Inspired by the recent Emmy awards broadcast, and with a nod to the awesome Best Drama winner Breaking Bad, this month I take a look at the impact of technology innovation on the Media and Entertainment industry and what it will take for those companies to win the “IT Emmy.”
As consumers, we have all directly experienced the dramatic changes happening throughout the Media and Entertainment (M&E) industry. From music to television, books and movies, new and innovative technology has been a major, and at times quite disruptive, factor in reforming the industry’s business models. It is only karmic then that M&E companies are using technology in turn to create solutions that deal with the underlying changes in long established production practices and distribution approaches. As readers of my CMSWire series might anticipate, I see enterprise information management (EIM) technologies playing an important role in those solutions.
It’s been said that the larger lesson of Breaking Bad is that "actions have consequences.” To help me take a closer look at both the actions and the consequences for M&E, I’ve invited my colleague and industry expert, Charles Matheson, to answer some top of mind technology questions for publishers, broadcasters, movie studios and advertisers alike.
Deb Miller: Charles, the Media & Entertainment industry seems to be going through a real transformation driven in large part by technology innovations. Traditional business models have been turned upside down or, in some cases, simply ceased to exist. What segments of the M&E industry are suffering from technology disruption?
Charles Matheson: Business model disruption has been in effect for the past 15 years and the first segment of the M&E industry to feel the sting of technology disruption was the music industry in the early 2000’s. The emergence of digital music files or MP3’s that could be shared or sold blew up the decades-old business model of recording and distributing music. In a half decade the music industry saw billions of dollars evaporate from the business with devastating results. Just try to find a record store in your town. The other segments of M&E saw what happened to Music and determined that it wouldn't happen to them, so adoption of new information technology and an innovation imperative drives their strategic planning and decisions. Media companies across the board have decided it’s safer to ride the technology wave than it is to resist and get buried by it.
Deb Miller: Each segment of the M&E industry is different and will face different business pressures and innovation challenges. Are some segments handling this business transformation better than others?
Charles Matheson: Each segment has its challenges, but they are not in denial or resistant to change. The two segments of M&E that took the hardest hit early on were music and newspapers in the publishing segment. The advent of a ubiquitous free network caused major disruptions in key pieces of their respective business models. Music was freely, if illegally, distributed through services like Napster and news was aggregated through portals while classified advertising moved to specialized web sites like Craigslist.com. Advertising jumped on the new technology early on and perceived it, correctly, as a tremendous opportunity. Other segments like publishing, studios, broadcasters and game developers have changed their business models to adapt and prosper.
Deb Miller: How are the segments using technology to enable this business transformation?
Charles Matheson: One key enabler has been the adoption of business process management disciplines and technology starting at the inception of a project, book, show or advertisement. Modeling and mapping a business process, even one as iterative as film production or website development, has proven to deliver results. Cost savings and performance improvements through process and case management are obvious benefits, especially those focused on serving the customer. However, increasing revenue may be the real “gold statue” winner for BPM. For example, a BPM based application that helps manage Intellectual Property and licensing can have a tremendous impact.
Deb Miller: How are distribution models changing to meet the new business environment?
Charles Matheson: Motion pictures used to be cut, approved and canned for distribution and released in a series of “windows” for consumption. The first “window” was theatrical release followed by a series of other “windows” which generated revenue for the property. Sell it to airlines for in-flight movies or premium cable channels, then network television and finally VHS or DVD distribution. With digital distribution this model stops working, so now films are distributed to as many resellers as possible in the shortest time frame possible – in other words, all the traditional “windows” of distribution are collapsing. The inaccessibility to films gave them great value; but that power is diminished in a networked world so ubiquitous distribution at a lower price point is the new way. This has a ripple effect all the way down the chain of production and accounting and requires new IT systems and applications to address the new paradigm.
Deb Miller: What kind of new applications are media companies implementing for distribution?
Charles Matheson: I’m a member of MESA (Media & Entertainment Services Alliance) and we spend a lot of time focused on digital distribution as the fastest growing segment of the M&E business. This is creating new challenges for content owners and distributors. Omni-channel distribution is the new imperative and media companies are looking for software platforms that intelligently push the right content in the best format for any device. These solutions need to be rock solid yet flexible and intuitive for the editors producing content and the end user consuming it. They need to be able to deliver highly personalized content over any network.
Deb Miller: So that’s a great example for the movie business, do you have other examples that you can share?
Charles Matheson: That’s just one example of a changing business model for motion pictures; there are many other examples I could give just within that same segment. The impact of DI (Digital Intermediate) in the editing process, the impact of digital cameras and the increasing size of digital files, the increased number of file types and devices that need to be supported for distribution all force organizations to modify their business process and technological infrastructure.
Book publishers for example, are being forced to change and adapt their business to the new competitive environment. To the dismay of bibliophiles everywhere the book is inexorably moving from paper to bits displayed on e-readers and tablets. The new “digital book” is a very different property than its paper bound predecessor and publishers need to reimagine what it is they’re selling and how they sell it. Magazine publishers, at least the ones that will survive, are already way down this transformational path and the print product is becoming a supplement to a powerful online brand with video, polls and questionnaires, social media integration and relevant links to additional information “outside” the property.
Deb Miller: How are M&E companies meeting this challenge of huge and growing volumes of digital media?
Charles Matheson: Media companies must have a robust digital asset management (DAM) system, preferably one that is integrated with tiered storage. Using disk storage for these large files is not practical or cost-effective and managing petabytes of video requires the use of object storage or LTO (Linear Tape-Open) tape systems. LTO is being used in production and the DAM system must know where content is located and how long it will take to retrieve it.
Deb Miller: These are really powerful specific examples of “actions and consequences” for the M&E industry. What would you say are common issues and solutions that apply across all segments in Media?
Charles Matheson: Digital asset management is a broad and fundamental imperative for media companies. All segments must effectively manage their content and that content or asset is at this point, by and large, digital. Ironically, because it is so important, almost all media companies have purchased or developed “in house” multiple DAM systems that don’t integrate with each other, so having a federated view and access capability to multiple repositories is vital for performance and innovation. This is an internal business process problem for media companies and the complexity is shielded from consumers and investors, but managing digital assets in the media creation supply chain costs a lot.
The digital distribution of content is also a common problem for all media companies and with advances in the network infrastructure and the explosion of end user devices, screen types and sizes, this issue is overwhelming. Leveraging cloud services for software and storage has become important for all media companies, as has the adoption of social networking software for building audience externally and collaboration internally.
Federated Media Access is the most common solution to solving the problem of multiple repositories containing valuable content. This can be accomplished in two ways: first by aggregating and storing metadata from different repositories in one single master database with links or pointers back to the actual content or second, by having an application that integrates to multiple repositories and gives the user real time search and access to the content.
Deb Miller: With so many technology hurdles and outside competitive threats, what can M&E companies do to gain competitive advantage and win the “IT Emmy?”
Charles Matheson: As a rule, Media companies run two parallel IT organizations. One IT shop focuses on traditional IT systems that one would find in any large enterprise. I’m talking about financial systems, email, CRM and other internal properties like the corporate intranet. The other IT organization is focused on creating content like books, magazines, websites, movies or TV programs and advertising plus all the marketing material associated with those properties. These two IT shops use very different technology to achieve their goals and they are not vertically integrated – in fact, often the right hand doesn’t know what the left hand is doing.
The integration of production IT with business IT will improve productivity, reduce cost and spur innovation and that is where media companies will focus their energies in the future. There are only a few companies who have operational experience in both back-office IT and media production environments, and they are poised to lead the next wave of business transformation in M&E.
About Charles Matheson
Charles Matheson is the industry strategist at OpenText for the Media & Entertainment sector. He has over twenty five years of experience working for and with companies in the industry, including: newspapers, advertising agencies, magazines, motion picture producers, broadcast networks and web properties. He has developed innovative IT solutions for The New York Times, ABC Television Network, Ogilvy & Mather, Pearson PLC, The Walt Disney Company and Warner Bros. You can follow Charles at @chasmath.
Editor's Note: Looking for more from Deb? Take a look at Dr. Seuss and the Internet of Things