Letter from the Dean
Support UCLA Anderson
By Bryce Edmonds
Flat screen. Phone. Tablet. In your car. From your tent. Waiting for the dentist. YouTube. Vimeo. Hulu. HBO Go. Sling TV. CBS All Access. It’s like someone blew up the old content consumption model — your television — splattering the bits everywhere. Only, instead of killing your television, it simply spread like that jellyfish that can regrow a whole new entity from the merest bits of cellular structure. Those lumps of TV sprouted new life and now we can, as the commercial goes, pause a show in one room and pick it up in the next one. Or, as many a parent bemoans, never take our faces out of our constantly streaming smart phones.
The new content-consumption reality is a chaotic swirl of possibility that has yet to settle down, akin to a kid on a sugar high. Where it will settle out is still uncertain as the myriad players, both new and old, jockey for position, for our eyeballs — and for our dollars.
But, it turns out, what’s old is new again. “When you look back through the history of television, new entrants into the market have all followed a remarkably similar pattern,” says Mike Hopkins (’01), CEO of Los Angeles-based streaming video service Hulu, a joint venture of NBCUniversal Television Group (Comcast), Fox Broadcasting Company (21st Century Fox) and Disney-ABC Television Group (The Walt Disney Company). “When the first cable channels launched they typically offered syndicated television shows (at the time very old ones) and older library movies.” He says that as those new channels matured, they reached the limits of what that model could deliver from an audience and revenue standpoint. Creating original content was a way to differentiate their service from the others. “Think of TBS, HBO, Showtime, FX, TNT, etc.,” he says.
John MacDonald, UCLA Anderson distinguished visitor and vice president and head of women’s and family networks at Toronto-based Corus Entertainment, says there’s another big financial benefit to old and new upstarts that branch out. “To the extent that platforms are successful in creating new hits, which is a nontrivial effort, they will have an advantage in the fight for share, and it will help them avoid a bidding war for hit library content from other studios,” he says.
So, proliferation of content is part and parcel with each new service that springs up, a circular bit of logic where creating content builds market share, which makes it harder to find content in a noisy marketplace, which makes building hit shows more important, which makes it harder to find content in a noisy marketplace, and so on, and so on.
As audiences have found new ways to consume their content, advertisers have followed. Networks, who still have a large financial attachment to the older model, have been slower to change. “Networks are adapting to an on-demand orientation, which will be difficult for them to compete with in the short term,” says MacDonald. “They are disinclined to make moves that accelerate [the traditional business model’s] decline.”
Hopkins says Hulu, with its links to those traditional models, is really a complementary service to the traditional TV bundle. And, he says, giving consumers that hybrid model of online and traditional options is best for them and the networks.
“We know that Hulu has brought new viewers into primetime television who would have otherwise been missed on air,” he says. “And, by giving viewers more time to catch up on the series after it airs, it may make the show bigger and more successful — which helps the network and us.”
But can cable’s network-bundle model last in the face of the growing factions of so-called cord-cutters and cord-nevers, viewers who have either abandoned cable services or have never signed up, preferring to get their content online? MacDonald says subscription services might be the new network bundle, but even they already face challenges in the new, quick-moving TV reality. “The all-you-can-eat services like Netflix will be susceptible to players who hyper-target profitable niches online, in the same way MTV carved off young adult viewers from the traditional broadcast networks when they launched,” he says. Ultimately, he predicts the newer models will create new options for consumers, creating niche programming targeted to smaller audience groups and increasing the overall pie.
Hopkins agrees, saying Hulu’s viewers seek content wherever they can find what suits their needs. “For example, we do not offer sports or live news,” he says. “Hulu users are entertainment enthusiasts and they use multiple services to fill out their entertainment needs. Four out of every five Hulu users subscribe to a pay-TV service and many also have a subscription to another streaming service.”
And, while you might think television’s recent growing pains might cause a content-creation, subscription-service or network exec to reach for the remote in a desperate attempt to find something, anything, good to see, Hopkins says he’s happy right where he is. “There has never been a better time to be in the entertainment business and, more specifically, TV,” he says.
The consumer, from a sheer volume perspective, also seems to benefit as they jump from platform to platform, device to device, changing “channels” to his or her heart’s content. The world, at least temporarily, has become their entertainment oyster. “Consumers should be the ultimate beneficiary of this transformation because they will have greater control and choice,” MacDonald says, a sentiment Hopkins echoes. “The marketplace is exploding and consumers have more choice than ever to decide what, where and how they will consume content,” he says.
But don’t think anyone in the content creation or delivery worlds will have much time, if any, to rest. “Innovation often comes in waves triggered by a catalyst — new technology, etc. — so we’ll likely enter a period of consolidation or a ‘settle down’ period,” says MacDonald. “But that period, too, is likely to be short lived, as the cycle of innovation continues to accelerate.” X
Peter Guber Gets Real
On Wednesday, May 13, Dodgers and Golden State Warriors co-owner Peter Guber, founder and CEO of Mandalay Entertainment and a UCLA Anderson distinguished visiting professor, announced a new, multi-million dollar investment in NextVR, a Laguna Beach startup. According to the company’s website, NextVR “has developed a custom lens-to-lens system for capturing and delivering live and on-demand virtual reality experiences in true broadcast quality.” It’s a 360-degree, immersive experience Guber describes as “emotional transportation on steroids.” Armed with a prototype of the device, he enthusiastically shared his thoughts on the potential of virtual reality technology at the March UCLA Anderson Economic Forecast conference in a conversation with Professor Sanjay Sood.
I’m building almost a billion-dollar venue like Madison Square Garden in San Francisco — a major undertaking: real estate, buildings, theater, all the bells and whistles. So that people can go to the theater and watch basketball, hockey, or a concert — physically get out of their home and go. Live entertainment is incredibly valuable socially, but it also competes very favorably against digital media … People want to be in social environments, sharing and joining and seeing; they want to feel that they’re there.
Buckle up your seatbelts.
I’ll show you the new arena and the new concert hall. Here it is, in my little black box, the whole thing. This is a studio. This is probably $40 worth of plastic, couple of lenses inside of it. You take your own mobile phone, and you put it inside, you turn it on. You put it on top of your head or you hold it to your face. And now the game that I was watching through an app, the game that I was watching on television — I am now in the arena, I am part of the experience, and I am in total control. I am now not a passenger, I am a participant.
I’ve been around this business a long time. I’ve built huge IMAX theaters. This is so different. It’s so transportive that it’s going to provide a medium so immersive that it will require a new dexterity from filmmakers and storytellers.
When I ran Sony, I saw a lot of really amazing things. This is not even in the same class. And it’s going to mean more production, more talent, more business, more opportunity. I’m extremely effusive in my belief that it’s the most transformative thing that I’ve seen in my time in the business.
It will create jobs everywhere where there are people who want to entertain other people, where they want to educate other people, where they want to train other people. We’ll have to develop movies differently because you’re not watching the movie, you’re in the movie. There’ll be a lot of technique, art, skill and talent all mixed together to make it work. All of it will require writers, directors, actors, producers… I’m not so sure about brick. I don’t think it’ll disappear, the physical studio; but I think it’ll become less of the fulcrum of the whole business.
Try it. It’ll change how you feel about what’s coming.