The Digital Hollywood Spring conference, held in Santa Monica May 4-7, 2009, provided many useful insights on digital media and how mobile can dramatically expand distribution. Insights gleaned from the conference are summarized here, around these topics: Event/Industry Overall Feel, The Living Room as “Ground Zero,” Hypertargeted Advertising, Mobility, the dawn of “Medialess Media,” and thoughts about the conference itself.
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Event/Industry Overall Feel
The “digital media” industry increasingly reflects the collision of multiple communication technologies into a unified consumer experience. As an industry professional who dealt with the tribulations of converging mobile voice and data services in the early 2000’s, this year’s Digital Hollywood Spring conference felt like “déjà vu, all over again.” Consumer demand for integrated information and entertainment services is fueling a huge amount of convergence innovation, and the upcoming digital TV transition fuels additional momentum. Millions of households have already replaced their analog TVs with new digital flat panels, and the digital TV channels will complete an all-digital media value chain, from production through distribution to consumer presentation.
The attendees at this year’s Digital Hollywood Spring conference are working hard to enable this convergence – even if nobody knows exactly what the converged entertainment landscape will look like when we get there. Television, Internet, on-demand, games, cable, satellite, mobile… theseformerly disparate communication and entertainment systems are being mashed up into new consumer services, devices, and experiences – and ground zero in the new battle for eyeballs is the living room.
One panelist summarized the challenge that conversion presents this way: “Technology is not the problem, making it fit together and be simple for the customer will be a challenge.” Sound familiar? My experience says the simultaneous pursuit of highly integrated, disparate services and simple user navigation will be a challenge the digital media industry will be working on for some time.
The conference was well attended: most sessions were full, the panels were packed with 5-6 speakers, the exhibit area was crowded (though small), and the end-of-day beachside cocktail receptions were so crowded it was hard to move around. Digital media distribution is a vibrant, growth industry, though it is buffeted by the current downturn through lower advertising revenues, tighter credit/investment policies, and slowing consumer demand for premium services.
On the other hand, rich media content delivery to the living room has become a lower-cost alternative to going out for a movie, and out-of-home media delivery is growing. Network, service, and consumer equipment providers are aggressively innovating the technologies that will be needed to evolve our collective digital media distribution capabilities and monetize non-broadcast content.
The speaker roster was dominated by smaller, media-based companies, plus a notable presence from a few large companies. Microsoft fielded nine panelists, Comcast eight. Sony and News Corp. followed with six each, while infrastructure vendor Alcatel-Lucent put up five. Other big names among the presenters included Yahoo!, Google/YouTube, IBM, and Motorola.
Venture investors were, in general, cautiously optimistic but some are quite aggressive. One Los Angeles venture group recently closed a $300 million digital media fund. VC’s expressed a bias against ad-supported models (with exceptions), toward provable business cases and “scrappiness” (read: shoestring budgets), and domain expertise within the leadership team.
Power is also shifting between industry players as digital delivery systems gain adoption. At least three significant shifts are underway: broadcasters à Internet, network operations à content owners, and labels/producers à artists à consumers. In the end, these power shifts will give the consumer more choice and control over their entertainment experience, though some are concerned about the quality and quantity of professionally produced content that consumers will be able to enjoy if today’s ad-supported models are scrapped.
The Living Room as “Ground Zero”
Blending broadcast, streaming, on-demand, online, and personal media into a simple, powerful living room experience is driving the development of many new technologies and products. One big question is which device will host the intelligence to deliver multiple content types to a big-screen flat panel TV: the TV itself or in one or more set-top boxes (STBs). Sony, Yahoo! and others are launching “open TVs” that can present Internet and on-demand content through widgets, browsers and other tools – though most panelists did not expect these TV’s to fully displace the functionality that exists in ever-smarter STBs.
Roku, TiVo, Slingbox and other media-centric STB’s provide a rich media experience through content partnerships as well as time- and place-shifting. Connected game consoles, including the Xbox 360, Nintendo, and PS3 further expand the STB category with their ability to download and replay content, access the internet, and more. Most participants expect the STB to remain “king,” due to familiar interfaces and large memory/storage capacity, and because the network operators that depend usage data from these devices to sell advertising aren’t keen on seeing them go away.
How the integrated media experience will be presented to consumers is the other big question: through open interfaces or a walled garden? As one service provider put it: “We want the customer to have choice, but we want them to come to us.”
“The more targeted an ad is, the less annoying it is,” claimed one panelist at the TV 2.0 workshop, and his sentiment reflects the focus of the advertising tracks. How to serve contextually relevant ads, in the face of time- and place-shifting, is a problem many are working to solve. Various software and platform vendors are developing tools to insert contextually appropriate ads into non-broadcast media, and cable operators and others are working to gather better targeting statistics from viewers via STBs and other tools. One company has developed a remote control with four user buttons, so that each family member can tell the STB who they are through their button choice. (I, for one, would select my child’s button from time to time, just to see what was being targeted to them.)
Hypertargeting is the presentation of ads to consumers based on a large number of data points: age, location, income bracket, household composition, surfing/viewing habits, usage frequency, etc. Done right, hypertargeted ads should be viewed as welcome by the viewer rather than a nuisance. Advertisers claim hypertargeted ads could be worth as much as $50-100 per thousand impressions (CPM), vs. $8-20 for broadcast TV. Comcast, Charter Communications, Time Warner, and others have created the Canoe joint venture improve targeting and ad delivery processes. Expect the hypertargeting trend to continue.
Mobility: How to deliver on the consumer’s any time/any place expectation
Mobility wasn’t as front-and-center this year as I expected – it seems the battle for the living room has temporarily distracted attention from “anywhere” availability, at least during the conference sessions I attended. Most agree that a user will “gravitate to the best available screen,” which could be a flat panel at home or in the office, a laptop or DVD player while traveling, or a smartphone while on the go. Content publishers bemoan the burgeoning number of mobile devices and operating systems, while infrastructure equipment vendors and software publishers are developing products and services to allow a content owner post their content once for presentation across multiple platforms. One vendor envisioned “transportable” media systems, in which entertainment programming can be cached and then plugged into a remote playback platform, such as a car.
In my view, the mobile device roadmap is murky. While the roadmap for wired devices is becoming more clear – open TV’s, Pandora-enabled coffeemakers, digital photo frames, IP-connected STBs – few industry participants can see past the iPhone when considering mobile media delivery platforms. A few innovative mobile devices earned panel mentions, such as cellular-enabled game consoles, a Wi-Fi camera, and the Kindle. Overall, however, the focus on mobility was significantly lower than this year than last.
Streaming, DRM, Unicasting: the Dawn of “Medialess Media”
To media or not to media, that is the question (with apologies to the Bard). Many attendees envision a future where physical media either doesn’t exist or is reserved for archives, while most entertainment is streamed to consumers in real-time: movies, music, games, online content. Numerous vendors are building devices and services to support large-scale, high-definition streaming media: gateways, cache storage, advanced codecs, and highly-capable end-user hardware, while others express deep concerns over whether network operators can field sufficient bandwidth to support a high-definition, unicasting media delivery model.
Digital rights management (DRM) comes to the fore whenever downloaded and streamed media is discussed. Participants acknowledge that the consumer expects to pay once for media, then play it back on whatever platform they choose, whenever they want, in perpetuity. There was much panel discussion on whether/how digital rights could be cataloged and stored, and whether such a regime is sustainable. DRM is clearly an area where the community is not of a common mind, and I wouldn’t expect that to change soon.
The conference itself
Digital Hollywood is one of my favorite conferences: it’s full of geeks, content producers, consultants, investors, students, lawyers, and entrepreneurs, all talking about and playing with the latest digital technologies to deliver media and content. The conference format allows plenty of time for networking between sessions and at the seaside end-of-day reception, so there are lots of chances to meet the geeks and others and discuss their ideas and products in depth.
These observations are based on attending six conference sessions and speaking with well over 100 people during three full days at the conference. Two co-located conferences emphasized peer-to-peer networking and digital content production, and it was good to have those attendees in the mix. The host hotel, Loew’s Santa Monica Beach Hotel, was a comfortable location with breathtaking views. Overall it was well organized and I look forward to next year’s show.