Speakers at EMA's 2017 Digital Pipeline Conference Discuss OTT, SVOD, Premium VOD, 4K, VR and More

27 Sep, 2017 By: Stephanie Prange

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Speakers addressed premium VOD, SVOD, OTT, 4K and virtual reality, among other topics, at the Digital Media Pipeline 2017 conference, presented by the Entertainment Merchants Association Sept. 26 at the Skirball Cultural Center in Los Angeles.

Fandango’s Cameron Douglas, vice chair of the EMA, said that the agenda reflected “what home entertainment was, is and will be in the future.”

CinemaNow’s Bruce Eisen interviewed Dr. Nelson Granados, Forbes contributor and professor of digital innovation and information at the Graziado School of Business, about which companies will win in digital distribution.

“When digital comes in and hits an industry, it hits where there are some inefficiencies,” Granados said. In addressing the possible advent of premium VOD (home release of a film shortly after theatrical release for a premium price), he said the three-month theatrical window has a month cushion because most of the revenues are captured in the first two months. He said content owners must balance meeting demand with cannibalization of other revenue, for instance from theaters.

“It becomes an empirical question. What’s the optimal release date and price so that I can capture the most revenues in theaters and all the digital channels and physical DVD?” Granados said.

He noted, “when digital comes in in any industry it’s going to involve channel conflict” and that content owners have “got to strike a balance.”

He cited HBO’s move into OTT as a case study in how to manage channel partners. HBO had market power advantage, making it a great candidate to rock the boat, he said. In proposing HBO Go, digital access for consumers who already subscribed to cable HBO, the company told cable partners that the digital component was an added value to the cable subscription.

“[HBO said] I’m going to tie the HBO subscription to your cable service so it’s an added value,” Granados said.

When HBO launched HBO Now, its OTT service without the cable subscription, the company told the channel partners that they were only going after consumers that didn’t have HBO (subscribers had HBO Go), thereby not cannibalizing the cable channel.

“That’s good management of channel conflict,” Granados said.

As OTT channels have proliferated, joining top dogs Netflix and Amazon, competition has gotten fiercer. It used to be a wide open “blue ocean” when Netflix came in, he said, but now he called it the “red ocean.

“It’s pretty competitive out there and there’s going to be a lot of bleeding and there’s going to be a lot of services that are not going to make it,” he said, adding that the increased choice is good for consumers and that differentiation, including original and exclusive content, is key for OTT competitors.

As for winners in that deadly competition, Granados said he gave the edge to content providers, noting he gave came down on the side of Disney after it announced its entry into OTT (pulling content from Netflix).

“The learning curve to produce content is pretty steep,” he said, while launching a digital service is easier.

“I give the edge to the company that has the bigger bank book,” added moderator Eisen.

Monetary might also came up when Erick Opeka, EVP of digital networks for Cinedigm Entertainment, moderated a panel called “OTT 2024: What Will It Look Like?” on the future of OTT.

Opeka questioned the sustainability of expenditures on original content by OTT goliaths Netflix and Amazon.

“It’s doesn’t have to be sustainable,” noted panelist Adam Rymer, president of Legendary Digital Networks. “All they have to do is drive everyone else out of business.”

Panelists said niche players would be able to compete against these goliaths in the future.

Calling the cartoon OTT site Boomerang an example of “OTT done right,” panelist John Carle, of Collective Digital Studio, said “niche audiences want a place they can call home.”

Colin Petrie-Norris, CEO of XUMO, said niche OTT players can survive with less income than legacy businesses. He said there are a number of companies “quite happy with $4 a month.”

Who will be the dominant OTT player 10 years from now? The majority cited Amazon and one cited Google. No one tagged Netflix, the moderator noted.

Speakers also explored the possibilities of virtual reality and other next-gen content.

Richard Broo, CEO of Wemersive, said it still comes down to storytelling with virtual reality, adding that “audio is 50% of the experience.” Where the audio appears in relation to the consumer can provide “important cues in the storytelling.” He said it can be a passive or a “choose your own adventure” experience, depending on the demands of the story.

Distribution is also a top question. “Streaming is challenging,” he said. “Anchoring to an app is far more efficient currently.”

The conference also touched on improvements in visual quality. Glen Hower, senior analyst at Parks Associates, noted that one-third of flat-panel TV owners are familiar with 4K UHD TV, but that only a quarter are familiar with high dynamic range (HDR).

“There’s kind of this initial soup that we’ve been brewing for some time and consumers are confused,” he said.

Teresa Phillips, SVP of V2 Solutions, outlined some of the many challenges in the international market. Some markets in the Asia Pacific region are dominated by mobile entertainment and payments. Some markets prefer subtitles, some dubbing. In some areas, actors that dub popular stars are so recognizable that they have become stars themselves; a particular German actor added his own twist to an Ice Age character, making him a marketable commodity in that territory. Certain countries require a certain percentage of content to be locally produced. And there some blockades to foreign involvement, she said. She expects Amazon and Netflix to pull out of Russia based on requirements there.

With regard to ratings, the situation is complicated as well. Citing ratings for The Wolf of Wall Street, Phillips noted that France’s rating allowed those as young as 12 to view it while the United Kingdom required viewers to be 18 and Singapore 21. Malaysia banned it altogether.

“Each country has its own underlying sensitivities,” she said.

Internationally, there is “a lot of choice” and “a lot of disruption and innovation,” she said.

There are also cultural differences that can affect the storyline of the content as well, she noted, pointing to a scene in Inside Out that had to be changed because Japanese children actually like broccoli, rather than abhor it as portrayed in the original film. The studio changed the abhorred food to peppers for the Japanese audience. It’s a change that may not have translated to the marketing team when it used the original clip, confusing Japanese audiences.

It’s just one example of the myriad challenges facing content owners distributing abroad.

The EMA noted it is expanding its digital footprint. Stadium Media president Mitch Mallon, chair of EMA’s Digital Steering Council, said digital membership had grown and noted the EMA held its first Digital Pipeline event in New York last November.

“EMA had another productive year and enjoyed continued growth,” said Mark Fisher, EMA president and CEO. “We have every significant domestic retailer or content partner in the transactional channel, including all the major studios and all the major retailers.”

He identified growth opportunities in three areas: TV networks, international retailers and content providers, and OTT services, including SVOD and AVOD services. Erick Opeka of Cinedigm is chairing a council on OTT, which will spearhead development of specs for rights communication or avails.

“Our keystone event, the Los Angeles Entertainment Summit, will be the biggest ever in 2018 as we expand it to include our new members and our new channels,” Fisher said.

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