Today, Pervasive Media president Bill Sanders moderated a panel on “Hollywood’s Online Video Gambit,” with panelists York Baur, executive vp of development at Zango; Ken Wirt, vp of consumer marketing at Cisco; and Sandy Grushow, president of Filmaka and former chief of Fox TV.
Since the panel is about how Hollywood is taking online video seriously, began Sanders, he described how he recently asked his writer friends, when they went out on strike, whether they were doing this to throw down the gauntlet and make a stand…or whether they thought the studios are making a fortune on new media and keeping the money for themselves.”If it’s the latter,” he said. “Think again.” Sanders also noted that if the Holy Grail is advertising support, his question is, if every startup thinks it’ll be supported by sponsorship and advertising, there’ll have to be a thousands times the current advertising dollars.
The questions he has for the panelists began with what they will say to Wall Street about how they’re going to make money, and how will they get the consumer to keep coming back? Sandy Grushow began, referencing the strike and how most writers have gone back to business as usual. “There is a big opportunity in creating high quality content for advertisers desperate to follow the eyeballs that have left television and gone to the web,” he said. He divided content into three buckets: “There is the user-generated folks; those used to making $3 million a year from Fox TV; and those interested in creating high quality programming for the web.” “We’ve demonstrated there are a lot of enormously talented people who haven’t found their way into the Hollywood tent,” he said. “What we’re doing is systematically creating an opportunity for those people to gain access to that world.”
The problem of the “top down” model, from TV to the web doesn’t work he said. “It’s impossible to cut through the clutter,” he said. “The phone never rings.” Thus his “bottoms up” process where Filmaka challenges creative people around the world, through various competitions, with the promise of real access to the Hollywood system that otherwise they’d have a hard time touching. “But everyone is chasing the same ad dollars,” he admitted. “I hate the idea of just being a digital studio, making series and hoping advertisers will come on board. We’ve created a process to engage advertisers in an interesting way.” He said he had a lot of advertisers on deck that he isn’t able to talk about. But he did talk about Miller, with the tagline “Life is what you pour in it.” Filmmakers from 117 different countries were invited to make something of that line. “You can’t replicate that through an agency,” said Grushow. “We’ve turned competitions into a business. People are logging in every day – they’re winning cash prizes, and increasing their odds of having their work seen.”
Is Filmaka a destination in and of itself, or a service? asked Sanders. “We don’t view ourselves as a destination,” answered Grushow who said he was interested in distributing media as widely as possible, working with legacy media and directly with advertisers desperate to figure out the web. “Who better to speak to than voracious consumers of media as opposed to the ad guy who drives behind tinted windows and works in an office? What we get are young people who are really talented with ideas that wouldn’t get born in a Hollywood suit – they’d get killed at the outset.” Grushow, who also noted that Filmaka has a relationship with William Morris Agency, spoke about a contest that Filmaka had when it was in beta: to make the jury laugh, with the topic of extracurricular activity in the office. Two young people from the U.K. submitted a 3-minute piece; he gave them $10,000 to make five more. An agent at William Morris jumped out of his chair when he saw it, saying his client, who was quite picky, would love it. Inside of an hour, a meeting was set up with this Emmy-Award winning comedian who loved the ideas and is now having meetings with the two, very surprised young guys in the U.K. “If that ain’t a paradigm shift, I don’t know what is,” said Grushow. “And the development costs were $10,000.”
Cisco’s Wirt talked about the rapid growth of digital media usage in the HDTV/broadband home, which uses 1.5 terabytes. Future projections go into the exabytes. It all represents an enormous growth of video traffic on the Internet. “What we see really driving this is a combination of social networking combined with video, which we call visual networking,” said Wirt. Eighty-four million people saw “The Evolution of Dance” on YouTube, he noted. How did so many people get to it? Social networking, he said, and that’s the phenomenon driving the consumption of video. People tell you about a video, it’s been rated and ranked.
Sanders asked what gets people to come back to the same destination again and again? Wirt said people come back to a place because of the quality of the video, the quality of the product. Does the guy who produced “The Evolution of Dance” have one more in him? If he doesn’t, people won’t come back. But he has awareness, and the opportunity is come back. Grushow added: It’s a series, not that different from normal television. “It’s just harder because there’s so much bloody choice, but someone will come up with “Seinfeld” on the web and that’ll be the game changer.”
Baur said that his company isn’t about generating content but exclusively about monetizing it, for the last nine years – “Successfully,” he added. Baur then proceeded to dump several buckets of cold water on the conversation that went before. “Video is not about quality – all that matters is the popularity,” he said. “In my view, and it’s easy for me to say, you want to ultimately want to be the platform on which everyone else can create. The world will vote. You can’t create popularity. ” He said his company spends a lot in online marketing to become one of the top sites for online gaming. “I would also tell you casual gaming is much bigger than video on the Internet,” he said. “And games are considerably more profitable. Games are addictive and video is not. Video is by definition a transitory experience.” To the ad side, Baur said the reality of online advertising, 42 percent of the total ad dollars spent in the U.S. were spent on search. “What does this tell you?” he said. “Search works really well and all the other stuff [doesn’t]. If you can make advertising appear as content, you’ll do really well.” He also doused the idea of the subscription model, asking the audience to raise their hands if they subscribed to video online, outside of subscriptions related to work. Out of the audience of 100+ people, only two raised their hands. “That’s kind of the way it is,” he said. “We trained a generation of people who want it for free.” [For the record, both Sanders and Wirt came up with examples of subscriptions that are financially successful.]
Grushow, who joked that he didn’t want to argue with someone with a successful business, nonetheless told Baur that he thought his view of the web was static. “This is the bet that those are making in the content creation business,” he said. “High quality means having a narrative, and if you can create that for small amounts of money, I believe it is a model that will start to work on the web with advertisers as partners.” Baur agreed, saying that building content around advertising does work, so it doesn’t feel like an ad anymore. “The interesting thing is that if your Ford Explorer, you’re spending a lot of money on search,” he said. “If you had an episodic site that people come back to, how much would you spend, especially when you’re having so much success with Google and other search engines?”
“It’s all about distribution,” added Grushow. “Content generators need to get in bed with distribution platforms. That’s when brands are going to become interested, because they can show how many people they can deliver. There are all sorts of interesting deals that are going to be made, and advertisers will be able to spend money in a meaningful way.”