LAS VEGAS -- CES 2017 -- Hollywood studios have spent too long controlling the flow of content to consumers, and now their time is up, according to Barry Diller, chairman of IAC/InterActiveCorp and Expedia.
Diller's comments came in a fireside chat during the opening part of the "C Space" keynote session at CES, which addressed the disruption caused by digital technology and the emergence of new media options for consumers.
Diller is the former head of Paramount Pictures, the Fox Networks Group and 20th Century Fox , as well as the former owner of USA Networks. He said that studios rarely make money, and that standalone studios are "hardly a great business proposition," despite the fact that he had attempted to purchase Paramount Pictures himself in 1994.
According to Diller, movies have to bring in $500 million to break even, making it very difficult to make good movies. What worked in the past though, was that the studios had the rights to the most popular content and controlled (via licensing) who was able to offer what downstream from the theatrical release window. That is now changing with the advent of Internet video streaming.
Diller sees more disruption coming, with consumers moving to adopt skinny bundles and cutting the pay-TV cord. He expects that consumers will be able to pick the channels they want (the so-called à la carte option) in the future rather than channels bundled together.
Diller's comments were followed by a panel discussion featuring top media and marketing executives from MediaLink, Johnson & Johnson, Condé Nast, NBCUniversal LLC , Fox Networks Group and Nissan.
Randy Freer, president and COO of Fox Networks Group, said he was all for establishing a direct relationship between consumers and his networks. He said that traditionally pay-TV providers have had a poor brand image, "even lower than the government." The emergence of OTT streaming services has helped change perceptions. Broadcasters can now develop their brands independently, and not be lost among 150 channels.
Jim Norton, chief business officer and president of revenue at publisher Condé Nast, sees disruption as opportunity. He feels that the push towards ad tech has been a race to the bottom, and that brands have "forgotten how to tell their story." He saw his organization and others as professional storytellers with the ability to help brands find the right way to tell their story, specially now that the programmatic buying environment has become more settled, in his opinion.
NBCUniversal's chairman of advertising sales & client partnerships, Linda Yaccarino, pointed to a recent experiment with advertising partners as part of its broadcast of Hairspray Live. NBC broadcast the musical live on the air as part of its Christmas coverage, but also added live and innovative features to the commercials that during the show.
Toyota aired a commercial styled in the 1960s setting of the musical, while Reddi-wip ran a commercial choreographed by -- and featuring -- the Hairspray Live crew and cast members. One of the cast members stayed in character after a song, and promoted Oreo cookies, and during other commercial breaks, NBC ran footage of live backstage scenes in a split screen while commercials were running.
Yaccarino pointed out that NBC actually reduced the time spent on commercials for the three-hour event. While data is still being analyzed, she said awareness, recall, likeability and other standard metrics were very, very high for the event -- "off the charts," in fact.
She also talked about Saturday Night Live (SNL), which she said was "lightning in a bottle" during the elections, drawing laughs from the audience. She said NBC plans to continue the segment as Alec Baldwin has said he will be available. This drew some cheers, leaving little mystery surrounding the voting patterns of session attendees.
NBC plans to experiment with similar advertising approaches with SNL, specifically taking aim at the 18-30-year-old demographic. Yaccarino plans to reduce the commercial load on the show, and present advertising in a way these viewers like, in the same context as the SNL show.
Moderator Wenda Harris Millard, president and COO of MediaLink, closed the session by concluding that disruption from OTT streaming services would only help create better media experiences for consumers, and that media and marketing companies would adapt well to this new environment by coupling great content with brands to tell stories. This, in her opinion, will be the key for marketers to engage with the new generation of viewers.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation