Exploring New Opportunities In Intersection Of Content And Technology

 October 27, 2010, Digital Media Conference, San Francisco—A panel of content and technology people looked at “Hollywood and Silicon Valley: Exploring New Opportunities In Intersection Of Content And Technology”. Mike Vorhaus, president of Magid Advisers, moderated the panel comprised of David Ulmer, VP content and services at LG Electronics, Travis Parsons, corporate development at Sezmi, Kevin Yen, director of strategic partnerships at YouTube, and Matt Glotzer, senior vice president at Fox Digital entertainment.

Parsons led off by describing Sezmi, an OTT alternative that is a hybrid hardware & software, mixed broadcast & broadband TV & on-line content delivery company. His functions are in content and distribution partnerships and international and government relations.

Ulmer noted that LG is looking at content and services as a new space for the company. The latest change in TV products is the move to being connected, but there is no significant change in TV broadcast and the Internet as it’s all content. The largest audience is tied to the DVR.

Glotzer stated that Fox has been in digital media since ’04. His work used to cover studio and network interests, but has changed to focus only on the studio area. He has to manage their portfolio of assets and also interface to Madison Avenue. The changes in platforms leads to new content on different canvases, but all of them have to face the issue of monetization. The larger issue for the network is the changing touch-points.

Yen commented that YouTube continually works to create and maintain partnerships with content owners, as release windows open and close. Their media surveys show that the use of content may even help drive viewers to the original source.

The first question asked “what is going on, the LA guys are angry and stressed?”
Yen responded that the industry is getting healthy and is showing growing excitement. YouTube is a new platform for Hollywood to promote content. It is also a source for new creators and talent. The website shows the potential to originate content and that content can be translated to film or a TV show.

Glotzer demurred that this statement is an oversimplification of the true nature of the industry. There is some diversity in the media business, with some willing to consider the many perspectives within any company. In the past, there were many who considered everything from Silicon Valley as a challenge. Now it’s more open. For all media companies, the content owners work to preserve the value of their IP and new technologies may affect that issue. The quality of the IP is not correlated with money.

The next issue was the creation of technology and the models to preserve the IP as the prerequisite for any discussions. Ulmer opined that there is no real debate going on now between the technology companies and the media companies. Now, it’s Hollywood versus Hollywood as the many of the distribution channels open up. The distribution business is changing as there is no longer a crowd around the TV. Viewers still only watch about 7 channels, but now it’s on their own schedule.

Ulmer continued that there are many routes to monetize content: ads, subscriptions, pay per view, and OTT. The traditional model is breaking so, if no money comes in, there is no business. The high value production TV and reality shows have lots of choice with the types of control for distribution. The debates are now on the choices, operations, money, ads, content, and number of viewers. YouTube as a content source, is not the same as broadcast, and operates with a different business model.

Parsons agreed that the two worlds are starting to come together. At the same time, partnerships are difficult. There is still a need for change in both industries and they need to prove and reform the models that will contribute money. The industries need to connect viewers while giving them choices for viewing the content. One problem is the availability of redundant content, someone has to help the content owners to monetize their old content.

This exchange prompted a question of OTT services. Parsons noted that NBC, Turner, and Discovery channels are all working with Sezmi. They are starting to recognize the value of this new business model as a long term play. They will be paid on a per-subscriber basis and can insert new ads, pre-rolls, and other content on this alternate platform. Some of the content owners are nervous with the relationships, but are looking at the music business as an example. OTT is a platform to deliver content and share money.

Glotzer acknowledged they are having go/no-go discussions, but it’s really about the timing. They have to manage the transitions to avoid a dip in revenues. One issue is the ads. Neilson is getting out of date, so both sides need to develop realistic metrics to increase ads and content to support the business.

Yen commented that there are multiple stake holders and business interests. On YouTube, the rights holder can serve new ads against the content, leave existing ones on, or kill the content completely.

The last point raised the issue of yield terms and deal structures. Glotzer responded that there are a lot of legacy issues related to actors and studios. In general, the studios are defending the status quo. Ulmer concurred that the deal terms hold back traditional media companies and make it more difficult for media companies to work with Silicon Valley firms. The older deal structures called for money up front plus a percentage.

Ulmer continued that there is no risk sharing at this time that would lead to a level playing field. With common platforms, there is a move towards equalizing models that acknowledge the consumer will find ways to get around any of the deals. LG can get content from many sources. Consumers will watch what they like, so access matters.

Parsons added that the industry still needs over the air. If something over 45 cable channels addresses about 95 percent of all TV, they have control of the long tail of the market.

The final question asked will (or can) you place ads using targeting technologies. Yen opined that new formats are coming on-line all the time that let the user choose the types of ads to view. The sales channels enable the providers to pick the source of the content. Targeting ads works. Thus facilitating any persons to create targeting for any ad to any piece of content.

Glotzer restated that the Neilson panel-based metrics are not good enough. The buy and sell sides agree that the metrics are insufficient but they are the only game in town. The industry has to define methods for privacy-enabled wide coverage and both sides have to agree on the value of the metrics.