Recap from Breakfast #1 Roundtable Workshop

November 20, 2006
Guest speaker - Steve Oedekerk (O Entertainment)

Steve Oedekerk has established a multifaceted career that included producing, directing, writing, acting, stand-up comedy and animation. Some of his works include “Jimmy Neutron: Boy Genius” as well as the “Ace Ventura” and “Bruce Almighty” franchises. Oedekerk also created “Thumbmation” technology, which will mark its debut in a series of Thumb Parody projects to be distributed worldwide on DVD and video by Image Entertainment. O Entertainment is a studio that creates multiplatform video content to test out how much power that traditional distribution still has over content. The studio created the “Dirt Derby” video series, best described as “anime with photos”, to be distributed via mobile devices such as PSP, etc.

Oedekerk discussed working with traditional media companies such as Nickolodean, where the normal path dictates that the media companies tightly control content they acquire. Content creators in effect are “giving up control within normal distribution in return for revenue streams”. The alternative is self distribution and then funding becomes a challenge. Hence, it is imperative then to seek out companies that have more creative goals to work with, such as Intel with its Viiv home entertainment solutions.

Intel’s goals are to sell more chips. By enabling partners whose value chains are in the home entertainment ecosystems, Intel can promote higher standards and better consumer experience. Intel connects partners to help distribute and to monetize their content. The better the experience, the more the demand will be for devices with Intel chips inside. Examples of Intel partnerships and ventures include AOL for its online advertising alliance, and ClickStar, that promotes day and date movie releases.

Oedekerk discussed some of the obstacles for content creators to distribute directly to consumers. One is finding the right distribution platform. This is where technology providers such as DAVE.TV comes in. DAVE.TV is a platform for digital delivery of content. Rex Wong, DAVE.TV’s CEO believes that content should live where users live and play. So in order to create critical mass of buzz, content or brands need to engage their consumers. Most current content have a hit and run strategy to reach their consumers and are missing out on the opportunity to build a relationship with them. Engagement can be had with simply a viral content that is passed around by consumers who viewed it hip, especially so with video. So, content owners should incorporate social media tools to build communities around their brands. An example of DAVE.TV’s deployment is Stargate SG1 that engages consumers through consumer generated content, user profiles, blogs and affinity groups.

Another source of funding is advertising. Advertisers currently advertise against brands or demographics but not consumer behavior. That is why large brands are creating new distribution (ie AOL’s In2TV, ABC.COM) platforms as well as social networks because the community’s engagement leads to advertising inventory associated with their brands. Most major name brands keep selling out their ad inventory (particularly for video content). In general, social media enabled an increase of up to 3X the ad inventory availability while supporting the same brand.

Other forms of interactive advertising can be enabled by technology providers such as Panache. Panache makes it possible to dynamically change the advertising inside video content. Advertising can be inserted into videos in multiple platforms including online video streams and cable set-top boxes. Now, in addition to traditional brand advertising, video content owners can explore and offer interactive advertising that is proven to be more engaging.

Sponsorship is an alternative financing method, especially when there is an opportunity to prop up a relevant brand. The main question is whether traditional distributors would invest in such content, ala the sponsorship model from television’s early days. This is only feasible if the production cost is less than the brands’ marketing spending. It is still not a normal business process. However, in this brave new world of consumers skipping ads via DVRs (DVR penetration to hit 16.4% of households in 2006, 28.6% in 2010 – Magna Global research), sponsorships through product placement may be the only viable short-term solution for advertisers to reach consumers. At least until other solutions are experimented on.

Oedekerk brought up the X-factor in entertainment where new content becomes hits and get found by consumers. Hence, a partnership with a distributor that can enable such hits to happen through viral (or other) means would be crucial. Critical mass will then come from consumers pulling the content instead it being pushed to them. When consumers want to see something, distribution platforms become irrelevant and content owners who can make this barrier transparent stand a better chance of their content becoming hits. An example is Comedy Central’s South Park from a decade ago. Who would have thought that a crudely made video about talking poo emailed around would evolve into a series with such a long shelf-life.

Content creators are now given with more options for distribution (traditional, online, mobile, etc…) than ever before, all of which have monetization potential. Self-distribution allows content ownership by the creators but revenue streams are not guaranteed. Traditional media companies always pay more to acquire content because they want tight control and are willing to pay for that privilege. Hence, content creators will have to decide between full content ownership and steady revenue streams.

Changes are happening at media companies where the newer business model is to license content instead of acquiring it fully. New management at these companies is more pioneering than the old guards, and is more receptive to the changing business models. Especially so, when they are faced with new threats from alternative distribution platforms and new media competitors.

Some technology providers are taking a different route. M2B aggregates content to serve to its own broadband television service, via a set top box. The box also handles all of the broadband communication including VOD, video conferencing and internet browsing. It either shares its revenues with content owners or acquires content outright. M2B already has a 6 year head start in Singapore and is preparing for a consumer launch in the US early 2007. M2B utilizes all supported internet business models including subscriptions, pay-per-view and advertising. The last option being a challenge currently so as to reconcile audience wants with advertisers needs.

Oedekerk posed a final question to the audience - how can content creators plan to monetize their products before buzz happens? As discussed earlier, with traditional media distributions, content creators may not participate on the upside, whereas with newer media distributions, buzz may not be achievable without critical mass. Hence, the dreaded “chicken or the egg” dilemma. Oedekerk’s final advice is for content creators to meet the challenge to first create excellent content that the audience can be excited about and will build buzz. The rest will follow.