Long Tail glut, the pending SVOD Wars and solutions we’ll find in 2010

Topics on my mind: The dilemma of the long tail and social networking glut and the trends of the giants. 2010 will oversee the SVOD wars as everyone competes with Netflix for a viable subscription VOD model… Hulu, Cinema Now, Blockbuster, Amazon et al, and including Apple will compete with Cable VOD too. And of course there’s Google which I’ll cover in the next edition.  According to Jon Reiss (filmmaker, blogger, and author of Think Outside the Boxoffice),  ‘Studios are experimenting with releasing catalog titles via Amazon’s CreateSpace’ (which one can read about in The Digital Distribution Guide on our website: http://www.thefilmcollaborative.org/digitaldistribution.html ) — and he postures that may create an appetite in consumers and a comfort level in getting non-blockbuster content via the web. Studios are experimenting with release windows to work up consumer appetites.

Avatar is a game changer as far as the experience audiences will learn to expect.  3D film is a growing business. There’s an impact on indie cinema? Mergers continue as Comcast bought NBC Universal and rumors resurfaced of Amazon’s potential acquisition of Netflix (both covered below).  Gigantic was a smaller start-up platform that did not make sense to me because it was too small and too unspecific and offered nothing special and indeed Mark Lipsky has ankled it this week.  And now, in answer to Comcast, The Walt Disney Co. and CBS have expressed interest in cutting deals with Apple to offer programming as part of a monthly Internet TV subscription service. The media companies are in early discussions with Apple on the service, which is being positioned as a competitor to cable and satellite TV. (This is not new, Netflix has already had streaming video content deals with TV networks, such as Starz and MTV for example). Comcast (the leading cable company) and the bigger Cable VOD platforms are decreasing their appetite for Indie cinema, at least in the short-term, and going for the more sure things, such as studio library content, marquee driven content and TV.  The rise in supply of indie cinema has made it harder for individual films to compete in a crowded market place of blockbusters and media conglomerates who cover them. I cover this more below.

Old rumors never die. In our Digital Distribution Guide we have previously covered the rumor that “Amazon may be buying Netflix”.  BusinessInsider.com and Reuters reporter Anupreeta Das have all pointed to heavy trading activity on Netflix (Nasdaq: NFLX) call options as the speculative root of the born again rumor. Amazon.com (Nasdaq: AMZN) is the logical suitor, as always. Given Amazon’s ownership of IMDB and WithoutABox and its search technology maybe having the two merged will help the long tail films better find their audiences. Amazon, Apple (Nasdaq: AAPL), and Blockbuster (NYSE: BBI) have been struggling in selling digital celluloid. Cable giant Comcast (Nasdaq: CMCSA) is losing video subscribers. In that time, Netflix is a great trusted brand that knows its customer and its customers know how to find films. Amazon needs a digital distribution solution better than its current offerings.

Speaking of Netflix which recently initiated a partnership with retail giant Best Buy, CinemaNow is now directly competing. CinemaNow’s founder went to work for Lions Gate (the studio behind the release of Precious) but CinemaNow is still in the game. The partnership between Best Buy and CinemaNow includes both physical and digital media.  More particularly, the deal will allow consumers to buy DVDs from Best Buy, then watch the same movie through CinemaNow on their computers, smartphones or Blu-Ray players.  It’s almost like buying a DVD and getting a digital copy on the second disc, but now you require just an Internet connection rather than the digital file.  The exact details of the partnership have yet to be revealed, but it’s expected the service will launch in early 2010, just as soon as some studios jump on board. (Of course we presume some day soon Studios will be direct with customers off their own sites).

Best Buy’s plan will require a DVD to be bought, but there’s no guarantee that the DVD will stay with the buyer, or that the stream will.  If it does work, however, it will add yet another streaming service to our media boxes.  As it stands with Netflix, Amazon Video, Blockbuster OnDemand, Hulu among others, we already have quite a few.  I expect some attrition and survival of the fittest.

Back to the topic of Long Tail and the increased competition in the indie film space. I wanted to link to an interesting article in The Economist: http://www.economist.com/displaystory.cfm?story_id=14959982

I select and quote a few key paragraphs from the article below. In summation, it’s about how the growth of “Long Tail” (as Chris Anderson of Wired coined it) has lead to a glut, a competitive crowded space where only the strongest survive, and hence its own demise. Some niche content maintains its appeal but much of the middle never makes the radar and the biggest blockbuster films continue to rise because they are the most known and talked about.

From The Economist:

“Ever-increasing choice was supposed to mean the end of the blockbuster. It has had the opposite effect “NOVEMBER 20th saw the return of an old phenomenon: the sold-out cinema. “New Moon”, a tale of vampires, werewolves and the women who love them, earned more in a single day at the American box office than any film in history. The record may not stand for long: next month “Avatar”, a three-dimensional action movie thick with special effects, will be released…  There has never been so much choice in entertainment. Last year 610 films were released in America, up from 471 in 1999. Cable and satellite television are growing quickly, supplying more channels to more people across the world. More than half of all pay-television subscribers now live in the Asia-Pacific region. Online video is exploding: every minute about 20 hours’ worth of content is added to YouTube. The Internet has greatly expanded choice in music and books. Yet the ever-increasing supply of content tailored to every taste seems not to have dented the appeal of the blockbuster. Quite the opposite. This is not what was predicted by one of the most influential business books of the past few years. In “The Long Tail”, Chris Anderson, editor-in-chief of Wired, a technology magazine (and before that a journalist at The Economist), argued that demand for media was moving inexorably from the head of the distribution curve to the tail. That is, the few products that sell a lot were losing market share to the great many that sell modestly. By cutting storage and distribution costs, the Internet was overturning the tyranny of the shop shelf, which had limited consumers’ choices. And, by developing software that analysed and predicted consumers’ tastes, companies like Amazon were encouraging people to wallow in esoterica. Such companies did not just supply niche markets—they helped create them….” (Note: The article sites research and statistics from the music industry, television, film and books and concludes)… “In short, just because people have more choice does not mean they will opt for more obscure entertainments. That is especially clear in the book trade. But nobody knows quite what to do. The old-media world of limited choice, in which any product that was not too objectionable was guaranteed a decent audience, was a comfortable place. Pleasing a customer who can choose from several hundred films and television programmes even without getting up from the sofa, by contrast, is an unnerving prospect.”

I referenced at the beginning of this post that I wanted to cover the clutter in social network marketing as well. Huffington Post is going to offer sponsored Tweets.  Every other blog or article in this business waxes prolific about Facebook and Twitter… how will unique voices continue to be heard and find more listeners when corporate brands use this space as much as they do Second Life to hock their wares.  We’ll have more about this and more about digital distribution platforms (especially mobile) and opportunities for Indie Filmmakers in the next edition.  One thing we can be sure of, there will always be independent filmmakers and their audiences. We’re committed to connecting them as directly, dynamically,  efficiently and inexpensively as possible, always.

The Collaborative will keep the information and service support coming in 2010.

Have a happy and safe new year!

Orly Ravid December 26th, 2009

Posted In: Amazon VOD & CreateSpace, Best Buy, Blockbuster, Comcast, Digital Distribution, Distribution Platforms, Gigantic, Hulu, iTunes, Long Tail & Glut of Content, Marketing, Retailers