Conference participants talk opportunity as TV continues to fragment, VOD grows and gaming gets stronger.
This year's Digital Hollywood Conference in Santa Monica brought together entertainment’s leading executives to compare notes on which opportunities to seize in a booming global entertainment environment. It's an environment that is complicating the task of clients, agencies and content providers to get noticed among the clutter.
The various sessions, over the course of three days, provided a comprehensive overview of the continuing convergence of communications and entertainment technologies and its impact upon the digital consumer market. In-depth analysis covered the television, movie, gaming, wireless and interactive industries, all of which are challenged to marry usability with consumer needs.
One of the sessions discussed how new technologies, services, partnerships, content innovation and investment will reshape home entertainment. Panelists suggested that the business model for how television is supported is going to significantly change over the next few years. The future of television may well be typified by viewer demand for a personalized experience, but consumers aren’t the only ones to benefit: programmers and advertisers will be able to establish more personal relationships with fully engaged consumers.
Aggressiveness pays off for digital cable and satellite TV marketers
The future of digital cable and satellite programming looks brighter each day, with more than 40 million households already reached. Cox Cable’s mid-March announcement of its Video on Demand (VOD) services launch with the help of Internet Photonics is just one recent signal that VOD over optical wires is ready to enter the mainstream. Other unique offerings, like new category channels and subscription packages, continue to intensify competitive forces. So it’s no surprise that the six big networks are losing market share to category networks.
The aggressive marketing strategies in this space have to keep pace with the aggressiveness of content innovation, partnership development and service launches. Maximized messages and new television products are challenging linear networks’ status quo.
VOD engages and guides time-starved consumers
Jupiter Media studies show that 12 million VOD-capable households were in place at the end of 2003, and the company forecasts that number to grow to 31 million by the end of 2008. What's notable is how this new technology is changing traditional advertising rules -- by leading consumers directly to what they want to see without any wait or hassle. Advertisers claim that using VOD is considered a voluntary action because consumers choose to expose themselves to ads or content if and when they want to view it.
Others, the more patient viewers, are dependent on their traditional television habits. A March research study conducted by Leiberman Research Worldwide and the Cable & Telecommunications Association for Marketing found that the majority of television viewers (64 percent) say they knew what program they were going to watch when they turned on the TV, and that nearly half of all viewing (48 percent) is dedicated to watching a program that viewers regularly make an effort to watch.
“TV viewers are accustomed to ‘managed scarcity’ -- meaning they work their schedules around specific programming at a certain time each week,” says Greg DePrez, Vice President SVOD at Starz Encore Group LLC. While this behavior establishes a consistent relationship between networks and forgiving consumers, it also opens a window for VOD marketers to promote it as a shortcoming of traditional television.
While consumers complain about being overwhelmed by choices, brands have the opportunity to assist them with product and media navigation. As viewers become shorter on time, they want to know where the best content is located and be directed to it. Consequently, they are turning to VOD for guidance. However, most executives agree that there remain two major challenges to VOD’s mainstream acceptance: navigation is still not optimal and competition from a variety of entertainment sources is proving vigorous.
Still, VOD and à la carte programming are where the industry is headed -- but neither can dominate in the immediate future until cable and packages prices come down.
Category television also boasts benefits for both consumers and businesses. The Biography Channel’s General Manager, Thomas Heymann, believes that it is enabling marketers to build better relationships with viewers. They are beginning to forge a more engaged relationship, whereas traditional television has relied on a passive one. Other benefits include allowing viewers to spend more time with, and gain incremental satisfaction from, specific brands they relate to, thereby limiting time spent with broad-based competitors.
By capturing those consumers who have tired of reality programming or traditional content, category television is quickly gaining advertisers’ commitment. Fine Living Network’s Charles Segars has no trouble proving the value of a 30 second spot to advertisers -- he simply shows them how passionate viewers are about a specific category. He claims that Food Network and HGTV, soon to be offered in high definition, have enormous potential to set television records in loyalty.
With a new product, category executives are still trying to determine creative ways to increase affiliate distribution and consumer awareness.
Games and Hollywood unite, not fight
While the merger most often discussed lately seems to be that of Hollywood and Madison Avenue, soon the marriage of gaming and Hollywood will take over the limelight. Several executives at the Digital Hollywood conference complained that the media under-represents the gaming industry, as well as the success of non-traditional marketing within this space. To date, much of its attention has focused on the extension of franchises being welcomed and embraced by the consumer.
Non-traditional marketing has been exciting, certainly, but only to those it touches. Game marketing has solidified a stronghold with the young male audience, but it still needs to learn how to effectively market to women, a demographic that is proving to be sincerely interested in casual gaming. Marketing games to any target is no easy task, since each new product launch is more and more complex, and requires incremental resources.
There exists a huge discrepancy between the marketing budgets of video publishers and the studios. As the consumer market grows, so, too, will studios’ budgets. Though many fear that this will cause games to become homogenized, others reason that consumers’ growing sophistication will encourage creativity of content and that a large portion of consumers will continue to buy into the market based on associated titles.
Don Duglow, CEO of Stormfront Studios and master behind the 'Lord of the Rings' game launch, believes that video game marketing involves one part storytelling, one part game content and one part emotional drama. Thus, he concludes, any executive who claims to be a “gaming expert” is only partly correct. He reinforced that each game’s marketing strategy must leverage its story, because at the end of the day entertainment is an emotional experience.
Merger of equals versus acquisition
If gaming has such potential and studios boast such sky-high budgets, why haven’t studios acquired video game companies?
The most prevalent answer seems to be that the studios are realizing they want developers, whom they consider the “true blood of the industry,” ultimately to have control. Both sides agree that there will be more activity with studios influencing the gaming space. How much influence is to be determined.
“The film industry’s growth rate is not as high as that of the video game industry, but gaming publishers require studio titles and budgets. These factors encourage the two to work in collaboration. For instance, our Harry Potter video game lets fans explore content in a way they value, which enhances revenue crossover,” says Warner Bros. Interactive’s Jason Hall.
Multi-platform performs well for multi-generation audience
“Convergence is occurring across multiple platforms. It’s integral that a brand is leveraged across all of them,” notes Paul Jensen, Sony Pictures Digital’s vice president strategic alliances. One brand that has attained multi-platform success is Xbox, selling millions of games across the PC and console platforms.
“Xbox Live is the perfect example of ultimate convergence. It has proved that multi-player gaming with voice communication has huge potential,’ says Chris Di Cesare, director of marketing for Microsoft Game Studios. He pointed out that MSN Games offers 150 different products, the most popular being the simplest and casual ones. This genre of games has drawbacks for both the software giant and the consuming population: games are free, but have limitations because of their file sizes.
Other buzz centered on the relatively new, but inevitable, emergence of massive online multi-player role playing games like 'Everquest.' This dramatic genre represents huge opportunity for marketers because of its development into a digital society. Promoting the endless possibilities of how people can relate to each other online is proving to be a lucrative strategy.
As powerful as the Internet is, however, the overriding challenge for gaming marketers is to “win over the living room” -- meaning that the companies who succeed in the long run will be those that can engage every family member together in the most important section of the home, and on one media device. It’s not enough just to exist in the kids’ playroom anymore. Adults are learning to relate to their children and to de-stress through participating in gaming.
“Games are so powerful in today’s age that they will slowly draw in all types of people no matter where they could potentially use them,” says Dave Perry, who founded Shiny Entertainment and led the sale of five million units of the 'Enter the Matrix' game.
And that is exactly the intrigue of entertainment -- it has the power to connect with anyone at anytime and in anyplace.
Rebecca Weeks currently directs Strategic Marketing at Citrus, an interactive brand response agency in Los Angeles. She is known for her exceptional industry analysis and trend-spotting skills.