolution are going to matter less and less to your audience.
The key here is high volume low margin. The cheaper it is, the more often people will utilize these services, aka, the higher your ratings will be. The more control you have over your own distribution, the more nimbly you can respond to market shifts.
When you show your film/show on TNT, TNT controls the delivery brand. Put TNT out of business. If you must outsource don't outsource the brand, outsource the labor. Your site can be maintained by a third party and marketing can be handled by a third party, but don't send people to TNT to watch your video, send people to 'My Film Studio'. That is how you can ensure that you know every last little minute detail about who is watching what, and their habits when doing so. When approaching potential ad buyers, giving them them the data, will be a simple matter of cut and paste.
A TV and a Computer are the same thing. Just repeat this mantra to anyone who doesn't understand. A TV and a Computer are the same thing. Don't allow them to think otherwise, it's not good for them and it's not good for you. There is only one network, the internet, period.
One day, and one day soon, you will be able to map hyperlinks to what is going on on the screen. Imagine being able to click on Vick Mackey's Dodge Charger while it's on screen. This is the future of Quicktime and Flash video they can already do this today. These tools are not being utilized effectively, because the people who control the content cannot conceive of why they might be useful.
We have gone from the release of "I am Legend" dominating the ad space in 'Rainbow Six: Vegas' because they didn't get enough ad buyers, to Barack Obama buying ad space in a dozen video games on the cheap in a short period of time.
All digital delivery mediums are rigorously logged. There is no excuse for not comprehending how to know who is watching your videos.