Will Hollywood leave behind a dying home entertainment model for a more audacious strategy that unlocks the power of the giants of the Internet — Information?
It’s pretty stunning to think that we live in an age of transparency. Our every purchase is tracked somewhere. Our preferences, our movements, and even the identity of our friends are known to the people who sell us stuff.
Netflix knows. Amazon knows. iTunes and Facebook know. Even Walmart knows.
But Hollywood doesn't. The movie companies that create and distribute entertainment don’t have the barest specifics about their customers, grasping darkly at intelligence served up by market researchers while ceding specific data about their customers to the retailers who sell their product.
In the Information Age, the one thing the entertainment industry is still missing is information.
It seems that Warner Bros. may be one studio that gets this problem. With its recent purchase of Flixster, and its 30-million strong consumer base, the studio has bought direct access to people who watch movies, rate them, read about them and want to share that information with their friends.
Warners, which recently joined the YouTube rental initiative and has experimented with renting titles over Facebook, is looking to gain direct knowledge about its customers and make that a core part of its strategy.
At a conference in New York on Wednesday Time-Warner CFO John Martin said as much. And he offered clues to a new strategic direction in which Flixster would be the “front end” of a digital library offered by the company, as he called it.
The idea would be that consumers could upload their existing DVDs into a digital cloud. (The cloud is part of an industry-wide initiative called Ultraviolet that will let consumers manage their movies digitally and view them on any platform they choose.)
Flixster would be the way in to inviting consumers to do this, as well as the tool by which library owners could share their movies and preferences.
In other words, we could all transfer the physical libraries that we already own to a digital platform, and then be able to view them at will, share them — and, critically, make that information available to the studios.
Martin said this was a path to getting people back to owning movies rather than renting them.
Maybe. For starters, we’re talking about uploading movies we already own.
But the real key here is the information. That would allow studios to market their films directly to the people most likely to buy them.
Still, there’s a snag here. This strategy probably only works if all the studios do the same. You’re not going to convince consumers to upload their DVDs from one studio and not another. No consumer is going to manage multiple movie libraries in the cloud.
So how to herd all the major studios into the same strategic direction?
Apparently I’m not the only person in town thinking about this pivotal point. As I was writing this post, an article by digital consultant Nick DeMartino popped into my email:
“Data is the secret sauce of social media that will empower Hollywood to take control of its own business, rather than to cede it to the disruptors from Silicon Valley,” he writes, continuing, as if we’d had a mind-meld:
“Hollywood’s biggest customers have been theater chains, TV and cable networks, and big-box stores — and now digital distributors like Netflix, iTunes, and Amazon. All of which have been very busy building a consumer ecosystem powered by data. To reach customers directly, studios will have to build new businesses to distribute movies and leverage behavioral data.”
So therein lies the challenge.
Will Hollywood be able to leave behind a dying home entertainment model for a more audacious strategy that unlocks the power of the giants of the Internet — Google, Facebook, Netflix, Amazon?
For decades the entertainment industry has lived at an arm’s length from its consumers. That has to end. It’s time to join the Information Age.