Editor’s Note: Embracing Change

NEW YORK: Ahead of this year’s L.A. Screenings, Anna Carugati, World Screen’s group editorial director, shares her thoughts on how today’s major media companies are embracing change.

Think back to the dawning of the year 2000. Remember how we woke up on January 1 in fear that Y2K or the Millennium bug had caused computers at home and at work to break down and created unimaginable havoc with banking systems, air traffic controllers, anything computerized?

Then, just as we thought we had averted digital Armageddon, on the morning of January 10, headlines screamed that AOL had acquired Time Warner. Say what? An Internet company was going to buy the media behemoth that was home to Warner Bros., Turner Broadcasting, HBO, Time Inc. and Time Warner Cable for more than $160 million. It was the largest merger in corporate history. The thinking at the time was that “new” media—in this case the Internet—was deemed more valuable by investors for its potential for growth than “old” media: newspapers, magazines, film and television.

The word “convergence” was bandied about and the newly formed AOL Time Warner would lead the way: Time Warner’s prime assets would get access to digital platforms, while AOL would provide high-speed Internet to Time Warner’s cable systems. A new, better, converged world was at hand.

Well, we all know what happened. The premise of the deal was woefully misguided, and in May 2009 Time Warner announced it would split from AOL. But the stigma attached to traditional media companies persisted. Stock prices of all major media companies remained grossly undervalued as Wall Street continued to be highly skeptical of traditional media’s ability to adapt to the digital world, monetize its content on digital platforms and increase profits.

If we fast-forward to today, the stock prices of media companies are up and earnings are way up. What has caused this increase after a long spell of stock doldrums? I am no financial analyst, nor am I an expert in technology, but I believe media companies’ ability to embrace digital platforms has made all the difference. What used to be an “us-versus-them” mentality, with content creators seeing technology and digital platforms as the enemy, the ultimate disruptors of business models, has changed. Rights holders of movies and television shows are making significant strides in harnessing the possibilities that digital platforms offer.

There is no question that the Internet brought the music industry to its knees. But lessons have been learned. Consumers have taken the driver’s seat, dictating how, when and on what screen they want to watch their favorite programming, and major media companies have answered in kind. What was at first a trial-and-error approach—what to provide for free and what to charge for—has given way to a number of established models that allow for decent remuneration of content.

iTunes and other download-to-own sites work for consumers. Netflix definitely works, as do countless other such subscription sites. The success of HBO GO is proof that consumers will embrace the TV Everywhere or authentication model: subscribe to one service, such as cable TV, and then when you want to watch, say, Game of Thrones on your computer, you simply go through an authentication process to prove that you already subscribe to HBO to gain access to online episodes.

As we see in the main feature of this issue of World Screen, Hollywood studios have found many ways to carve out substantial revenues from digital platforms. What was a two-way battle of content owners versus disruptive technologies has morphed into a three-way minuet between consumers, technology and content owners. Technology allowed TV episodes and films to be streamed online and consumers flocked to sites that offered this convenience. Content owners scrambled to get paid for what was being streamed, and now they are, often handsomely. Consumers are taking the convenience of watching wherever and whenever to new limits—namely, by binge viewing. We all do it, and what a pleasure it is to catch up on favorite series by watching episode after episode after episode. This works particularly well with serialized drama, and this new viewing habit has pushed digital platforms to pay more than decent prices for hot shows. In turn, that has given serialized dramas new life after their first broadcast, when not so long ago serialized fare was dead on arrival in the syndication market.

The relationship between viewers, technology and content is getting more and more intertwined and intimate. It seems every morning we wake up to a new screen, device or outlet for content. In this brave new digital world, smart companies spot opportunities through the disruption.