Connections

By Devendra Mishra, Executive Director, HITS and Chief Strategist, MESA –

Hollywood’s “Made in the USA” intellectual property has proven to be the most enduring entertainment in the world. Digital technology has enabled the preproduction, production, marketing, distribution and personalization of content in the last two decades and has brought us to a cusp of significant economic prosperity. We have witnessed the transformation from physical to digital content, screening to streaming, content delivered in theaters and on TVs to the smartphone and personal devices, and scheduled entertainment content now consumed anytime and anywhere.

Today, there are many precursors of significant growth in monetization of Hollywood’s stories, brands and assets. We’re seeing a perfect storm for the M&E industry to ride to seek the pot of gold.

Until a year ago, we witnessed uncertainty and inactivity in businesses across the M&E industry. After all, we were recovering from the onslaught of disruptive digital technology when the cash cow, DVD, was decimated. Hollywood put a virtual freeze on investment and tightened its collective belt to ensure survival.

It’s ironic that the cyberattack of Sony resulted in unleashing securitization of the supply chain of Hollywood. R

ecognizing that the studio expertise was limited to combating piracy, the floodgates were opened for technology enablers and service providers. Security solution providers got to examine every link of the business processes and acquired a strategic insight. Hollywood studios began to invest in technology in the business — from scriptwriting to production to marketing and distribution — to mitigate the threat from cyberattacks. The outcome defines an unprecedented opportunity for growth of monetization of content.

Financial drivers

Here’s the confluence of technology-driven factors driving financial growth for the industry:

** The ever-increasing FAANG platforms of Facebook, Amazon, Apple, Netflix and Google are fulfilling an insatiable appetite for content in all corners of the world. Facebook alone has 2.2 billion people in the community. While internet distribution made content available on platforms, social media created the community to share and enjoy it. Streaming of content has emerged as the most compelling driver of the consumer experience. Finally, personal devices made consumption of entertainment anywhere and anytime a reality. Content is being localized and personalized in its delivery to consumers.

** The ongoing adoption of direct-to-consumer delivery of content to replace the traditional B2B business model has opened the floodgates for monetization. On April 12, 2018, we got a peek into the future of content delivery when ESPN+ catered to sports fans in ways traditional TV did not. Disney’s CEO Bob Iger had delivered on his wildly ambitious plan to give the company control over its own future in the era of streaming video. The headline news was that the company had decided to get out of the business of supplying content to others in favor of launching its own direct-to-consumer streaming service featuring Disney, Pixar, Star Wars and Marvel titles. The upcoming Disney service, and its acquisition of most of 21st Century Fox, will give it control of the social media platform of Hulu. ESPN+ may prove to be a Trojan horse for the direct-to-consumer transformation of the entertainment industry.

** The integration and systematization of management of rights, contracts, licenses and talent can yield greater benefits through people, processes and technology. Lack of machine- readable metadata deprives Hollywood of sales and licensing teams of valuable content availability data. Some studies estimate that 67 percent of intellectual property owned by U.S. corporations is not commercially exploited and only a fraction of revenue is extracted from licensed IPs.

** Global expansion of the market for M&E remains an ongoing phenomenon. On April 18, 2018, Saudi Arabia, a nation of 33 million people, opened its first movie theater built by AMC Entertainment in 35 years, with Marvel’s Black Panther showing. Additionally, significant growth of theaters in China continues to take place.

** The two-hour-long film structure in theaters has been around for more than a century. But more is being done with Hollywood’s stories, brands and assets. Experiential products, short films, music videos and VR/AR are emerging as new consumer experiences and formats. The millennials, with their shorter attention spans, have to be satisfied.

** Finally, we are climbing a new plateau where semantic metadata, image recognition, natural language processing, GPS location, AI and machine learning will help deliver content to engage the demanding consumer and provide an enriched experience.

It’s amazing to witness the confluence of the technology enablers, service providers and the M&E industry working together to raise an economic tide for the industry, one which will lift all boats.

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