philip lelyveld The world of entertainment technology


Digital Entertainment World, an Overview Report




By Philip Lelyveld

The first Digital Entertainment World (DEW) Conference proved to be an excellent opportunity for a quick dive into current key topics of interest to the entertainment industry.  The structure of DEW, which was held at the Hyatt Regency Century Plaza in Los Angeles from Feb. 18-20, 2014, was six cycles of a keynote panel, followed by a keynote speaker, followed by one or two sessions of seven simultaneous panels.  Topics covered included the states of all major media verticals, issues related to reaching and engaging with Millennials, alternative revenue streams and payment options (ex. Bitcoin), current developments and lessons learned related to metadata and content discovery, and the technologies and costs associated with using cloud-based tools and resources.

On the opening View From The Top: The State of the Digital Union panel, the importance of context was a recurring theme.  Former Guggenheim Digital Media EVP Zander Lurie said that premium content value is driven by social media, fantasy experiences (ex. sports), and context (twitter).  The Content Collective’s Chief Content Officer Claudio Cahill spoke about how Pepsi used a very successful and buzzy Grammy broadcast Halftime Show commercial as a contextualized lead-in to their Superbowl marketing campaign.  The best contextual ads, he noted, are ads positioned as entertainment, such as Facebook’s Look Back personalized photo montage application.  CBS Interactive CEO Jim Lanzone added that things that flair up on the web are not predictable, so advertisers cannot plan on them.  (Side note: Jim said that CBS Interactive is the largest technology, automobile, and fashion news site in China.)

In his keynote conversation, David Lawenda, Head of Global Marketing Solutions for Facebook, said that his job is “to help the studios see what’s possible.”  Fans are a small part of the potential customer base.  Massively targeted reach with metered results, which Facebook can do using their consumer data, will greatly increase the customer base, he pitched.

Millennials, who get their video from Vine, Instagram, Snapchat, and other sources, are developing a new vernacular for viewing, said futurist Rob Tercek.  He believes that the Dreamworks deal to produce children’s content for Netflix is a play by Netflix to capture and cultivate a generation of viewers, similar to the way Apple seeded schools with Apple computers.  He also posited that all of the truly successful internet companies are essentially ‘switchboards’ (his term) that connect buyers to sellers (ex. eBay (goods), Google (information), Amazon (goods), Wikipedia (information)). Netflix is a switchboard for content.  Netflix has about the same revenue as HBO, but is valued by the market at half of all of Time Warner, because of these two strategies.

Mr. Tercek also noted that they best way for a company to defend its market and grow its business is to “commoditize your compliments.”  Microsoft commoditized computers to greatly increase the market for its OS.  Google commoditized information to make it difficult for another search engine to get established (ex. Bing) and take away its user base and ad revenue.

When asked to predict who the winners will be in 2020, he noted that the winners in 2006 were Vodaphone, Electronic Arts, Myspace, Microsoft, and Nokia.  Digital media is a very volatile space.  For him, Netflix was the winner of CES 2014.  Their announcement of plans to start 4K streaming to the home in 2014 makes them a perceived market leader and trendsetting.

Revolt TV is an American music-oriented digital cable television network that is owned by Sean "Diddy" Combs in partnership with Comcast.  Jake Katz, VP Audience Insights and Strategy, and Amrit Singh, Music and Culture Editor and Host, both at Revolt TV, discussed how they are reaching their peers; the Millennials.  Curation is key, said Amrit.  For news, his goal is to be first, be right, and “identify the relevant narrative.”  Although they call themselves a cable network, they have a large bicoastal (LA, NYC) staff working on Twitter, Instagram, Tumblr, and other social media in real time during the broadcast.  34% of their audience won’t watch a TV screen.  They prefer phones and tablets.

Music festivals are staging a comeback because people have been robbed of physical experiences in the digital age, said Amrit.

Metadata was the core topic of the “Discovery and Recommendation for Digital Content” panel.  Structured Data Intelligence CEO Xavier Kochhar said to let the crowd create the metadata for clips and frames.  They will error-check, and “people create metadata on things that they value.”  Yidio’s COO Adam Eatros noted the crucial importance of quality control.  Without consistent spelling and labeling, DVRs won’t record as expected and searches won’t return complete results.

During “The State of the Music Industry” panel, Jordan Berliant, Head of Music Management at The Collective, noted that music revenues are still at 1999 levels in Scandinavia because a charge for Spotify was bundled with phone bills early on.  Although other panelists noted that in larger markets that might require picking winners among vendors, they agreed that the fundamental approach of processing entertainment service payments within utility bills is an option that should be explored in other markets.  CD sales still account for 40% of music revenue worldwide, and should not be dismissed yet, said Anthony Bay, CEO of Rdio.  Anthony also commented that the quickest way to devalue music is to turn it into an undifferentiated commodity.

Aaron Levie, the Founder/CEO of Box, a B2C secure file storage and sharing service, said that he sees three types of file sharing structures by industries.  Healthcare has very little data sharing outside of the individual healthcare facility.  Manufacturing is very often one-to-many file sharing.  Entertainment looks like a web, with production companies, studios, post houses, and others sharing files throughout the workflow.  Because software is often built to serve organizations, and not networks, entertainment file sharing often involves emailing and FTP-ing files.  This is both inefficient and unsecure.  Entertainment companies should track their “information balance sheet” as well as their financial balance sheet.  Box tracks, controls, and audits the use of data in its secure system.

“The good digital producer knows how to get content seen,” said John Roberts, SVP Digital, Endemol, during “The Future of Multi-Platform TV / Digital Hybrid Production” panel.  He said that we know how to make content, but asked ‘how do we create content for the Tumblr experience?’  He suggested learning from Vine’s six second video model.  If you can skip YouTube ads in six seconds, he noted, then learn to make an ad that tells a story in six seconds.  ITA CEO Allison Dollar noted that everything is digital, so it’s the backchannel that matters and distinguished new media from old.

“The State of the Publishing Industry” appears to be ongoing efforts to become print plus video plus social media, in direct competition with the other media verticals, if the panelists are to be taken at their word.  Phil Wiser, CTO of Hearst, said he has “a dream of a high definition interactive media experience.”  Hearst has built an infrastructure to push targeted ads based on consumer profiles.  He eliminated Hearst’s internal IT groups and placed their staffs in positions that “touch customers” directly so they are building to serve their markets.  Michela Abrams, President of Dwell Media, said that her industry ‘has spent so much time protecting journalist and editorial against advertizing that we’ve fallen behind.  We need to give in and adapt to the new environment.  We also need to define quality in the new journalism.’

During “The State of the Game Industry” panel, Allen DeBevoise, Chrm/CEO of Machinima, said that gameboy culture is driving entertainment.  Martin Trembly, President of Warner Bros Interactive Entertainment, said that WB is exploring games as a service (ex. their upcoming Lord of the Rings: Shadow of Mordor).  They are also working to link console activity to mobile gameplay.  For example, if you achieve a certain level on the console, it will unlock capabilities on the mobile counterpart game.  He noted that Lego Chima plays on all platforms and OS’s.

Virtual Reality for gaming was supported with caveats by everyone on the game industry panel.  SGN CEO Chris DeWolfe noted that there are emerging competitors to Google Glass and Occulus Rift head mounted displays (HMD).  There is an opportunity cost, as well as an financial expense, in developing for one HMD over others.  There is also the problem of how to demonstrate the experience to consumers in order to gain widespread adoption.  WB’s Martin Tremblay said VR is extremely exciting today, but adoption will be gradual.

Regarding gaming in the cloud, Chris DeWolfe pointed out that a GPU chip on a local device is extremely powerful.  It will be hard to duplicate that local power and low-latency response over a network connection for the foreseeable future.

Chris also noted that SGN’s customer acquisition costs have gone up 300% in the last 18 months.  Console game developers now have to plan to create games and their related ecosystems for 3-5 year life spans.

In his keynote interview, Electronic Arts COO Peter Moore reported that 63% of iTunes Store revenue was from videogames.  Santa Monica-based Riot Games averages 27 million players per day.  EA’s customers are now the gamers themselves, not retailers.  A good percentage of his workforce is involved with directly keeping those consumer-gamers happy via 24/7 live help desks, video tutorials, and other B2C services.

As for marketing the games, Peter said that TV advertising “is like blood in the water.  Its chum.”  Once you have the gamers’ attention, you use digital media to demonstrate, explain, and engage the gamers in conversations.  Staffing for this is 24/7.  Their current gaming demographic are 38% women and 25% over 50 years old.

During the “How Data Analytics is Changing the Entertainment Industry” panel, CBS Interactive Sr. Dir. Stan Kwon reported that their research and business intelligence groups work together to build context around their trend data and analytics.  John Sierotko, Chief Revenue Officer of The Echo Nest, commented that sometimes clients don’t like what the data shows.  One retail store client of theirs thought that their customers enjoyed “Ramones” music while shopping, but the data determined that customer would enjoy the shopping experience more if they played soft country.  Richard Maraschi with IBM’s Big Data, Media and Entertainment group has worked with studios on the predictive modeling of twitter feeds to predict opening week movie box office up to either weeks in advance.  Dr. Vandana Mangal of UCLA Anderson mentioned that some companies are monitoring and responding to viewer behavior down to the millisecond level in real time.  The goal is to provide individualized changes to applications so fast that the user is not aware that it is happening.

“Distribution/Mobile: TV Platforms and Experience Shift to the Cloud” was a discussion of both the technical and business aspects of enabling new distribution options that consumers want.  Disney/ABC SVP of Digital Media Skarpi Hedinsson pointed out that broad industry agreement on authentication is needed to make controlled acess systems for paid premium content on mobile devices easy. He added that authentication is much more of a marketing and education problem than a technical problem.  Like Netflix, people need to learn that logging in gives them capabilities they wouldn’t have otherwise.  Anvato CEO Alper Turgut, whose company had the rights to stream the Superbowl, said that websites were the #1 means of viewing his streams, Apple iOS was #2, and Android was a distant #3.  The streams had different ads than the over-the-air broadcast.

The “Understanding Metadata” panel focused on the importance of metadata accuracy and standardization.  Ian Greenblatt, VP, Strategy and Business Development at ARRIS, summarized the panel well by saying that it is much more important to have an authoritative source than a standard.  Ian noted that FYI, TMS, and Rovi each have unique identifiers.  IDER was an effort to combine these three identifiers.  ARRIS has engineered around this problem, so a standard is not as important as the quality of the associated metadata itself.  Peter Siciliano, SVP of Music Technology, Beatport, amplified the idea that quality control is critical for metadata functionality.  He starts “with the word, sentence, paragraph, and document.  If you have the wrong word, you get the wrong search results.”

This report covers a small sample of the many panels that took place concurrently at DEW.  Ned Sherman, CEO of Digital Media Wire, and Mary Dolaher, CEO of IDG World Expo, co-produced an excellent conference whose session titles accurately describe what the speakers spoke about, and whose scope encompassed key current trends and topics of the broad entertainment industry.

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