James Murdoch, founder and CEO of Lupa Systems, discussed investing in future trends in the media system, weighed in on the chase for scale to compete in the streaming world and stressed the increasingly important role of creators owning their own IP in his APOS opening keynote.
Murdoch founded Lupa after exiting 21st Century Fox following the sale of most of its assets to Disney. “The exciting opportunity was to do something more entrepreneurial with a small team, but also focus on future questions. After a career in turnarounds and legacy businesses adapting to digital, actually thinking about future questions and our 2040 selves and what would we have wanted to have done? What are the long-term trajectories in our industry and nascent industries and other areas of interest we can identify today and say, ok, over the next 10 to 20 years, these are going to be interesting places to be? Lupa was set up as a private company to start exploring questions of what’s happening in future media with respect to synthetic storytelling, technology in storytelling, as well as its counterparts in live events. We’ve been very interested in emerging markets, particularly in Asia.”
On the role of content creators in the media landscape today, Murdoch observed, “In the last decade we saw the big media companies, the larger players, on a journey of scaling in order to compete in the new streaming environment. The open question in the larger media sector is not whether it’s right to scale to compete in streaming but rather how many of these companies attempting to compete in streaming and direct to consumer at a mass level are actually going to be more profitable in the future than they were in the past. You can say that avoiding the loss in value is great, but I’m not sure if your survival creates new value. Going forward, if you look at this downstream competition that is going to be incredibly intense for a long period of time, if you’re trying to compete in the mass market, you have to have an amazing user experience, you have to invest a ton in programming, and that creates inflationary pressures. At the same time, you don’t have downstream retail pricing. It’s very cutthroat downstream. My own sense is that value transfers upstream. With creators, there are two things going on. The downstream competition, which is only going to intensify, is going to put a lot of inflationary pressure on content creators and there’s going to be a lot of demand for their services, particularly if you’re an established producer or writer. Those creators create a reaction to this massive conglomeration of businesses. Some of it was brewing before the streaming wars started. There’s less room for truly original work and there’s lots more derivative work. There are higher budgets in blockbuster pictures or episodic television, whereas the mid-market literary adaptations that a lot of creators like doing and audiences like, where’s the room for that? There’s a question of what the creative output is going to look like within these large conglomerates and what established and talented creators are going to want to do. I feel like there’s more value for creators in the future, but not just in selling at a high price. What you’d like to see is new creative centers of gravity emerge that apportion the rewards of authorship appropriately to writers and artists and so on. I think creator-led franchises are going to be very powerful going forward. Maybe each one not at the scale of these giants, but very profitable businesses if they can take a bit more risk, own their IP, own their creativity and then apportion it in the right way.”
Murdoch went out to note that the “collapse of the theatrical window” amid Covid-19 in the U.S. and other markets “is here to stay now. That was fought tooth and nail by exhibitors for decades. Those things have real consequences over time. It will be interesting what emerges after this.”
Among Lupa’s investments so far is AWA Studios, an independent comic book publisher. “It’s the beginning of a model I think is quite interesting. If you look at comic book franchises, the characters in most of these we go to the movies to see were created 40, 50 years ago. They are great stories, reinvented and brought to life again. But it struck us that the writers and artists involved in that original creation were at some point in a comic book industry that was almost Dickensian. Some comic book writers get paid by the page. Sometimes they are independent contractors. And often they don’t get an opportunity to work on the original IP, the original stories they are passionate about. We [wanted to] have great creators come together in the company AWA and try to create something that is a fount for new stories. It’s not just about making comic books, it’s hopefully creating new stories and new IP that can then feed games, film and television, streaming, merchandising, other kinds of stories. The way it’s structured is you have lead creative folks who are partners in the business and there are stories that get written in a shared universe, if you will. In addition, they get to publish stories that are truly original and that they own that copyright themselves, or much more of it. We then function as a machine, hopefully, to go out and license those things, distribute them, do all that stuff. Ultimately, the goal is for the writer and artist to own their work and to move forward from there. It’s a powerful model for creators and I think it will be more common in more scenarios over time as people don’t want to sell their work for forever and a day. In the absence of a secondary syndication market, it’s hard to see in a streaming environment where future value is going to be. If you sell a product to let’s say Netflix, it can be marketed and it can be a great product, but it just becomes a number in an endless shelf of titles forever. It may be under-exploited in that way. I think artists should have a greater say in that. AWA is an expression of what I think is going to be a trend for creators seeking to own more of their own copyrights, at least have more control over how they are exploited when they are dealing with a distribution environment that is very different than it used to be. There will be conflict there. If you’re an established creator that can take risks to own your own product or win that discussion if you will, that’s one thing. I think it is harder for new voices to have the same opportunity.”
On the role of aggregators and bundles, Murdoch noted, “In the scaling of the streaming platforms themselves there is a rebundling already. Netflix is in and of itself a bundle of services—kids, movies, serialized television, etc. As is Disney+—National Geographic, Marvel, Lucasfilm and so on. And they’re bundling that with ESPN+. Rebundling is natural and inevitable to some extent. Whether you get back to the sort of bundles that will satisfy a lot of different tastes without giving you a lot you don’t want is a hard question to answer. Rebundling is happening and I think will be a good thing, because it’s very difficult for consumers to juggle the multiple subscriptions they have. And your total prices are kind of the same as they were when you were subscribing to cable, if not higher. There is a reaggregation that is going to have to happen. The danger for some firms is if they are left out of that reaggregation or that bundling, if you’re not the top three, where are you?”