Hollywood Needs Start-Up Incubators for Entertainment

GUEST BLOG: Why not let start-up incubators and accelerators provide a bridge between traditional Hollywood interests, tech companies and angel investors?

Should there be an incubator for start-ups in the entertainment industry? It’s a question brought into focus by a recent post from IndieWire editor Dana Harris: "8 Film Startups You Should Know from SXSW.”

"Film, to put it mildly, is not a priority for tech people," says Ms. Harris, reporting from the floor of Austin’s interactive conference. Eight film start-ups in a sea of technology suggested that more could be done to address the needs of our industry.

Her bold suggestion: “A startup incubator entirely devoted to problem-solving for the entertainment industry."

Maybe that’s what we need: a year-round community of tech, creative and business innovators who tackle the pain points and create innovation (and disruption) in the entertainment business.

(Note: I spent 11 years nurturing the AFI Digital Content Lab. It did not incubate start-ups so much as new forms of content and user interface, but it was a similar community. I'm currently advising a new accelerator-inspired Lab in Toronto that will support digital entertainment content start-ups — what we're calling "engaged entertainment.")

THE INCUBATOR/ACCELERATOR MOVEMENT

Los Angeles, the home of the entertainment industry, has recently seen an explosion of incubators, accelerators and other instruments designed to help start-up companies race towards launch, viability, funding, and exit.  (A blog post by start-up consultant Joey Tamer reviews some examples.

It’s not just L.A., of course: This is a true global movement, with hundreds of similar organizations springing up around the world.

Most offer some combination of seed money, advice, education, and connections. And most have been influenced by the two most successful models — Silicon Valley’s YCombinator and the TechStars network. (For the difference between incubators and accelerators, check here.)

The movement seeks to find and support entrepreneurs who will build winning companies that deliver the kind of profits sought by investors in the angel and VC world, preferably 10 to 20 times their investment.

Traditionally, companies that can grow quickly and scale into large-scale businesses are rooted in technology. They are almost always very disruptive to the incumbent market leaders. They almost always destroy the status quo.

WHY IS ENTERTAINMENT DIFFERENT?

Are entertainment industry start-ups different than those in technology?

Historically, content hasn't been seen as having a predictably "scalable" business model. Content remains a hit business, whether distributed in analog or digital form, and the ability to repeat a success has proven to be illusive over time. Perhaps, that is changing, given the blur between content, technology, social, and audience.

In some ways, innovating business practices within the entertainment industry has been even more off-putting for the traditional investor — aspiring start-ups must contend with entrenched, complex business relationships, rights and long-term contracts. Over and over again, companies have crashed on these rocks.

Interestingly, many of LA's leading tech investors are high net-worth refugees from mainstream entertainment who know only too well how difficult it can be to bring change to the legacy industry.

As Amplify.LA founder and investor, Paul Bricault emailed me, “I pass on most entertainment start-ups, mostly as I have too much scar tissue dealing with rights et. al.”— as he spent years as a senior executive at the William Morris Agency.

DISRUPTION VS. CONSORTIA

Truly disruptive entertainment start-ups like YouTube, Netflix or TiVo launched up north where there's less reverence for the legacy of the studios.

Paul Graham, founder of YCombinator, caused a stir with a recent “request for startups” post entitled “Kill Hollywood,” calling for entrepreneurs to replace a dying industry with products that enable what “people are going to do for fun in 20 years instead of what they do now.”

Graham’s jeremiad, triggered by a nasty battle with Hollywood over the SPA legislation, has stimulated lively dialog at Hacker News, and Quran.

Hollywood’s love/hate relationship with technology leads to very different strategies than Silicon Valley’s. Instead of start-ups, Hollywood funds organizations and consortia to address its own technology needs, such as:

>>  Digital Entertainment Content Ecosystem (DEC), a consortium that promotes the Ultraviolet “digital locker” technology.

>> Movie Labs, a studio-funded grants program based in Palo Alto that focuses on narrow industry problems.

>> Entertainment Technology Center a USC-based program that researches issues like digital cinema and 3D.

OPPORTUNITIES

Nevertheless, there are a limitless number of start-up opportunities in digital content, production, funding, distribution, creation, marketing, community building, sharing, tools, collaborative production and much more.

The eight start-ups Harris found at SXSW featured innovations like crowd-sourced cinema exhibition, collaborative feature film funding, embeddable movie clips on Facebook, Facebook-based VOD of full-length movies, recommendation engines for movies, direct filmmaker distribution and sale of movies, and subscription to upcoming movie titles before release.

Or take a look at companies like WatchIt, Scene Chat, NanoCrowd and Slated.com. These start-ups offer, respectively, a single movie queue across all media, social commenting within videos, a new paradigm for film recommendations, and a next-generation online film investment marketplace.

Indeed, a search on Angel List for start-ups with the tag “entertainment” will yield 813 start-ups. A search for the tag “content” brings up another 133 companies.

How many will succeed? What will it take for that success? That’s where the incubator/accelerator could prove to be decisive.

WHY AN INCUBATOR?

The incubator/accelerator movement is exploding worldwide, in part because it’s cheaper and faster for entrepreneurs to take an idea from concept to launch in the web/mobile era. Moreover, start-up founders find that they can get what they need to go to market within the accelerator/incubator community and continue to get advice along the way.

When the model works, there is a virtuous circle of success created. Entrepreneurs come back as advisors to the incubator, and a new crop of hopefuls gain the benefits of even more experience.

This formula is beginning to be applied well beyond just the classic technology start-up with models designed to support all manner of enterprises, not just those which can return a 20x profit.

Special-purpose accelerators and incubators have been launched for women-run mobile businesses, for solutions in education, government, social entrepreneurship, journalism, and health, to name a few. Just this week at SXSW a Public Media Accelerator was launched.

Ultimately, such an incubator needs the commitment of a core community of true believers whose interests (and resources) converge to generate a critical mass that gets the program up and running.

I believe that an amazing community will flock to support such a venture focused upon entertainment, providing a deeper layer of support that can help shortcut the unique challenges of navigating the entertainment ecosystem.

With that, and some deep pockets, the model could be extremely powerful.

Clearly, there's a gap, an unmet need, a vacuum waiting to be filled with investors and visionaries with a passion for entertainment solutions driven by technology.