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Power Lawyer Ken Ziffren on Who Wins the Race to Go Over-the-Top ►

The Hollywood Reporter has a guest column posted by a “power lawyer” – They do not specify if he is “mighty” or “morphing” so I’m going to guess both.

He provides a succinct overview of all the OTT efforts being made by traditional studios, traditional networks, and stars from those traditional studios and networks. It doesn’t delve deeply inside how anything works, or acknowledge efforts made by non-traditional entrants, or services.

By “over the top” services, I mean Netflix and Amazon Prime, of course. But I also mean any outlet offering professionally produced content made available on-demand over the Internet (either in lieu of or in addition to linear viewing). Here, content is streamed to connected televisions and other devices. The business model could be subscription, VOD and/or ad-supported. In today’s pay TV industry, cable and over-the-air networks are paid affiliate fees ranging from a few cents to about $6 for ESPN, based on the number of subscribers reached, as opposed to the number of viewers actually watching the programs. The current OTT ecosystem is not following the linear TV model, so subscribers are being asked to pay for only the specific channels to which they subscribe; the appeal is made to millennials, mostly, who are willing to limit channels to escape the $80-plus-a-month tab when they subscribe to cable, a telco or satellite.

Ignore the conclusion where he tries to grade the OTT efforts for their potential to return on their investment. He just kind of hand-waves.

The worst is this line:

With incumbent companies, the criteria is more complicated. For them, I see the goals as improving the stock multiple, increasing the brand recognition and avoiding cannibalization

You can’t avoid cannibalization. Not unless you can make older customers immortal. Which is a power that I’m not sure Ken has.

2015-03-12 13:00:00

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Rocket 9: Channing Tatum Saves Feminism ►

Don’t let this sexy podcast title fool you, this episode mostly analyzes announcements from the Apple event and discusses HBO NOW. Christina Warren discusses the positive aspects of the NOW deal, though I still feel like the three month exclusivity window is fairly disappointing.

2015-03-12 12:10:00

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Companies That Start With “V”

Saba Hamedy, writing for the LA Times, reports that Verizon is purchasing original programming. As I’ve discussed previously, internet services, networks, studios, new media, and old media are dancing around how to handle entertainment — and paying for entertainment. In this particular case, a group that has a YouTube channel was acquired by DreamWorks a few years ago, and now they’re getting contracts to make content directly for an internet provider. This goes around television networks, and traditional production studios, cutting them out of the process.

There’s some unintentionally hilarious stuff:

“The millennials are at that stage where they are forming brand prerferences that will likely last a lifetime,” said Jim Nail, an online video market analyst at Forrester Research. “If brands can’t reach them through old media, they will be desperate to reach them through some of these new innovative channels.”

He’s not wrong but it’s so, so, so funny. Verizon’s primary motivation here is brands, so maybe we’ll wind up with some horrible webisode garbage? It’s unclear.

What is clear is that it can’t really be dismissed.

AwesomenessTV, which DreamWorks Animation purchased for $33 million in 2013, has grown into one of the Web’s biggest multichannel networks for emerging online talent. The network, which has more than 7 billion total views and 112 million subscribers, has served as an important launching pad for YouTube stars.

Please read the rest of Saba’s reporting on this, because it really shouldn’t be taken lightly. It’s only the start of further acquisitions of cheaper-to-produce online media being repurposed, instead of expensive-incumbent TV being repurposed for online.

Vox Media, a company known for stylish video pieces, and comparatively high production values, announced Vox Entertainment yesterday. They’ll be creating, and collaborating on scripted content, unscripted content, and even tie-ins with Top Chef. They’re pushing out the material on any avenue, not through a specific network, like Verizon, but with a strong emphasis on the Vox sites as an over-arching brand behind all that they’re doing. It’s really nothing to sneeze at.

While I have reservations about Snapchat’s ability to stick around, Vox Entertinment will be everywhere, so it won’t matter if Snapchat does, or doesn’t exist. They’ll also have the flexibility to figure out what kinds of advertising will work best across the platforms — it is a business.

I keep harping on this point, but the traditional sources of entertainment are artificially propping up a business model that is withering away with their customer base in North America.

The Hollywood Reporter wrote a listicle about “Five Worrisome Moviegoing Trends in 2014“. A year isn’t a trend, but they do go on to actually site things over more than one year, so it’s just a silly headline. The piece specifically talks about the decline in frequent moviegoers in the most valuable demographics, and an increase in old people showing up to movies. Also, everything basically hinges on China’s growth compensating for North America’s decline.

Everything’s just fine, Hollywood. No reason to react to the world changing around you. None whatsoever.

2015-03-12 07:30:00

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Rumor Has It

Yesterday’s blog post over the Apple TV generated a lot of tweets. Once I was up to my neck in tweets, I realized it really should be a post instead.

Gurman

Zach Kahn pointed out that I wasn’t considering Mark Gurman’s reporting about the new Apple TV being held up by content deals. I had considered it, that’s why I had lines in the piece about what Apple can do without content providers being onboard.

Mark Gurman, from 9to5 Mac, writes a lot of leaks, rumors, and sourced material about the internal workings of Apple. What he prints very often turns out to be true, but not always, and more often it’s mostly true. Jason Snell has a really good episode of Upgrade where he discusses receiving tips, in general, and ATP also has some speculation about why people would choose to send anonymous tips to them.

Mark’s inside info from February 10th, 2014:

We reported last fall that a revamped Apple TV set-top-box is in the works, and then we learned earlier this year that the new box would likely be introduced in the first half of 2014. Sources said at the time that the new model would be redesigned (at least on the inside) and would sport new content (perhaps a true App Store or gaming functionality). Since that time, sources indicated that internal prototypes for the new device include AirPort Express-like functionality, a form of enhanced iOS gaming integration, and a TV tuner component for connecting to existing cable setups.

He goes on to talk about the hardware references included in the iOS builds. That does, of course, mean that there is something that hasn’t shipped, but is referenced in official Apple software that has shipped. It doesn’t mean that whatever is internally known as “AppleTV4,1” will go out the door. Indeed, Mark has more current info which suggests it was redesigned again, last fall.

Mark’s March 5th post from before the March 9th Apple event said that they would not be launching a new TV because of additional delays, and wouldn’t have anything TV related to announce.

As for the Apple TV, the new service will be an app that replaces the existing Beats channel. Sources say that Apple is also finishing up work on a slimmer Apple TV set-top-box with a more capable and tactile remote control and a redesigned operating system bundled with an App Store. As of last fall, Apple had hoped to debut a new set top box as soon as this month, but with reports of the discussions between Apple and content providers being in only “early stages”, it seems that, just like last year, content roadblocks could keep the new Apple TV from debuting until another point in the future. As we learned yesterday regarding the larger iPad Pro, Apple will have another busy fall, so perhaps the new Apple TV will launch later in the year.

The event occurred, and the existing TV was talked about, with a discount, as well as a new service. The information Gurman had for the TV turned out to be imperfect, but that doesn’t mean he’s incorrect about a more substantial change being held up — how can you be wrong about something that isn’t announced? It’s not even his fault if they change their minds. Really, I am not speaking ill of him, or his sources, but they’re really not something that should be used as justification for Apple’s inaction.

This is why I didn’t explicitly discuss the rumors in the previous post. I find it fruitless to discuss Apple’s unreleased prototypes that are changing. I implicitly refer to the rumors of content providers holding everything up, and I refute them by citing things in the platform that can be changed that have absolutely nothing to do with the consent of content providers. I refuse to believe that shipping the Apple TV in basically the same form since 2012 is rational.

The Apple Way

Another point Zach Kahn made was that it’s not the Apple Way to ship something that isn’t 100 percent perfect. That’s, like, the Google Way, man. They don’t care like Apple cares. This is demonstrably false. Apple incrementally updates products all the time. They also inconsistently update products. The current MacBook Pro and MacBook Air are getting the Force Touch touchpad from the newly announced MacBook, but they’re not getting the USB-C connector. You know.

I don’t buy into this omniscient Apple that knows the perfect time to announce, ship, and package products. They do, without a doubt, have waaaaaaayyyyy more info about what they’re doing than any of us do. I simply don’t believe that means they shouldn’t be critiqued for a product that has been in stasis for three years.

There is a philosophical case to make that they will finally get the perfect moment to launch the next Apple TV, when all the content providers will align with all the component parts, and the angels will sing in harmony, but I think that’s a weird case to make for a three year-old set-top box.

Content Content Providers

There was a suggestion made by Josh Centers that the whole reason to announced the HBO NOW plan was to scare the other content providers. I disagree. I don’t think a three month exclusivity window on a service that is an alternative to an existing cable service is significant leverage over other content providers, or cable companies. If anything, HBO NOW data might be a test to try to convince some providers that are on the fence. Even then, I’m deeply skeptical that anyone feels significantly motivated to abandon what they’re currently doing.

Far more likely scenario is that we’ll continue to see other over-the-top services created by cable/satellite providers, with special restrictions, and package deals, and they’ll have apps that stream to a TV. At that point, it’s not significantly different than the current state of affairs. Dish already shipped their Sling TV service, which has plenty of weird restrictions, and it’s not available for the Apple TV, but is available for iOS, Roku, Amazon Fire, Samsung TVs, etc.

DirecTV (soon to be acquired by AT&T (we’re all fucked!)) has created an over-the-top service for Spanish speaking audiences in the US, Yaveo. It’s also not available for the Apple TV. They’ve also been in the process of securing OTT rights for years so they might be launching something else, or it could be a defensive maneuver to ensure they have the same rights as anyone else that might use those rights (like Dish has with Sling TV). Mutually Assured Over-the-Top.

The largest internet and cable provider, and content provider, Comcast (NBC, Universal) was merged together in a way to defend against OTT. This is, hilariously, the first search result for “comcast over the top”

So, no, I don’t think Apple’s 3 month exclusivity deal with HBO NOW is sending anyone into a tizzy.

That’s also not the point of that previous post, because they have so much latitude to make the device, and viewing experience, better without involving any cable companies, or studios. Tying software and hardware updates to the whims of proven enemies seems irrational.

I have missing rentals from my Apple TV that show up only on my phone because of content providers? No. That’s all on Apple. Comcast also isn’t holding up changes to menus, or icons.

WWDC

Zach also made the case that the 90 days of exclusivity would coincide with a possible time for Apple’s WWDC event this year. I think that’s pure coincidence though. It’s not like they’re going to announce that they lost exclusivity. He does speculate that Apple could announce a product to ship in the fall at this time. If it was the device with the game controllers, and the app store, then yes, but then the whole argument about them waiting around for content providers doesn’t make any sense. All indications seem to be that the content providers aren’t budging right now. Perhaps Apple will release something then, and perhaps it will, as I’ve argued, not rely on the content providers, but that would basically prove my point that they need to ship a significant update, not refute it.

It’s also kind of silly that they’d discount the existing Apple TV for 90 days, and then release a new platform. Unless the new platform will exist over the current one. $69 Apple TV, and $99 Apple TV Pro (giggle). That still means they’d need to update the software on the existing model in some way to align with with the ATV Pro (giggle). Again, this speculation doesn’t refute, or excuse, the current product, or Apple’s inaction.

The panel rumor also came up in the conversation thread, and I’ve felt it’s too big of a leap to go from the current puck to an integrated panel. Eventually, it makes total sense, so my skepticism is simply my gut feeling and I have nothing to support it.

2015-03-11 07:35:49

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The Bold, Old Apple TV

Everyone expected more details on the Apple Watch today at the event in San Francisco. The special 12” retina MacBook had also been teased as a possibility. No one seriously expected any Apple TV news. I’ve cracked a few jokes about it, but even I didn’t think it would really get an update.

It Didn’t Get an Update

They reduced the price by $30, to $69, which means you can now buy an Apple TV and a Chromecast for the same amount of money! What a deal!

The device, the physical hardware, has remained virtually unchanged for several years. The last revision changed some components but didn’t add any hardware features, and that was in January of 2013. Two years of … basically nothing happening. Competitors have entered the market with similar boxes, and some even smaller sticks. They offer channels and access to on-demand content from various sources. Apple TV has the dubious honor of being the only device that will let you stream iTunes Store content to your TV. (You know, when you really want your rental to fail, or a movie to buffer for a projected 5 hours.) Google and Amazon have mostly kept pace with Apple in terms of content that can be purchased online. Apple offers still offers no all-you-can-eat streaming service of it’s own, but does allow for other partners. Amazon isn’t present, and Google’s purchases must be conducted on another device linked to the YouTube account shared with your Apple TV.

The last major revision to the software on the device was also years ago. In the intervening time, updates have brought only the headache of a download and a restart to provide some unheard of service. Since the Apple TV’s software is based on iOS, it’s baffling to me that adding channels requires a restart. Could you imagine restarting every time you installed an app?

While the iTunes Store provides many things for purchase, the other services amount to almost no value at all. Several apps allow for users to pay additional monthly fees to access content (unless it’s sports, which is sometimes under local blackouts).

Apple TV is pretty nice for Netflix though, and it has the largest library of the monthly subscription services on the device (not much of a contest!). Netflix is available on literally everything under the sun that can plug in to a TV, or in most cases even the TV itself. Even premium services, like HBO Go, are available elsewhere.

In a previous diatribe on the state of online media as a whole, I lamented the current stagnation of Apple’s entertainment efforts. If the lack of significant progress is directly tied to the content providers, then that’s bad, but other companies are finding ways to work with content providers, or work around them.

Apple Worked With an Exclusive Content Partner

The biggest news was, of course, that Apple is bringing HBO NOW (an over-the-top service, and shouty name) to the Apple TV. Oh, except it’s only getting that exclusive for 3 months. [Update: This deal also took one year to put together. Read the Re/Code piece on it for more info, and to get some quotes of HBO’s Richard Pleper talking like a cartoon CEO.]

That is not a very long time. I’ve been around for several three-month periods so I feel pretty confident in making that assessment. That is approximately the current window of time between a movie being shown in theaters, and the movie being available to consumers in their home. Think back to the last movie you saw available for home purchase, you know, when you said, “I thought that was just in theaters.” That’s how short this window of exclusivity is. It’s not even as long as most video game exclusives for different game consoles which can typically last a year. Once the exclusivity is over with, will there be any differentiating factor between the Apple TV and the other devices that this is available on other than access to the iTunes Store?

Whither Growth?

Does this drive sales, or does this ensure people are actively using the little plastic boxes tucked in their media centers? I’m guessing it’s the latter since it seems most of the sales are driven by product refreshes.

As we can see on this chart, from Horace Dediu’s site, the biggest sales spikes have been after product refreshes. So why hasn’t the product been refreshed? It would score some points, no?

Today, at the Apple Event, Cook said that Apple has sold 25 million units to date.

In May of 2013, Tim Cook said that 14 million Apple TVs have been sold.

“Frankly, the popularity of the Apple TV has become much larger than we thought it would. We aren’t marketing it.”

Yes, this is very apparent to me, Tim, thanks.

Fortunately, thanks to the lack of any upgrades at all, it’s pretty easy to do the math and determine that Apple sold 11 million of the 2013 model over the last 2+ years. That’s not exactly explosive growth, but it is a large install base of mostly identical appliances at a rate of about 1.3 million units per quarter. After the initial price drop, and smaller form factor, the device was about to pass a million units total in late 2010. In January of 2012, Cook said they sold “a bit above 2.8 million units, and just in the past quarter, we set a new quarterly record for Apple TV at over 1.4 million.”

The iPhone, in contrast, is sold 51 million units from October to December in 2014 alone. That’s double the entire install base of Apple TVs. This is not a case of iPhone owners buying Apple TV so they can use AirPlay with their TVs. Even if we compare sales to the iPad, which were 26 million for that same quarter, that’s still more than all of the Apple TVs ever sold. That press release for the quarter makes no mention at all of the Apple TV in any form.

Apple’s largest pool for future-buyers has always been its existing customers. With no update to the model, what would compel any of the people that own those 25 million units to upgrade what’s in their home? Obsolescence hasn’t been a factor in 3 years.

My (joking) open letter:

Dearest Tim,

Hey, bro, what’s up? Nada mucho here. I was wondering if you guys have considered doing literally anything to refresh the Apple TV? I have a couple freebies for you:

  1. You bros love gold right now. It’s totes sweet. Why not just make a gold one? That doesn’t even mean you need to change anything!
  2. Make a stick. Sticks are so in right now.
  3. Software refresh. It’ll feel like a new model, because hey, you can market it and it looks different. You can still push the update out and claim a consistent install base across all the Apple TVs.
  4. Streamline the setup and operation of the device. Your remote is stupid and painfully irritating to most of humanity. The Remote app for iOS would be fine if it didn’t seem to want to completely jump out of RAM and reload every time I wanted to use it.
  5. Crush the bugs. There are tons of them, mostly involving rentals and purchases, which is strange because that’s where you stand to actually make money off the thing you are selling people.
  6. Build in a way, a button right there on the movie page, to convert a rental to a purchase. It’s possible to do, but not easy, which makes very little sense.
  7. Universal search, Spotlight, to find media across all the services.

This is low-hanging fruit that requires the consent of no content partners.

Things that would require the consent of content partners, but would make your platform more enticing to people looking to purchase it, or as a device current owners might recommend to other humans:

  1. Force rentals. The studios want to push the value of “owning” content, and rentals undercut that, but persuade the studios that you have a brilliant way to leverage rentals into purchases, and it’s called making the movie worthwhile for people to keep it. It’s a crazy mechanism that requires the studio to exert a little effort.
  2. Allow users to lend purchased movies to other iTunes users. It’s all in the cloud anyway. Amazon has been able to do this with Kindle.
  3. Produce your own behind-the-scenes iTunes Extras. You might not be able to make your own movies without ruffling studio feathers, but surely you can obtain access to produce Apple-quality featurettes that make purchasing content from iTunes more valuable than it currently is, where it’s mostly what’s available from different DVD and Blu-Ray extras. There should even be previews of those extras to entice people considering a purchase.

I have lots of other thoughts that are mostly inapplicable to your business, so please don’t hesitate to call me about those.

Love ya,

Joe

2015-03-09 23:59:00

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Moviemaking on a Hot Air 2

Bryan Bishop wrote up a piece for The Verge on Apple’s latest ad spot premiering during the 2015 Oscars broadcast.

The commercial features several groups of high school students as they shoot different projects using the iPad as their camera, overlaid by an inspirational voiceover from Martin Scorsese, who extolls the virtues of hard work and experimentation as the keys to creative success. And while the piece has the kind of delicate score and evocative images that one would expect from an Apple ad, the spot was actually shot on the iPad Air 2 itself.

With expensive camera rigs. Also, not mentioned was whether the person that assembled the final ad did so with an iPad, or even used Apple’s video products to do it. It would be pretty funny if the whole thing was shot on an iPad Air 2 but edited on a Mac Pro using Mavericks and an old version of Final Cut Pro 7. Ha. What a laugh that would be.

First, and foremost, I am criticizing Apple, and not the students. I think they should be proud they were featured in a very prominent ad. However, the presence of these hard working kids doesn’t make the commercial immune to scrutiny.

While the ad showcases students using the iPad to do video editing themselves, Apple has not made video editing a real priority on their platform. That’s a controversial statement because then you get into arguments over tools people use to make art, and what constitutes a professional. Whether this is about old, crusty, stubborn jerks vs. new, free-thinking, people that can adapt to use all media. Let’s pull back from that philosophical discussion because that’s fruitless. Let’s focus specifically on the ad.

Apple showcases students using the devices, but it isn’t about what the students make. The students are provided very expensive gear to make these things — each item of gear you see costs between 100 and 500 dollars. This is not the same thing as giving students iPad Air 2’s alone. It assumes a whole system of attachments that are required to make things.

That’s fine though, because you need accessories for any camera, in any film course. The problem is that the camera itself is not a very good camera. Indeed, Apple brags that the commercial is shot on the very same device, but the whole time I watched it I was kind of appalled by the quality of the image. Imagine spending exactly the same amount of money on gear, but buying a DSLR, or GoPro camera. The iPad Air 2 is fragile in ways that the others are not. The screen also gets in the way of it being a decent camera and makes it more fragile. You have to be further from the controls to see the full screen too.

That is to say nothing of the fact that by any possible measure, storage on a dedicated camera trumps the iPad. Shooting video creates enormous files. Even if you compress the crap out of the video as you shoot it, you still have a ton of video that needs to pass into a video editor and make a new video. The iPad Air 2 starts at $499 with 16 GB of storage. 16! What is this? A film school for ants?! There isn’t even an easy way to migrate files on and off the device without requiring a desktop Mac capable of using AirDrop, or a giant iCloud Drive, or other cloud storage plan. For any other camera you can buy an appropriately sized card for the task, buy more cards if you need them, and stick them almost any place you want to. Apple sells an iPad Camera Connection Kit, which allows you to upload photos and video from an SD card to an iPad with a 30 pin connection dock. So…

Even if it has to be an Apple device, a far more practical Apple device is the iPhone 6 or iPhone 6 Plus which have nearly identical camera elements, but better low light performance, and work better for macro photography. It’s also more portable, less fragile, and almost any software on the iPad Air 2 is going to be on the iPhone 6. Teens are using the iPhone 6 to do lots of video work right now — just on Vine, Instagram, and Snapchat. It’s a good thing Apple didn’t make this a video about the social ways in which teens today use video over cloud services, because LOL.

What about that software? If the edge here isn’t the lens, or the sensor, but the ‘experience’ of it being all in one device then where’s the software experience? Apple treats us mostly to images of people shooting video. There’s a moment where someone drags a clip in a row of clips to reorder them. Apple’s own video editing software for the iPad is iMovie, which is still a bloated, slow, appalling piece of software that behaves more like baby’s-first-video-editor than a real piece of software. Apple even makes Final Cut Pro X on the Mac, but has no similar product for iOS devices. Despite FCPX’s many, many flaws, it’s still better than iOS’ iMovie.

Another major flaw is that you can’t easily pass video content back and forth between different apps in iOS. You have to work off the camera roll. Using any kind of collaborative cloud storage requires importing and exporting clips constantly. There’s a lack of seriousness here. If it’s not great to edit on, and you need to edit on a desktop, then what’s the point of this over a better camera?

Sure, maybe this is purely about getting people to consider the iPad Air 2 for education environments. Something that you can’t really do with iPhone 6’s because of phone contracts. Still, it’s ironic to push hard on that when we’re still dealing with the fallout of the LA Unified School District’s disastrous rollout of iPad 2’s to every student.

Yes, that wasn’t a misprint. LAUSD planned to buy an iPad 2 for every kid. They never completed rolling it out. They pulled the plug and reevaluated and now they’re not sure they can afford devices, and they have no clear path to maintain and keep them up to date. (Think of all those paint-splattered iPads in that commercial.) If this spot is about the iPad Air 2 as an educational tool, then it’s going to have to work harder than having a bunch of LA high school students use iPads the school district doesn’t have.

Perhaps it is my deep skepticism of Apple’s interest in helping artists that colors my view of the commercial. If Apple truly cared, I wouldn’t be reading about the slow-motion collapse of LAUSD’s technology efforts. I wouldn’t be looking at iMovie on the iPad. I wouldn’t be hearing Scorsese talk about philosophy instead of seeing Scorsese make something with it. This is fluff that needs a more critical eye. I guess that makes the crummy Oscars the best play to show it then!

Do not pass go, do not collect $499.

2015-02-22 14:35:00

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Everything is Not Awesome ►

Robb Lewis is a web developer in Portsmouth, England. After reading my complaints about studios sticking with UltraViolet, and listening to Dan Sturm and I discuss it on Defocused, he decided to explore it himself. How bad could it be?

I was informed I would have to create two accounts, Flixter and UltraViolet. These are for “storing your film and TV collection in the cloud” and to “stream and download your UltraViolet Digital Collection to your favourite compatible screens” respectively.

It took Robb 40 minutes to create an account and setup one movie.

2015-02-21 12:36:00

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Discs Not Included

Kevin Tsujihara, the CEO of Warner Bros. Entertainment, gave a very candid interview with Recode media at their Code/Media event February 18th. Dawn Chmielewski liveblogged, and Peter Kafka conducted the interview.

Tsujihara talks about the decision to tap a digital guy to head the film studio: The changes that are happening in the industry are pretty dramatic. And the DVD business is one that’s undergone a significant amount of change. The whole model is threatened. There are benefits to owning movies, though there are a lot more choices in the world today than 25 years ago.

Incredibly, he highlights that they’re still trying to push hard on UltraViolet. Consumers have roundly rejected this as any kind of solution. Disney, Google, and Apple won’t participate — but sure, let’s prop this sucker up, Weekend at Bernie’s style! It is a farce of a system that has wronged many that dare to use it.

It’s kind of breathtaking when you realize he’s the digital guy.

Tsujihara seems to have a very clear understanding of the ways in which customers, and content providers like Netflix and Amazon, want the studio to move.

There was some pressure from the audience about the amount of work they’re doing for online providers of the content they make, instead of relying on their own online content distribution. This isn’t really that abnormal if you pay attention to all the credits on the things you watch.

For those that aren’t familiar, Warner Bros. makes both television shows, and feature length movies, through separate divisions of the company. Each of The Big Six Studios (Disney, Fox, Universal, Paramount, Sony Pictures, and Warner Bros.) basically act like big companies full of a lot of little companies specializing in making particular kinds of media, or providing services to make media. Some are owned by larger parent companies, like Sony owning Sony Pictures, which owns Columbia Pictures. Paramount is owned by Viacom, which also owns CBS, Nickelodeon, Mtv, etc.

It might seem confusing to an outsider, but these different parts of studios are actually pretty used to working with different parts of other studios to produce, and distribute, media. Buffy the Vampire Slayer, for example, was made by Fox for the WB’s TV network. It happens a lot. Films are usually more self contained, but they will split things like distribution. Films will have weird distribution deals. Like DreamWorks Animation distributing with Fox, or something like 2007’s Beowulf: “Originally, Columbia Pictures was set to distribute the film. However, Steven Bing did not finalize a deal and instead arranged with Paramount Pictures for U.S. distribution and Warner Bros. for international distribution.”

This is pretty bizarre when you think about it. Like if you just turned over a packaged food item and looked at all the fine print for each of the sources.

That Warner Bros., and its’ subsidiaries, would make content for Amazon, or Netflix, instead of their own services and networks is not really that surprising because that’s actually business as usual. Those subsidiaries have to do business, and those companies are willing to do business. The end. What is strange is that Warner Bros. has very weak online services. It’s not like making a TV show for Fox instead of the CW, it’s like making a TV show for Fox, or only showing it only in Ludlow, California.

When a reporter for Bloomberg pushes him on why they haven’t acquired Machinima. (While Machinima isn’t the biggest online “channel” it’s a huge leap over Ludlow.) Kevin replies, “We’re going to have to own some of these platforms and have a real, direct relationship with the audience.”

Excerpt from Dawn Chmielewski:

“I think that everybody’s looking at this and evaluating it,” Tsujihara said of the proliferation of on-demand video services. “And everybody has a different suite of assets. Not everybody has HBO or the Turner Network.” TV viewing, overall, is up. And one could argue that the exposure on on-demand platforms is helping the shows.

Hmm. That seems like he understands, but doesn’t know how to follow through. Much of what Kevin says here is about acknowledging their shortcommings. Worringly, he doesn’t seem to have any action to follow through on. After all, this is 2015, and it’s not like Netflix and Amazon popped out of thin air. Even if we pretend that he shouldn’t have done anything until these companies started winning awards — well, that’s already too late. House of Cards is going into its third, award-winning season on Netflix. Tsujihara has been the CEO of Warner Bros. Entertainment since January of 2013. Where’s the plan?

I can only assume that Kevin’s held back by other, risk-averse elements. WB is not adapting to changing markets that call for investment in on-demand, convenient media.

There’s no better example of the aversion to risk, to change, than Tsujihara wants people to understand the richness of theater experiences, and he thinks people need to be taught the value in owning content (he means discs).

Usustainable, Distantly-Sourced, Subsidized

Kevin’s not the only CEO that has problems adapting. Sony’s CEO, Michael Lynton, famously gave an interview in which he said that no one would distribute The Interview for them. Sony Pictures owns more than one content distribution network. I would assume he didn’t consider them for distribution because he didn’t believe in them.

Why would an electronics manufacturer that owns a movie studio, which owns several online video distributors, think his services weren’t up to snuff? Because those services can’t compete. They’re hamstrung by a corporate focus on protecting the current business model. They don’t seriously think they can go toe to toe with Netflix, Apple, or Amazon, but they own all the component pieces. It’s a lack of will.

Apple was roundly criticized for not distributing The Interview at the same time as Google, and Microsoft. Again, where’s the pressure for Sony to do their own distribution? Their chance to prove their services are worthwhile? No?

One reason they’re so timid about online distribution, and shrinking home video sales, is that they can hide the problem.

The studios have been able to cling to the past because municipal, state, provincial, and national tax credits which help remove some of the risk. This used to be filled with DVD money. All that precious home video money has dried up. Instead of realizing there’s a hole in the sinking ship, they stuffed a shirt in it.

There’s also something else to worry about on the horizon, and that’s the online content providers. Amazon and Netflix are content to either make their own content, or get traditional studios to do it for them, but what happens as their popularity increases and the networks and theaters decrease?

I would wager that these internet companies will buy, and restructure, today’s Big Six companies. Sure, that’s just a gut-feeling, but the history of film and TV is full of studios getting bought, sold, merged, and shuttered. That’s why we have six big ones, after all.

Let’s say that WB has a few summer blockbusters flop, maybe some shows don’t pan out. At a certain point, the wealth of the internet savvy companies will be enough that they can snap up a poor studio.

Why would you want a floundering, top-heavy, anti-internet studio? Two reasons: You could actually integrate the production of your shows with the management of the studio and eliminate management overhead. Primarily, the intellectual property that the studios hold is priceless.

IP is priceless because it’s never going to ever expire as long as copyright laws keep getting extended. There are huge libraries of things spanning decades.

Don’t believe this is valuable? Look at Ted Turner’s rise to power in the 80s. He bought up all the film libraries he could so that he would have things to show on the cable networks he owned. He was able to do this because the companies were in financial distress.

Look at Sony too, Sony bought up Columbia Pictures, TriStar and the Lorimar (formerly MGM) lot in Culver City. Sony didn’t make Sony Pictures out of whole cloth. Is it so hard to imagine Sony Pictures Entertainment being sold, whole or in chunks, to finance the ailing parent company? With the TV division being spun off, and now the audio-video business, it’s hard to see a future where they cling to the not-so-bright future of Sony Pictures Entertainment for the corporate synergy they once did.

The tax credits will not be able to spackle-over structural problems forever. Vancouver is running up against problems competing in the race-to-the-bottom for subsidizing production. Even meager tax incentive programs are facing stiff criticism in Florida, Louisiana, and North Carolina.

Net Worth

Clearly the studios are flailing around. They make profits by taking advantage of taxpayers. They have no clear path forward to adapt to the changing demands of the consumer market they face.

What about the internet companies they potentially compete with? The vast majority of internet-based companies aren’t constructed like the studios. Netflix doesn’t have a studio division that makes films for Amazon. Most of them do maintain a library of content that is exclusively available to customers of their services, or through their storefronts. Almost all of these services, and storefronts, are available on a wide variety of platforms. This platform agnostic approach ensures a wide customer base.

Apple and the Old, Simple Way

Apple is a notable exception. Apple sells, and “rents”, access to digital copies of media from traditional media sources. In a way, they are very similar to the Blockbuster of yesteryear. Some alternative providers are available on the Apple TV, but are usually in areas where Apple might not compete directly — like cricket matches on a channel that ONLY shows cricket. I can’t even.

Apple’s at the largest disadvantage if their competitors gain serious traction. Particularly if their competitors purchase one of the big six studios. Apple could buy a studio (all six, really) but they would scare away other content providers, or face enormous regulatory problems. Even today, Apple tailors their content offerings on what The Big Six are making. The streaming services that exist for sports, subscription services, and special “cable anywhere” programming still leave out other storefronts, like Amazon. If anything is purchased on an Apple device, it’s purchased through Apple.

They aren’t hurting because they have over 600 billion iTunes accounts. To really hammer home the point that UltraViolet doesn’t fix anything, let’s point out that they saw 30% growth last year to 21 million accounts which is less than 0.001833333% of the number of iTunes accounts. iTunes, as a storefront, isn’t in any danger as long as they still have things to sell, and they will outlast any studio controlled effort, like UltraViolet, which doesn’t exert any kind of leverage over their business.

Apple doesn’t use ad platforms for the iTunes video store, and doesn’t pursue user-generated content at all. They are quite satisfied to host several services that do that alongside their rentals, and sales. They don’t provide any system to convert purchases, though they do allow studios to issue codes that can be redeemed in their store, and they don’t offer anything like iTunes Match for movies since Apple never pushed people to rip their own discs, I doubt we would ever see something like that at this point.

Their last major revision to living room hardware was over two years ago. Rumors have circulated, from time to time, that Apple is going to release a full television set, but that they’re holding back because they don’t have content deals in place. The fact that this hasn’t materialized in years, and that Kevin Tsujihara doesn’t want to go on record as being involved in any kind of deal with Apple, should only serve to reinforce that Apple’s success is closely wedded to the status quo.

Amazon and Netflix

Both companies are pushing hard to create video content for streaming, subscription services. The studios wouldn’t let them stream the good stuff, so they had to make their own good stuff. Studios have no real response to this, other than handling the production of some of the shows.

Exclusivity is the name of the game here. It doesn’t matter if you subscribe to a competitor as long as you absolutely have to subscribe to them too. What we might end up with is a system of providers we subscribe to instead of cable TV packages. The providers becoming their own “bundles” with good stuff, and filler.

Indeed they are similar to many on-demand premium cable channels. They have a rotating library of available films on hand, and some of their own videos.

They are more comfortable with making TV shows than they are with feature-length blockbusters. It’s hard to recoup the amount of money you’d need to justify the risk of a big-budget film. Eventually, they might make their own $200 million, VFX bonanzas, but there just isn’t the same incentive.

The Changing Adscape of YouTube

YouTube, the biggest online video service, has its roots in amateurish videos and clips of user-uploaded studio content. They’ve moved away from that, towards more polished products. They’ve repositioned themselves with experiments with financing their own “channels”, licensed music with Vevo, movies purchased through the Google Play Store, and content produced by individuals or small teams. With the exception of movies, the real goal here is to make YouTube a destination for people to go see advertisements. There are no services offered to people uploading to YouTube to allow for direct payment, like the Google Play Store, so everything is financed by ads.

The studios don’t fully understand advertising. They understand a deal for a project. Product placement agreements that result in immediate payments and are permanently intertwined with the media. They don’t offer advertisers the ability to dynamically alter the advertising in an existing work. If you watch Paramount Pictures’ Transformers movies you’re “treated” to GM cars for the Autobots. A cable channel showing Transformers will insert ad breaks and show commercials they’ve bought and sold themselves. The studio has no control over that, but they license the content to the cable channels knowing it will happen.

YouTube’s ads are kind of like the TV model in that regard, but YouTube isn’t paying YouTubers (they live underground, and make a great puree) an upfront sum of money like networks pay studios. They can monetize each ad being loaded, and dynamically alter what kind of ad is served based conditions that are absolutely impossible for a cable network to match. YouTube doesn’t expose itself to the risk of buying a show and selling ads for the show. They don’t pay Tyler Oakley a sum of money for a season of work and then they renegotiate his contract. The risk in making the videos is entirely on the YouTuber, not on YouTube.

YouTubers negotiate their own ad placement in their videos to maximize this revenue, but YouTube is cracking down on this. Imagine the FX Network telling Michael Bay, and Paramount, to remove all the GM logos or they won’t broadcast their movie, and that they won’t pay for the rights up front. They’ll just send them money as commercials are viewed, and tracked. It’s kind of mind-bending to think about how different these business models are, even in situations of video advertising and product placement.

CGP Grey (not a real name) makes his living creating YouTube videos. He talks to Brady Haran on their podcast Hello Internet. Their YouTube channels select a topic and makes a presentation describing it to viewers. Ads are shown and they get a cut of those ads from YouTube. In several episodes of Hello Internet the guys have discussed problems they see looming on the horizon. A recent episode is about musician Zoë Keating being pressured by YouTube into a new, onerous contract, and what it could mean for all of them. Grey makes the case that YouTube is not only the largest game in town, it is the only game in town. No one else has an ad supported platform for small, independent producers.

The other day, CGP Grey took to twitter to voice his concerns over another YouTube policy change, a crackdown on brand-sponsored videos.

The change is about videos made specifically for the sponsor (as opposed to videos with sponsors) but thin-end-of-the-wedge and all that.

@cgpgrey

Services like Vimeo, where I host videos like my demo reel, are better at showcasing creative works that don’t rely on advertising. Short films, student projects, reels —you know, artsy-fartsy stuff. The relationship is also different in that you pay Vimeo to host your videos, and viewers don’t pay, or see ads.

Snapchat, Niche, and Vessel

Other, smaller services have spotted a unique chance to use video-sharing services to create short-form videos with very minimal overhead. Like YouTube, they are relying on advertising, but many of these entertaining videos are ads. People had the brilliant idea of making ads so clever that they are the complete content package.

This is revolutionary, in a stomach-churning kind of way. Young people can leverage their social graphs to push paid endorsements on their friends, and they love it because gosh-darn it, the ads are fun.

The concept isn’t completely alien. There are people that watch The Super Bowl just for the advertisements. In that situation, there’s actual pressure on companies, and advertisers, to use a finite amount of time to do something that isn’t completely lazy. It’s still a risky proposition though, and still uses large, up-front costs. What if it was just a couple millenials and a medicine ball and then you could just pay as you go? Great. Done.

Snapchat, a company that I despise with every fiber of my being, has “invented” channels. They didn’t invent channels, or old-media partnering with new-media, but millenial tech bloggers are so enamored by the company that it is only obvious to human beings. This Discover tab experiments with getting studios to produce small, sharable content for the desirable demographics.

The biggest problem Snapchat’s logic is with the ghost of webisodes. People forget about webisodes, for good reason, because they didn’t work. The theory was that for less money, and effort, and talent, they could make short shows for the web and profit off of all the money they were saving by not really trying. This didn’t pan out.

Snapchat doesn’t seem to have solved the problem of webisodes, they’ve just siloed webisodes into their exclusive service instead of the webisodes being available on individual, stodgy, buggy, corporate sites. Will collecting all this mediocrity work? Doubtful. The 30 Rock jokes about webisodes are available to view on a variety of content and platforms, the webisodes Warner Bros. made for Breyers Ice Cream, and starring Jane Krakowski, are not available.

Niche, is a company purchased last week by Twitter, looks like the fever dream of a coke-addled business executive. It’s a middle man to partner brands with people that have large social media followings on various services, like Vine. It’s like Uber, but for Vines. (Jumps out of window.)

Vessel, a new startup by a former Hulu executive, is positioning themselves differently from the others in that users pay for early access to “premium” content. I’m very skeptical of the viability of this service. People are reluctant to pay for access to things, and it wouldn’t solve the situation for YouTubers because they rely on people sharing their videos. This windowing concept is akin to a paywall. I’m also skeptical this will solve the film industry’s problems. From Jason Abbruzzese’s Mashable post on Vessel:

“The way I think the film business is going to evolve in the next 10 to 15 years… Let’s say the tenth Star Wars that comes out… I think that will be available on day one on your computer for probably $55 for a one time view,” Kilar said.

Rich, white guy’s gonna rich-white-guy.

It’s a Trap!

Selecting a service is, in and of itself, a problem. When a studio, or independent producer, aligns with a particular service, they are aligning with a single “storefront” to handle their business. Cheering for the next startup, is cheering for the next incumbent. Diversity of stores and sources helps people producing videos hold leverage over stores. Look at the film industry, which we all laugh at, their eggs are not in one basket. They’re in a bunch of stupid baskets, but hey it’s better than one basket. They’re misusing that leverage to cling to a business that’s shrinking instead of growing, but c’est la vie.

Maybe we’ll get lucky and we’ll all pay for a monthly subscription to apps that show different silos of webisodes about brands that allow us to connect with product narratives.

2015-02-20 09:03:00

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A No-Brainer

Tim Gray, writing for Variety:

It sounds like a no-brainer for a film company to focus on filmmakers. But in the past, Disney Animation was often administrative-driven, with layers of notes from executives that dictated content and bogged down the creatives.

It’s tempting to point and laugh and say “of course the creatives should be in charge!” However, “creatives” can make really bad choices too. The key here is to have good executives that can take themselves out of the process unless they’re needed. That is entirely subjective, and very difficult to promote good behavior of not doing something. “Good job, Mike, you didn’t say anything except that one thing.”

Bad executives have to weigh in on every, single thing. They see it as their role to give input. The worst outcome is a studio hierarchy full of those executives that feel the need to insert themselves. It is very easy to accumulate more of these executives if a studio feels that greater oversight improves films. It’s also very easy to have a lot of them if they each find some budget savings that makes a little more room for profit by cutting some component.

Disney sees the success of their animated features, and the money they pull in, but no one is pushing for Disney to close their Burbank animation studio in search of tax credits. A lesser movie studio might see enormous profits and try to squeeze out even more profit by slashing production costs on future animated features. This is totally different from the way other studios are running these days.

There’s an incredibly depressing documentary, The Sweatbox, that captured what making an animated movie at Disney used to be like. It was made by Trudie Styler, as a condition of her husband’s (Sting’s) contract. The rights to it are owned by Disney and they haven’t released it, for obvious reasons. Disney doesn’t seem interested in suppressing online leaks, so it’s usually on YouTube. Disney Feature Animation of today seems like it doesn’t have those problems. A total cultural shift.

Hopefully, competing animation studios will start looking at Disney’s process instead of just looking at the pictures Disney makes.

2015-02-15 19:45:00

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Elk Shaving

I am on vacation from my job that involves computers, so I am using computers. Of course I am. I was never happy with the look of the blog (I’m still not happy) but I feel like I got a decent visual refresh in.

I am playing with some CSS properties that I haven’t played with before, so I am not sure it will work across all browsers, on all systems, but that might not be such a bad thing (theoretically, the worst thing is that the BG image won’t load, or the blend-modes won’t blend and will just be solid.) I also fixed a long-standing bug where TypeKit was not being included in my template for the About Page so it was rendering in other fonts. You were most likely treated to Avenir Next if you didn’t have Adobe Source Sans Pro on your system.

I am pretty unhappy with the navigation controls at the bottom. They are laid out OK on a desktop, but look really gross on iOS. In fact, I can’t really do the fun background stuff effectively on the phone, so it just uses it for a hint of color around the sides.

I wrote the static-site blogging engine myself, so naturally, this explains a lot. It’s called, yakbarber, if you were unaware of that.

Elk Barber

I had also messed around with some photos from my trip to the Grand Canyon in Adobe’s LightRoom 5. This is my first time using LightRoom, but I will save my Aperture vs. LightRoom thoughts for another time. I thought the elk was visually interesting enough to use as a BG photo, without being about anything specific.

In future updates, I want to include a per-post background (or at least the option to use one instead of a default image) just to add some visual interest. Probably something that will go with the yellow and blue thing going on here.

I hope none of this distracts you from reading my thoughtfully composed text, and well-considered opinions. Butts.

Look Forward to Nodding at Your Feedback

If you have any specific requests, or notice particular problems, please feel free to ping me about it on Twitter. I am not a web developer by trade and do appreciate feedback on my cluttered CSS and nested divs full of blend-mode shenanigans.

2015-01-28 13:20:00

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