Kevin Reilly - President of Entertainment, Fox Broadcasting Interviewed by David Wertheimer, Executive Director, The Entertainment Technology Center @ USC.

How is the business different today?

When Kevin started at NBC in 1988, he started to see articles being written about how network TV was a dinosaur. The articles we see today are similar. The death of TV is greatly exaggerated. Back then you could see that cable would grow and network TV would lose share to cable.

There was no discussion of how the business model would change back then. TV was the greatest advertising mechanism every invented. While the media mix will change, there is so much information coming out now that people actually miss ads when they get pulled out of shows. People want to know about products and ads play a useful role.

People will declare TV dead. While there is no turning back the clock, there will be TV networks in the future.

What are the fundamentals that will always apply?

Kevin says he’s really shocked to see how much sometimes nobody knows anything.

We can’t make declarations about what will work and what won’t. He tells the story of how everybody passed on the Sopranos, how Law & Order was not seen as the great show and the same thing applies to the media and the business model. There is massive change going on, but when people declare something to be the “way things will be” it’s more often wrong. He says the one constant is quality content.

If we were at this conference 2 years ago everybody would be saying long form video won’t work on the web. Now, we see it as one of the leading drivers of video on the web.

Where are you on UGC?

We all love a polished production, but great entertainment can be some 5 minutes of truly entertaining content. He’s all for it if we can make a living with it.

What experiments have worked and what haven’t?

This is not like trying to re-tool the auto industry. He says the media business is very responsive. It’s all about the risk takers. He points to Rupert Murdoch as someone who has challenged the status quo and its one of the traits of News Corp.

Talk about year round development

The more things stay the same, the more they stay the same. The old network model was a license to print money. The cycle worked. It wasn’t very efficient. Peaks and valleys in work were huge.

It seemed to outlive it’s usefulness, but people kept doing it. When we came out to the strike, it seemed like an opportunity to move to a year round basis. It’s a risk, but it creates opportunity to use highly viewed shows at the end of their season to promote new shows.

Talk about the Remote Free TV idea.

The idea is an experiment. Last year they were setting the schedule and they decided they needed to do something different. They had been stuffing more and more commercials into shows. Advertisers had come to view the commercial load as clutter. They decided to cut the ads in half and charge twice as much per ad. Fringe was the first experiment. It was really received well by the audience. The rub was that the advertisers who would pay the premium were few in number.

Not sure whether this will be the model for the future, but it may be the way to go. (My note: he should read the Innovators Dilemma. TV is in segment retreat to the high end. Higher quality ads at higher prices. Same move as the steel industry etc. Worth reading if you care about this stuff.)

What about the relationship with Cable Networks.

We are at a saturation point with cable. People have 118 networks and watch 16. It’s no longer good to add more networks. They are negotiating with cable networks to take cash for their network broadcasts, but it may mean a reduction in the number of cable networks that companies like Fox have.

When things are available online via Hulu, how does that change the relationship with cable companies?

We have to create legitimate models before illegitimate ones pop up, like they did in music industry. Fox makes high end content which need 10 minutes of premium advertising to support. When people watch 24 on Hulu we make less money. How we balance this is important. Windowing might help this. Cable companies have a 7 day delay before it goes online. It’s just one of many challenges we are dealing with.

For example, the way we finance these shows has changed as well. It used to be getting to re-run syndication. That market has seriously contracted. We need to figure out new revenue models.

What’s popped culture?

Pop culture and mass media had a symbiotic relationship. It was a great robust time for media. Now we’re living in the era of Moore’s law. Everything is moving much faster. Managing the relationship with pop culture is challenging when things are moving so fast. Media is not moving in lock step with pop culture. It’s the beginning of a really big transition. Even in a forest fire, there is rebirth after the fire.

Stan Rogow, Executive Producer/Director, Gemini Division and CEO of Electric Farm Entertainment.

Why is a successful producer even dealing with the Internet?

Stan says he has a son who was just not watching TV. He says his son asked him about CSI which he saw on YouTube. His son’s generation just doesn’t know about networks.

The Internet is just growing and growing.

What does it take to make a successful show on the internet?

Principally, it starts with a simple thing - a great idea that the audience will embrace. If you don’t have that nothing else matters, no matter what channel of distribution you use.

The difficulty of making a 3 minute episode with a beginning, middle and an end, with a cliff hanger to bring people back is very hard. Some writers figure that out, some don’t. It’s very challenging to make that short format work.

The other thing that is becoming very important is the social networks into account. They are different and they will evolve into places where different type of entertainment will migrate to different places.

The challenge is to stay ahead of the curve. It changes always.

One of Stan’s partners spent two years working on games. They see the game aspects of the core piece of entertainment is important and growing in importance.

How did you get Rosario to do the show?

One of the writers of Afterworld is a friend of hers. She did one of the voices on Afterglow and it turns out she’s a sci-fi fan. We asked if we could do something with her and she said yes. Finding an artist that thinks the internet is cool and wants to be there, is what it takes.

Where’s the money?

Gemini Division has different model. They are using product integration with 5 different brands that are very organic. Microsoft, Intel, Cisco, UPS. They talked to the brands to find what was really cool about their stuff. They then could integrate the product features into the show.

The show starts with Rosario talking into the PDA, they had her talking into the Windows Mobile software. They created a new interface which was not the traditional Windows Mobile interface. Microsoft let them go ahead and it got really good reviews. Now waiting to see what Microsoft does with the interface.

They have not done pre-rolls - but they are open to experimenting. They believe there is more value in product integration, but traditional media buyers still want the things they know.

What about distribution?

Phase 1 was tied to NBC for the first 50 episodes. Phase 2 will be opened up to much wider distribution. There are lots of people who love the show now, but it can be opened up to many more people with wider distribution.

What can be learned from Quarterlife?

Internet entertainment is internet entertainment and TV entertainment is TV entertainment. They will re-cut the web version to make a DVD, but the TV version is a different thing as is a game version of the show.

At the 2009 Future of Hollywood conference, held at the Roosevelt Hotel in Hollywood, California, Blair Westlake, Corporate Vice President of Microsoft’s Media & Entertainment Group was interviewed by Tom Adams, President of Adams Media Research.

Hulu has been a great consumer success. But it’s not clear how it plays out for the traditional distributors like cable and the content producers.

The traditional distributors are saying hold on, we’re paying to distribute this content and you are giving it away for free online.

The content producers are used to the TV load of advertising revenues which is much higher than the ad load at Hulu. We may not be talking about trading analog dollars for digital pennies, but it may be analog dollars for digital dimes.

If the cost per thousand impressions doesn’t change, it’s a hard to see how things progress quickly. It just doesn’t make economic sense for Madison Avenue.

One of the things that technology allows to do is to target ads much more effectively, which may be a way to increase the digital revenue without the same advertising load. There is some certainty that advertising will remain a major component of the revenue model.

There’s a tendency to lump music, TV and movies into an entertainment bucket. Movies have two primary sources of revenue. Renting a night at the movies which represent about 30% of revenues and then the sales of DVDs and the like representing the bulk of the revenue.

Cloud computing based movie distribution will begin to substitute for DVD’s as rental on demand grows. For example, while DVD sales may be down 30%, Xbox video on demand revenues have roughly doubled.

Looking at TV, before DVRs, TV viewers would watch about 2 out of 4 episodes of shows. With DVRs, that number has increased to the average viewer watching 3 out of 4 episodes. Cloud based access could play a role in further increasing the viewing ratio.

Is the next step the Netflix subscription model? Fewer and fewer movies are being distributed via the ad supported model. The Netflix model is not new. HBO has been around for a long time and is the premier movie channel. Netflix is a different time window than HBO. It’s offering access to the library. One in ten Netflix subscribers use the Xbox Live service to access movies to consume billions of minutes of media.

The two models that seem to make the most sense are subscription and ad supported distribution.

What’s been the impact on the rental market? The VOD market should see strong growth. The average consumer only watches a movie a couple of times which makes rental a sensible alternative.

However, the switch to online will take longer than people expect. It won’t be one model for everyone.

Westlake looks at the audience and see different segments. The older audiences will be stay wedded to the traditional channels. The younger generation will be different. Just like they prefer cell phones, they will be looking at it with a very different set of eyes. They will drive the change.

In the first session at the Future of Television Conference, held at the Roosevelt Hotel in Hollywood, California, was full of stats and data from analysts at SmithGeiger, Parks Associates and Magid Associates.

The bottom line - the internet has caught up with TV for entertainment use. TV viewing is down by about 2 hours from last year, with most of the increase being in watching online video.

The interesting thing is that there is lots of data to suggest that TV and Internet media reinforce each other. Much of the online activity revolves around catching up with what’s going on with TV shows. Watching shows you missed is a highly popular use of online video.

There appears to be a future for TV, but one quite different from that of the past. TV won’t be the single dominant entertainment channel. It’s going to have to share prime time with the Internet.

You can follow what’s going on via Twitter search.  Just search for #FOTV.

UPDATE:

# Mike Vorhaus (Magid Advisors) Presentation:
Nielsen versus Consumers - They Say Canabilization Happening
# Seth Geiger (SmithGeiger) Presentation:
Digital Media Trends and the Future of Television

Tony Ponturo, President and CEO of Busch Media Group, spoke at the Future of Television conference. Tony observed the increasing complexity of marketing as the number of channels has exploded from the basic three back in 1972 to hundreds of thousands today with the web.

At the same time, the consumers are getting more sophisticated, diverse and elusive. Tony describes how the demographics of college markets are changing rapidly, in particular the increasing share of women in the college ranks and how that will change their marketing in the future.

He goes on to describe the rise of UGC and changing consumer media habits. Today, adults 21-34 consume over 58 hours of media each week (28+ hours on TV) . The internet has risen to 6.4 hours per week on average, and it consumes an average of 8.5 hours per week for those that have Internet access.

In the 80’s and 90’s, “consumers had to come to us”. In the latter 90’s through today, you need to go to the consumers. You need to find the consumer. While 90% of media spend is still on traditional sources, almost every deal needs to integrate into the digital space in some way.

Tony described the example of Swear Jar, which was originally done for the Super Bowl, but was considered too racy for TV given the bleeped out language. They bought 6.2 million views on Yahoo and Break. It then got 2.7 million more views on YouTube.

Tony showed the original internet spots for the Dude campaign which allowed the creative team to develop something unique, which then led to TV commercials with the same theme.

TV strategies are focused on Tivo proof TV such as big events and sports which have managed to retain their audiences. He sees an increasing shift to cable spend. Cable is up form 19% in 1998 to 30% in 2008.

Another major theme has been an increase in product placement in TV and movies.

The integration of TV and online is important. He describes how they get 32 million views online after the Super Bowl.

TV is as strong as ever, but there is now more need for added value and consumer engagement.

In addition to TV, Tony sees product placement and the convergence of broadcast marketing with online publishing as important brand marketing priorities going forward.

Technorati Tags: Future of Television, brand marketing, Busch Media Group

This panel at the Future of Television focused on user generated content, it’s role and the ways in which it can add value..

Panelists
Ken Todd, VP, Content, Showtime Networks
Richard Titus, Head of User Experience, BBC Future Media & Technology
Ivana Ma, Partner & President, New Media, Generate
Moderator: Rohit Bhargava, Author, Personality Not Included / SVP, Digital Strategy & Marketing, Ogilvy Public Relations Worldwide

What’s the role of UGC?

Much of UGC is seem as being funny and somewhat irrelevant. However,the BBC gets lots of content from citizen journalists who send in content and blogs are some of the most heavily trafficked sites on the network.

UGC also has a major role in contests. Ivana described how when a music contest incorporated UGC and was framed as competing communities (eg, Colleges), really made the contest a much bigger success.

UGC also plays a role as brand evangelists. Ken spoke about how they used a site to have people write fan lit and have people vote on the content. He also spoke about a UGC contest using the them song from Weeds - Little Boxes. The prize was playing five of the songs on TV, with a grand prize of $10,000. He says it has proven very successful for Showtime.

What role do bloggers play?

Ken speaks about how they can play the role of uber fans (Super Fans). They can have a huge impact. Ken says they have started treating these uber bloggers as they would reporters, sending them press kits and advance on shows.

Richard speaks about how bloggers have now added a new voice to the conversation. He says blogging has made the BBC wake up and work harder.

Ivana points out that brands have taken an interest and started courting bloggers. Richard asks that since bloggers are more likely to be easier to buy off than the traditional media, does that make them more interesting to brand advertisers. ( What BS - like the auto mags don’t demand advertising for reviews.)

Is it money or is it attention and micro-fame?

Some do it to communicate, others want that small moment of fame. If they are doing it for money, its not there yet. You just have to look at the content and you will usually see what the motivation is. Richard points to the opportunity for blogs to generate huge momentary fame based on controversial content.

What about the cost of supporting UGC?

The cost of supporting UGC should also be recognized. Supporting this content is not free. It takes substantial moderation and infrastructure costs. Richard says that the conversation is going on and if the BBC wants to be part of it they will have to bear the cost.

Technorati Tags: Future of Television, user generated content

This panel at the Future of Television conference focused on producing content specifically for the web. Do we need it? How should we approach it?

Panelists
Alex Barkaloff, Executive Producer, Digital Media, Lionsgate
David Leibowitz, EVP, Business & Legal Affairs, Gotuit
Mara Winokur VP, Digital Media & Business Development, Starz Media LLC
John Edwards, CEO & President, Move Networks
Keith Richman, CEO, Break.com
Moderator: Lindsay Campbell, Host, MobLogic (a CBS company)

Do we need content created specifically for the web?

Alex says absolutely. Re-purposed content from one platform to another is just not the same. It’s not optimized to that platform. He points to Weedisodes that will be created specifically for the web as an example of something that’s appropriate for the web.We need this because its where people are going.

Mara says there is no formula. Different things work for different brands. Mara says that clips didn’t work originally for their Monga(sp?) site, but when packaged into channels they became much more successful.

The content needs to be true to the brand. If it’s Weed’s related content it needs to be zany, but for others it may be a different type of content that works.

What about downloadable media?

The challenge is tracking the data for downloadable media. Without the data, a view doesn’t count as much. John discounts downloadable because people want it now, but he admits that we don’t know what people want or where they want it. He points to the difference between email and texting based communication segments. Different segments want different things. He says that the key is to experiment and measure to find what works.

Are people looking online because the content on TV is not good enough?

John points out that to a large extent what they want online is what the want on TV. The challenge for users is that when and where it’s shown on TV may not be convenient for users. The net provides a way to place and time shift content viewing. John goes on to say that distribution should not get in the way of viewers. Distribution needs to be transparent to the viewers to eliminate speed bumps.

How to build an audience and get sponsors?

Keith Richman says that the people who focus on specific target group or interest group will build an audience. Focus really helps in building that audience. He goes on to say that with good packaging and programming advertisers can get comfortable with lots of different content. Providing some confidence and consistency in the programming, even if it’s silly/strange content, is very helpful to getting the advertising dollars.

Technorati Tags: Future of Television, internet content

This panel at the Future of Television conference focused on the state of Mobile TV and its chances for success.   How is it doing?  What is needed for breakout success?

Panelists
Bill Sanders, VP Mobile Programming & Digital Development, Sony Pictures Television
Derek Broes, SVP Worldwide Business Development, Paramount Pictures
Steve Smith, Managing Director, Playboy TV International
Douglas Craig, SVP Digital Media Operations, Discovery Communications
Seamus McAteer, Chief Product Architect & Senior Analyst, Media Metrics
Moderator: Ted Cohen, Managing Partner, TAG Strategic

What are the gating factors for Mobile TV acceptance?

Hasn’t been an overwhelming response for adopting Mobile TV.  Insufficient marketing to consumers; marketing is not the carriers’ core competence, just as software development is not the core competence of studios.  The numbers are still small - one or two percent - of the mobile phone market in US and Europe, but it’s meaningful, and five to ten percent of the addressable market of video-capable handsets.  The combination of flat rate data with increasing video capable handset and YouTube-like free video should be powerful drivers of adoption.  If it’s free, everyone will try it at least once.

What are the major content and user interface issues?

Need to build products and services in the way that our kids want, not based on the constraints that we place on them.  Examples of limitations: content deleted after 24 hours, inability to pause and come back to content later.  Short form is performing better than long form, of course.  Foreign language is an issue - need dubbing, subtitles don’t work on mobile (Sony does subtitle, though).  Every panelist is doing a combination of repurposing existing and developing original content.

Whether long or short form, it’s about building habit — people returning to the brand again and again.  For example, Sony did 200 Ripley Believe It or Not clips.  Traditional carrier approach, put them all out there on the shelf and let them die a quiet death.  Bill is pushing to go back to original comic strip format, thirty seconds every day with a shelf life.  Perishability is important to drive habit building.  On YouTube, you want to be the person who discovers the clip and forwards it to your friends.  This is something that we should have learned from traditional media.

On digital rights, the most important lesson is that the consumer will do what’s convenient whether it’s legal or not; we need to get in front of the needs and offer what consumers want legally.  Should you ask for permission first or forgiveness later?  With talent, ask for permission.  In other cases, bias toward asking for forgiveness.

What will make Mobile TV prime-time, with DVR- and HD-like uptake?

Forcing the issue on studios and other content owners by device users figuring out how to get the content on the devices.  These mobile devices increasingly have the capability of PCs, access to broadband networks, and the ability to sync with PCs.

What about the opportunity for direct-to-consumer, internet / browser based mobile portals, bypassing operators?

Hard to market and reach consumers without carrier support.  However, YouTube has some success in mobile.  Operators are very concerned about this, want to stay well ahead of it.  Also, trying to convince carriers that they can be “smart pipes” without being the programmer, e.g. billing relationship.

This panel at the Future of Television focused on the metrics for TV 2.0

Panelists
Eric Garland, CEO, BigChampagne
Eric McMillain, Partner, Proace
Steve Markov, SVP, Sales, Teletrax
Howard Shimmel, SVP, Client Insights, The Nielsen Company
Moderator: Chris Lang, SVP, Research Strategies, SmithGeiger, LLC

What are the measurement challenges?

Eric Garland points out that metrics are expanding fast and we’re now seeing data by the pound. We need to get beyond the endless pile of data to meaningful analysis of what’s going on. Howard adds that this explosion of data will continue. He says we have a huge amount of data, but very little insight. He provides an example that provides answers in the brand management space that provides real insight. He says we are light years away from having the insight tools we need.

Eric McMillion has a perspective that different channels have different values and that a view on one channel may not be the same as another. It would be good to get to some sort or “gold” standard that would allow more efficient comparisons.

When thinking about cross platform measures, Howard asks is the industry willing to sacrifice some level of quality in exchange for more holistic measures? He hasn’t seen companies willing to do this. Eric Garland points out that the perfect can be the enemy of good enough. He says we need to focus on the answers business.

How do we measure engagement?

Howard says that it’s an important issue, but the question is what are we measuring engagement to? Without answering that question, it becomes circular logic.

Both Eric’s point out that we have more data online than we have ever had in traditional media. When looking at different generations, Gen Y is much more engaged with content in a certain way. They talk about it, share it, move it, do everything with it. But when it comes to focus as a measure of engagement they are terrible. They watch three things at once. So we need to get better about our definition of what we mean by engagement.

Howard says that the research is conflicting. Some says that when you are really engaged with content you stay engaged with advertising. The other side says that when you are deeply engaged in content you actually need a break at the commercial and therefore disengage.

How do we take advantage of better usage data?

Howard contrasts how traditional advertising is based upon average demographics and time slots, as compared to Google which is offer user specific offers based upon your profile. The challenge is how to do that on TV. Eric Garland suggests that perhaps we should focus on how to make the content and experience better. Make it better than the experience the pirates offer and then serving the right ads becomes much easier.

Technorati Tags: Future of Television, metrics, performance measurement

Television is changing a lot and television advertising is changing with it. Tivo, DVRs and the internet are changing the way content and advertising is consumed. It changes the way TV ads need to work. This panel explores some of the changes they see on the horizon.

Panelists
Karen Bressner, SVP, Advertising Sales, TiVo
Eric Hadley, Chief Marketing Officer, Heavy Corporation
Rick Mandler, VP, Digital Media Advertising, Disney/ABC Media Networks
Robert Riesenberg, President & CEO, Full Circle Entertainment
Moderator: Joe Adalian, Television Editor, Variety

What’s the future of the 30 second spot?
The 30 second spot is still an important marketing tools and will remain so into the future. As long as television is important spots like 30 second or 15 second ads will be important. Karen from Tivo says they can enhance the 30 second spot by making it interactive. Eric points out that the importance of TV will change for different segments as young males are using the Internet with increasing intensity on sites like Heavy.com. He says the key is to respecting the viewer and make the advertising relevant and engaging.

How important is diverse portfolio in marketing?
In this day and age, when a network has a show doing 7-8 share its a success. It demonstrates the fragmentation of advertising channels and the need for marketers to explore a diverse set of channels to find their audience.

What one thing should change, what would be the new rule?
As the networks have jumped on the bandwagon of integration it has become more commoditized. The integration needs to be more strategic and in harmony with the show as opposed to something that is just a media deal done for an advertiser wanting integration. Rick would like to see more aggregation of agencies to make it easier to coordinate marketing and make it more integrated. Eric suggests that measures need to be tied to the intent of the campaign, not just what can be measured. Just because you can measure impressions or click throughs does not make it a good measure for everything.

What new capabilities will brand marketers need to become publishers of relevant and engaging content?
Need to become masters of what data comes from set top boxes and DVRs to understand what works in different environments. There is also a crying need for different kinds of resources within the marketing infrastructure. Interactive capabilities are still very underdeveloped and need to improved. Brand marketers will need to integrate these new capabilities with their traditional story telling strengths to make interesting content.

Should brands rent or own their content?
Rick suggests that brands should rely on rented content. Content is not what advertisers do so they should leave it to the traditional content producers. Eric suggests that it doesn’t matter whether you rent or own it. What matter is that you need good content wherever the content comes from.

Technorati Tags: Future of Television, television, advertising