by Michael D. Sellers
I’ve had a few days to digest all the info from last week’s NATPE convention and I am going to try to summarize the key points here. We wanted to make sure we were alert to what this means for MovieBank, Quantum and of course WeEarth.
WHAT WE HOPED TO LEARN
NATPE (National Association of Television Program Executives) encompasses both traditional TV and, increasingly, the emerging world of Internet TV and other things having to do with the delivery of ‘TV-like content’ (basically any kind of video content) over the internet. We went to NATPE to attend most of the sessions relating to internet TV and video content, hoping to gain new insights and make new connections for MovieBank and Quantum.
STATE OF THE INDUSTRY
Speaker after speaker highlighted certain key points about the state of the industry. First — with broadband connections getting faster and more ubiquitous, the delivery of quality video content over the internet is increasing dramatically. There are more and more mechanisms either in place or in development for doing this — and the ability to deliver professional, high-quality video (as opposed to highly compressed, YouTube quality) content is growing dramatically. There are more and more aggregators and other types of sites that offer avenues for the delivery of video programming to an audience that is out there and hungry for it. That said, the mechanisms for ‘monetization’ are not there yet, and there is a great deal of uncertainty about how successful monetization will finally occur. Most of the discussion concerned advertising-supported models rather than subscription or pay models. There is no standard yet — and different innovators are trying many different types of ad-support ranging from “pre-rolls” (where a 10-15 second commercial appears before the material), mid-rolls (where it breaks in the middle), end-rolls (where it appears at the end , and other types of stamps and mechanisms that appear during the viewing. The bottom line is that while there is great confidence that an ad-supported business model is going to emerge that is strong enough to support the costs of acquisition and distribution of the material — it hasn’t happened yet. It is expected that within the next 1-3 years it will arrive.
Coming from a traditional marketing background, it was fascinating to see all of the remarkably clever and innovative ways that ads and marketing are being accomplished in such a way as to make them relevant for the viewer. This word — “relevant” — comes up again and again and basically the theme was, internet viewers are quickly turned off by traditional ads that may or may not have any relevance to them, but if they see ads that are relevant (i.e. ads that are targeted at them based upon that thing they are watching or some other way of knowing their personal interests), they are much more responsive. For example, if you’re watching a video on kayaking and an ad for a kayak comes up …. that’s “relevant”. This is just one example. The other aspect of marketing that was fascinating is to consider what the “wired” nature of the internet experience means to marketers who in essence can gather extraordinary information about every user, since each user or viewer is identifiable. This allows for customized marketing that is pretty extroadinary. And the other aspect is the degree to which the content itself and the marketing material that goes with it can be thought of as a single unit. There is much to learn here — but it is very promising and intriguing.
CONTENT PRODUCTION FOR THE INTERNET
This is an area where the conference was less helpful and one of the main themes of feedback from the conference goers was a desire to have more on content production next time around. There were, however, some interesting discussions — particularly the Michael Eisner led panel where all three members talked about the fact that while on the one hand current ad revenues do not support major league (or even triple a minor league) budgets, this is about to change and within the next two years they expect to start seeing content productions costing $2-5M being created with the internet as the primary distribution vehicle. They just aren’t sure when the “breakpoint” will happen — and until then, the budgets for content produced for the internet must be much lower due to the monetization challenges discussed above. But it’s coming….and that is significant for us.(I am going to add to this later but will post this much now…have to get on to other things. It’s Monday morning.)