SampoMedia’s Michael Gubbins was a keynote speaker at this year’s Prime Time conference in Ottawa. The event brings together leading players across the Canadian media sector to discuss the key issues affecting audiovisual industries, and looks forward to the future. SampoMedia’s Michael Gubbins was invited as a keynote to this year’s event. This is a summary of his address. (Download PowerPoint here: OTTAWAPRES)
THE ENGAGEMENT ECONOMY
Engagement Economics describes the ways in which new patterns of audience demand are being turned into tangible value.
It is intended to suggest alternative approaches to the debate around sustainable business models, cultural impact and diversity, much of which is trapped in the era of analogue ‘scarcity’ economics (see Audience In The Mind).
It also tends to be obsessed by the perceived successes or failures of digital technologies. But ‘digital’ today is not a set of products, or a trend, it is the environment in which the vast majority of content is produced and distributed.
Of course, this changing environment does present challenges for established industries, as evidenced, for example, by the fraught discussion about whether subscription VOD channels, such as Netflix, could, or should be regulated like broadcasters.
But the deepest problems – already faced by every other creative industries in recent years – are the result of the inability of value chains built for different purposes, and a different era to adapt to the realities of rapidly changing audience demand.
And audiences don’t give media or platforms a second thought. The growth of high-quality mobile platforms and smart TV will serve to make the distinction between television, film or digital content still more irrelevant.
Most consumers want what they want, where and when they please, and pay no heed to the economic and technical challenges of production and distribution.
There is no single business model that can allow every kind of production to neatly accommodate those kinds of demands. It cannot be achieved through a simple and singular industrial push, like the move from 35mm projection to D-cinema, which was achieved with relatively few casualties.
In this emerging on-demand world, scale counts.
Hollywood is increasingly using cross-media tools and (well-financed) marketing; and it is employing Big Data to capture audience behaviour and sentiment as an integral part of its global brand-building.
Meanwhile micro-budget productions are successfully picking up the tools associated with online video, social media, crowdfunding, etc. High aspiration and low financial risk is a winning combination for innovative creatives and YouTube is building its own wealthy star system.
The problem is the ‘squeezed middle’: those mid-range budget films that often define public perception of independent, national and arthouse content.
Risk-averse financiers and rights buyers, dramatically increased competition for time, and the decline of physical formats, such as DVD are all having an impact.
The lack of a viable financial model is destroying the career paths for talented people, which in turn undermines diversity. And it also rewards conservative thinking in content production and distribution.
Take away a thin top layer of international and local hits, which are often used to suggest the health of industries, and the outlook becomes much less rosy, meaning that public funds have become a life-support system, rather than an enabler.
That role may not be sustainable in the long run, and public service broadcasting is already finding itself the subject of growing political pressure, exacerbated by difficult economic climate.
Throwing money at new priorities, such as diversity, is no longer an option.
Engagement Economics suggests that the desire for long-term sustainable business models and diverse content with real cultural impact, must begin with a fresh look at processes, working practices, and the ability to adapt to new realities.
Demand and diversity
The industry often talks about the problem of audience ‘fragmentation’. It is a misleading phrase, suggesting a profound collective shift in public taste. But the Internet Era has not necessarily (at least yet) led to fundamental changes in what people want to see.
SampoMedia’s research work in many countries tends to suggest a degree of consistency in what people say they want to watch. In broad terms, those trends might be summed up as:
- Authenticity and Exclusivity
- Spectacle and Event
- Community and Choice
- Discovery and Serendipity
- Convenience and Catch-Up
Those are probably quite close to what consumers have always wanted. The big change is that those desires can now be fulfilled.
Fragmentation merely describes the way that consumer spending and time, that used to be concentrated on a small number of content channels, is now divided across a wider set of choices.
That exponential increase in choice has not, unfortunately been matched by any corresponding increase in the 24-hour day.
The logical, and relatively successful, response of the biggest and richest content producers, has been to grow the customer base – with increasing attention devoted to the emerging super-audiences of China and Russia.
The biggest ‘linear’ franchises think global, and use the full range of digital and cross-media tools to achieve their ends.
The extent to which digital tools, and particularly social media, drive demand for the biggest television and film productions is deeply underestimated. Television has not fought off and beaten the challenge of ‘digital’ – it is now fully integrated into the digital environment.
The grow-the-audience strategy, however, does not easily scale. Global media strategies are extremely expensive. And, given the increased competition for space, the value-for-money of, say, a cinema poster campaign is now under question.
Success on on-demand platforms is still highly dependent on success in the established media. You need to create demand before you any wants you on demand.
The independent industry has to face the fact that there will never be less choice than there is today; and it will never be harder to access it.
More choice then is going to be a permanent fact of life.
Ironically, the lack of sustainable models to make a mark in a world of ever-growing choice is further polarising the industry, with the big getting bigger and the small mobilising niches. The middle again suffers.
The current market creates the illusion of choice.
The more people are given an excess of what they think they want; the less they tend to find the content that might change their minds.
The current media culture can still make hits but that is not the same as a sustainable, inclusive and diverse audiovisual economy. And that is where Engagement Economics comes in.
What is engagement?
Engagement is one of those very useful words, which is already being dragged over to the dark side of buzzword platitudes. It needs to be rescued.
In simple terms, engagement describes the different kinds of interaction between audience and content. It is where emotional response takes on practical form.
Engagement has always been there of course. There has never been a truly passive audience; people bring their own interpretations to what they watch.
And there are times, of course, when people are happy to sit back and consume. Active and passive engagement is not an either/or choice.
The means to actively engage were historically restricted, like choice of content, by the barriers of technology. We could choose to watch, or pay for a ticket, or alternatively turn off and walk out.
These days, passivity is an active choice.
The digital age, however, has created a wide range of engagement tools and activities, including: Social media, personalisation, crowdfunding, cross-media games, fan fiction, user reviews, etc.
The current phase of Internet development seems tailor-made for audiovisual engagement. Broadband speeds, compression technology, high-quality devices, mobile technologies, etc have opened up dramatic new opportunities in content distribution and play.
Those industries that have most successfully adapted to the changed environment have found new ways to engage.
Much professional sport, for example, like film, started life around the turn of the 20th century and has seen periods of severe decline. But from football (soccer) to ice hockey, it has dramatically increased its appeal through new forms of engagement: mobile viewing, in-play betting, fantasy leagues, social media links to players and clubs, replica kits, etc.
The big sports clubs have created enviable audience engagement across many platforms that has helped build global brands, deeply attractive to sponsors. One might call them transmedia brands but the public calls them football, hockey, etc.
As so often in the digital age, consumers assimilate new opportunities, often, as in music and film, before industry has worked out a business plan.
On a smaller scale, engagement techniques are increasingly being used by museums and art galleries, particularly in the field of mobile apps.
In every case where these strategies have been successful, the process starts with understanding the audience value of different aspects of a product, brand or design. That value often extends far beyond the original supposed ‘core’ product.
Engagement begins with an understanding of value in the early stages of development. It is not prescriptive – different projects will have different engagement points.
Those points might be developed through a degree of early-stage testing and prototyping, in agile production models. Far from a recipe for homogeneity and the lowest-common denominator, this kind of process allows room to test out the truly daring and innovative.
It is more a case of maximising and exploiting value (cultural or commercial) throughout the creative development of a project, rather than waiting until it is finished. Common sense suggests that in all aspects of life “Point, aim, shoot” is the most logical and effective strategy; but current practice persists with “shoot, aim, point.”
It is not a question of allowing the audience to rewrite a story, and it is a peculiar conceit to believe they might want to. It is a matter of identifying the most promising IP, understanding the value of elements of a film, building audience strategy at a stage where something can be done about it.
In all SampoMedia’s research work, the most frequent, and most depressing refrain is “if only I had known…”
A conversation is not a compromise.
The design process
Industry and many public funds remain stuck in the more single dimensional operational model of the analogue age. Content essentially reached audiences through the same process.
There was a simple path beginning with production and ending with some form of screening, or exhibition. That singular approach has been deeply, and in all probability, permanently disrupted by the vastly increased choice.
To create sustainable business models, there needs to be a more multi-faceted approach, taking advantage of the fact that value can be created in many ways.
Engagement Economics aims to capture value in all the different phases of development:
- B2B (the different agencies and expertise to help finance work and to connect to audiences)
- B2C (the direct relationship with consumers through product, marketing and interaction)
- C2C (the value that is derived from conversation between customers)
In each case, those opportunities must begin with the producer and they can only truly be grasped at the development stage. It is tragic that so much energy, value and love might be invested in a project over years, only to be lost because, for example, it was sunny on the one weekend it was afforded to make a mark at the box office.
While those processes may be adapted and refined, some elements seem essential. They include:
Data and knowledge: Knowing the audience seems an essential precursor to developing engagement processes. Much data is either not systematically collected, or it is collected and discarded, not just by companies but by public funding bodies. Data from films that fail to meet expectations is often simply lost, and with it any valuable lesssons. Most industries instinctively know that failure is the best form of learning.
The concept of ‘failing fast’ really refers to the ability to learn lessons at a stage where they can make a difference. The value and power of data is meekly handed to the global on-demand services, who have no interest in sharing.
Public funds currently make interventions at different points of a linear value chain with producers at one end, and audiences at the other. Engagement Economics suggests a circular chain, in which data informs every aspect of work, and where results are recycled for use in the next round of early stage development. Perhaps governments might also spend more time putting pressure on the SVOD giants to reveal data, rather than thinking solely about taxation to create more work to be lost in a failing system.
Early stage development: Much of the innovation, and most of the audience interaction, in the audiovisual industries happens after the completion of a film or programme. The producer effectively hands responsibility for the success of a film to sales and distribution, and often moves on to the next project. The window of opportunity for three, or four years of work may come down to a single weekend, in which simple factors, such as the weather may consign good work to obscurity. Early-stage development planning is essential to capturing audience value for the different IP elements, and to planning an effective eventual audience strategy.
Producer/audience relationships: The core problem with the audiovisual value chain is that it is generally a straight line with the creatives and producers at one end and the audience at the other. Simplifying and shortening that chain has been the focus for some innovators, cutting out supposed ‘middle men’ in sales and distribution. Many of these experiments in ‘direct’, or DIY distribution have been unsuccessful, particularly outside the micro-budget range. The experience and knowledge of many in the distribution world is extremely valuable, while many producers have neither the skills, nor the inclination to take on greater responsibility. There is little incentive for change in a system where there is both strong public support for production, and a system based on territorial right.
Entrepreneurialism: Engagement Economics is strongly predicated on entrepreneurial thinking. Whether the outcomes are cultural, or economic, success will come from an ambitious commitment to planning, testing, communication, brand building, audience interaction and creating a sustainable and possibly diversified long-term base for their business.
The changes outlined here may be challenging to the status quo but the alternatives look considerably more difficult.
There will still be success stories, and there is reason to believe in the further development of about an increasingly confident and creatively exciting growth in the best serialised drama content.
But if the aim goes beyond ‘hits’ and looks towards a diverse economy with sustainable models, and a focus on the producers and audiences of tomorrow – then processes will need to change.
Given the permanent increase of choice and the emergence of new forms of art and entertainment, there will be plenty of alternatives for creative people and audiences.
The biggest danger is that the film and media industries sleepwalk into irrelevance.