Distribution Revolution: Conversations about the Digital Future of Film and Television - Softcover

Softcover

ISBN 10: 0520283252 ISBN 13: 9780520283251

Publisher: University of California Press, 2014

Synopsis

Distribution Revolution is a collection of interviews with leading film and TV professionals concerning the many ways that digital delivery systems are transforming the entertainment business. These interviews provide lively insider accounts from studio executives, distribution professionals, and creative talent of the tumultuous transformation of film and TV in the digital era. The first section features interviews with top executives at major Hollywood studios, providing a window into the big-picture concerns of media conglomerates with respect to changing business models, revenue streams, and audience behaviors. The second focuses on innovative enterprises that are providing path-breaking models for new modes of content creation, curation, and distribution―creatively meshing the strategies and practices of Hollywood and Silicon Valley. And the final section offers insights from creative talent whose professional practices, compensation, and everyday working conditions have been transformed over the past ten years. Taken together, these interviews demonstrate that virtually every aspect of the film and television businesses is being affected by the digital distribution revolution, a revolution that has likely just begun.

Interviewees include:

• Gary Newman, Chairman, 20th Century Fox Television
• Kelly Summers, Former Vice President, Global Business Development and New Media Strategy, Walt Disney Studios
• Thomas Gewecke, Chief Digital Officer and Executive Vice President, Strategy and Business Development, Warner Bros. Entertainment
• Ted Sarandos, Chief Content Officer, Netflix
• Felicia D. Henderson, Writer-Producer, Soul Food, Gossip Girl
• Dick Wolf, Executive Producer and Creator, Law & Order

About this title

About the Author

Michael Curtin is the Duncan and Suzanne Mellichamp Professor of Global Studies in the Department of Film and Media Studies and Director of the Media Industries Project at UC Santa Barbara.

Jennifer Holt is Associate Professor of Film and Media Studies and Director of the Media Industries Project at UC Santa Barbara.

Kevin Sanson is the Research Director of the Media Industries Project at UC Santa Barbara where he oversees the development of MIP research initiatives and publications.

From the Back Cover

"Distribution Revolution asks the right questions of the right people at the right time as the entertainment business grapples with monumental changes. Michael Curtin, Jennifer Holt and Kevin Sanson deliver intriguing and contrasting perspectives on the disruption caused by the growth of digital distribution options through interviews with a cross-section of smart industry leaders who are in the eye of the storm."―Cynthia Littleton, Editor-in-Chief, Television, at Variety and author of TV on Strike: Why Hollywood Went to War over the Internet

"An immensely valuable resource. Required reading for anyone trying to engage with and understand digital media’s profoundly disruptive impact on media distribution. The book cuts through academia’s speculative penchant for shortsighted futurisms; mining original insights of major industry players from the normally segregated sectors of management, business, technology, and creative development in a single interactive meeting space. Productively avoids media industries research and production studies’ inevitable traps: the inaccessibility of industry insiders, the scripted spin of their handlers and trade publishing, and the ‘halo effect’ generated by grateful aca-fans and overly deferent scholars. The provocative conversations and lengthy interviews here will surely generate a round of productive new research questions for media studies scholars."―John T. Caldwell, Professor, Cinema and Media Studies, UCLA, author of Production Culture: Industrial Reflexivity and Critical Practice in Film and Television

From the Inside Flap

"Distribution Revolution asks the right questions of the right people at the right time as the entertainment business grapples with monumental changes. Michael Curtin, Jennifer Holt and Kevin Sanson deliver intriguing and contrasting perspectives on the disruption caused by the growth of digital distribution options through interviews with a cross-section of smart industry leaders who are in the eye of the storm." Cynthia Littleton, Editor-in-Chief, Television, at Variety and author of TV on Strike: Why Hollywood Went to War over the Internet

"An immensely valuable resource. Required reading for anyone trying to engage with and understand digital media s profoundly disruptive impact on media distribution. The book cuts through academia s speculative penchant for shortsighted futurisms; mining original insights of major industry players from the normally segregated sectors of management, business, technology, and creative development in a single interactive meeting space. Productively avoids media industries research and production studies inevitable traps: the inaccessibility of industry insiders, the scripted spin of their handlers and trade publishing, and the halo effect generated by grateful aca-fans and overly deferent scholars. The provocative conversations and lengthy interviews here will surely generate a round of productive new research questions for media studies scholars." John T. Caldwell, Professor, Cinema and Media Studies, UCLA, author of Production Culture: Industrial Reflexivity and Critical Practice in Film and Television

Excerpt. © Reprinted by permission. All rights reserved.

Distribution Revolution

Conversations about the Digital Future of Film and Television

By Michael Curtin, Jennifer Holt, Kevin Sanson

UNIVERSITY OF CALIFORNIA PRESS

Copyright © 2014 The Regents of the University of California
All rights reserved.

ISBN: 978-0-520-28325-1

Contents

Foreword, 
Acknowledgments, 
Introduction: Making of a Revolution Michael Curtin, Jennifer Holt, and Kevin Sanson, 
STUDIOS, 
Editors' Introduction, 
Gary Newman, Chairman, 20th Century Fox Television, 
Richard Berger, Senior Vice President, Global Digital Strategy and Operations, Sony Pictures Home Entertainment, 
Kelly Summers, Former Vice President, Global Business Development and New Media Strategy, The Walt Disney Company, 
Thomas Gewecke, Chief Digital Officer and Executive Vice President, Strategy and Business Development, Warner Bros. Entertainment, 
Mitch Singer, Chief Digital Strategy Officer, Sony Pictures Entertainment, 
UPSTARTS, 
Editors' Introduction, 
Gail Berman, Founding Partner, BermanBraun, 
Jordan Levin, President, Alloy Digital, and Chief Executive Officer, Generate, 
Betsy Scolnik, Founder, Scolnik Enterprises, 
Christian Mann, General Manager, Evil Angel Productions, 
Ted Sarandos, Chief Content Officer, Netflix, 
Anders Sjöman, Vice President, Communication, Voddler, 
CREATIVES, 
Editors' Introduction, 
Scott Frank, Screenwriter-Director, 
Paris Barclay, Director-Producer, 
Felicia D. Henderson, Writer-Producer, 
Stanton "Larry" Stein, Partner, Liner Law, 
Patric Verrone, Writer-Producer and Former President, Writers Guild of America, West, 
Dick Wolf, Executive Producer and Creator, Law & Order, 
Appendix: Interview Schedule, 
Glossary, 
About the Editors, 
Index, 

CHAPTER 1

Gary Newman, Chairman, 20th Century Fox Television

Gary Newman has been chairman of 20th Century Fox Television since 2007 and has overseen the television studio with Dana Walden since 1999—with great success. Some of the studio's recent hits include Modern Family, Homeland, Glee, and Sons of Anarchy. Twentieth Century Fox Television also is responsible for 24, Family Guy, and The Simpsons, the latter now the longest-running prime-time show in television history.

Newman began his career as an attorney and worked in the legal and business affairs departments of Columbia Pictures Television and NBC before joining 20th Century Fox Television. After rising to become the studio's executive vice president and top-ranking business officer, he was tapped to run the studio with Walden. Newman's experience and instincts have helped build Fox into a leading supplier of programming to all six broadcast networks. He has also pioneered mobile content strategies, and with Walden he established the practice of releasing series on DVD immediately following the broadcast season—now industry standard practice.

We interviewed Newman in his Century City office where he talked to us about developing new formulas for successful distribution strategies, the different needs of studios and networks in the current environment, and television's "new golden era." Flowing between historical perspective, high-level business strategy, and pointed illustrative details, Newman explored the complexity of the contemporary marketplace with a great deal of nuance and presented a clear—and an optimistic—vision of the digital landscape that content providers are currently navigating in the TV industry.

MEDIA INDUSTRIES PROJECT: You and Dana Walden are chairmen of 20th Century Fox Television. How does that partnership work?

GARY NEWMAN: I tend to focus more of my time on the business and distribution side of what we do, but our philosophy is that either one of us should be able to sit in any meeting and be fully up to speed and lead it, so I end up getting quite involved on the creative side, as Dana does on the business side. As the heads of a content creation company, our primary focus is creating new series, whether it is selecting the writers, shaping pitches, or overseeing projects from the script stage to the editing room and beyond. We work through all the difficulties of production, from hiring talent to negotiating license fees with networks to getting shows launched and pushing the networks to market, schedule, and support our shows successfully.

Once we get a show launched and secured, I immediately turn my focus to the distribution of it, which a decade ago was a relatively simple thing. There wasn't a lot to do in the first four years of a series' life until the network exclusivity period ended and you were free to sell the show into syndication. Ten years ago we were just beginning home entertainment releases of shows, but even that was always after four or five years of production, and sometimes just the pilot or special episodes—no one thought to release entire seasons back then. Now, things have changed so much. We map out and execute our distribution strategies right from season 1 with streaming, electronic sell-through (EST), and releases on DVD. The international distribution of shows, which has always been the province of the studio, has become a more important part of our financial equation. Then there are ancillary businesses that are only applicable to certain shows, whether it is the music of a show like Glee or the licensed merchandise for a show like The Simpsons or Family Guy. Those are businesses that begin right away, and it is up to the studio to manage them.

What do you focus on when you're building brands: the content, the studio, the Fox networks, News Corporation?

I think about branding on a show-by-show basis. I visualize each show as a wheel, with the center of the wheel being content and then the spokes go out to the different platforms. So I think of the brand as the content itself.

Part of what has changed over the last decade is that it is no longer sufficient to focus solely on the performance of a series on the broadcast networks. Performance on other platforms has become more important, and those platforms tend to be the studio's businesses, not the network's. We have gone from being a company that serviced networks to being a company that services consumers. That being said, we can't service the consumer if we can't initially launch a show on the network, so the network is still a big part of the equation. But it is no longer the only part.

The network business is quite challenged right now. I believe retransmission consent fees are going to ease some problems. As the networks get their dual streams of revenue, which is I think an absolute inevitability, then some of the pressure we have been feeling at the studio from the networks will ease. Network executives think our ancillary distribution is harming their ability to go into the advertising community and say, "The only place your clients can associate with Glee, Modern Family, or Family Guy is on our air." That model gave them an enormous premium. I think some of the pressure on us will be relieved because the networks will have revenue coming in through retransmission consent fees.

I can't in my mind picture a business model for studios that doesn't include the network. The network is critical. Our business doesn't work without networks. While the show will always be the brand and the center of the wheel, the network is one of the spokes without which the wheel falls apart.

Ten years ago the network was more or less the client?

The network was certainly the dominant piece of our business model by far. If you looked at a pie chart of our revenue fifteen years ago, the network revenue was the single-biggest element, with syndication second and international third. We found in the early part of this last decade that home entertainment revenue became a major part of the pie. International was probably fairly comparable to the network slice, and sometimes syndication remained important. Now it's shifting again. I think DVD revenue is down across the industry. International has remained strong, although it is a very challenging world economy right now. The United Kingdom, which was such a vital part of the international television business, is still really in trouble, and our numbers in the United Kingdom aren't nearly what they were three to four years ago. The makeup of the pie keeps shifting.

Could you explain your philosophy about the relationship between the creative decisions you make and the distribution strategies you pursue?

We are all about the creative integrity of our shows first. If you don't develop things that are unique, distinctive, and engaging, then it doesn't matter how brilliant your distribution strategy is; you're going to have nothing. We don't ask writers to develop ideas in "hot" genres. We believe our best chance of creating great programming is to have a writer come in and tell us what they are passionate about, what they know, and what is personal to them. A great example is Ryan Murphy and Glee. Trust me, we didn't ask him to come up with a musical, particularly one set in a high school. It was just a show he was passionate about, he knew the world intimately, and it really came alive when he sat in our office and pitched it.

That being said, when we hear these ideas, one of the things we think about is whether it will be commercially viable or not. It certainly needs to pass that test as well. Still, we do take fliers. Sometimes we just love a show so much we believe that somehow the market is going to open up for it. 24 is a great example of that. No one had produced such a serialized drama. And, in fact, no one ever tried to do a show in real time, which seemed preposterous to us when it was first pitched. Looking back at its first season, even though its ratings were strong enough for a renewal, we had no idea if we would ever make any money on it.

The network figured out very quickly that it wasn't repeatable, that people didn't want to watch it a second time. In fact, at the end of the first season they had us write a script that would be a template for 24 without any of the serialization; each episode would be a stand-alone story. We saw very quickly that the show wasn't nearly as compelling without the real-time format and the serialization. We all said, "Well it was a good experiment, but we love this show as it is; we think there is something special, so let's just keep going."

When the network green-lit a second year, we released the first-season DVD, which was the first time a show had ever done that—released a season box set at the end of its first season on the air. We released it at the beginning of September, one month prior to the premiere of season 2. We believed there were potential viewers who had missed the initial episodes and thought it was too serialized to join during the season. We wanted to capture those viewers by allowing them to watch season 1 and see a trailer for season 2. The show had great buzz, the press liked it, and so we thought it would be a great marketing strategy. We really had no expectations of making any money on the DVD. And when it just blew off of the shelves, we realized that something very special had happened. The DVD was a great marketing platform for season 2, but it was also a remarkable way to monetize a show early in its life span.

But it's important not to allow the business side of things to drive the creative side. At the end of the day we have to have passion for the shows we produce, and produce them even if we are unsure whether they will have ancillary value. Our very best properties almost always were the ones that scared us, that we weren't really sure would be economically viable. 24 was that way; Glee was that way; even X-Files was that way, as we elected to produce that series when conventional wisdom told us that one-hour dramas were dead.

Family Guy seems to be a good example of the changing dynamics of distribution. It didn't look like the show was going anywhere and then the DVD market told you something very different. What happened in the case of Family Guy?

First, it was a network decision to cancel the show. The studio loved it and we would have continued production. After it was cancelled, a few things happened. Steve MacDonald, who works in our syndication division, loved the show and was frustrated he couldn't take the fifty episodes that existed and sell them to a cable network. Typically fifty is too few episodes for a cable network to syndicate because they want to be able to strip it five days a week, and fifty episodes is just ten weeks of programming. But Steve convinced Cartoon Network to "buy" it and he convinced me to let them have it for free for the first two months. After that, Cartoon had an option to continue for another period of time for a very low price, which I believe was $25,000 per episode. So this was a very small deal, but Steve hoped to ignite interest in the show so that when the contract with Cartoon Network was up he would be able to raise the prices.

The deal with Cartoon Network happened at about the same time we began releasing the show on DVD and our sales were through the roof. A part of the reason we were willing to sell the show so cheaply to Cartoon Network was that we had a DVD release coming up and we wanted to create awareness on Cartoon Network. We figured our consumers were watching that network, or at least the children of our consumers were, and they would convince their parents to buy it. So we thought of the sale to Cartoon Network as a synergistic marketing campaign for our DVD.

At about the same time I took my older son, Jordan, back to Yale on a college trip. I spoke at Pierson College and took questions from students after my presentation. Twenty hands shot up and almost every question was about Family Guy: "Would it come back?" "Why was it not on the air?" "Do I know Seth?" It was just that confluence of events, coupled with our great relationship with Seth MacFarlane, who was still in business with the studio. Seth never let go of the dream of bringing back Family Guy. He used to call me or come in and see me every few weeks to convince me to bring Family Guy back to television.

Eventually we just decided that we should do something. So I went back to talk to the network but they just flat out passed. They had no interest in bringing it back. So I went to my boss, who oversaw both the network and the studio, and I would bug him every couple of weeks about it. Eventually, I said, "What if we can figure out how to do this without a network and still pay for it?" He said, fine, never imagining we could do that. We got our DVD division to give us estimates on the value of new episodes, we got Steve MacDonald to go to Cartoon Network to see how much they would pay for new episodes, and we made deals to bring the show back. Because we knew our network could easily change its mind, and because it would be helpful to us to have the network relaunch the series to create awareness, we negotiated a Cartoon Network deal with a potential window for the Fox Network, in the event they changed their minds. Of course, once we got into production, they did change their minds. We had gone into production on forty-eight episodes, which is what Cartoon Network was prepared to buy. The Fox Network only agreed to buy the first thirteen. Later, they agreed to take all of the episodes. And it turned into one of the studio's most enduring and valuable series.

Over the last seven to eight years we have recognized that we are in an even more hit-driven business. It isn't about market share, it isn't about volume, it's about very brand-specific properties. Shows that are serialized, or are genre or animation, and that appeal to a young and male-skewing audience still perform great on DVD. We are not going to be able to sell serialized programming in syndication to broadcast stations or cable networks so you must rely on home entertainment

There is a level of complexity to our business that simply didn't exist when I started. I know it sounds simplistic, but twenty years ago all we cared about was the network and its needs. Almost everything went from network to syndication and that was pretty much it. As that changed, we began to look at each show separately to determine whether there might be other paths to financial success. At the same time we need to be careful to protect the core parts of our business.

So every decision we make about digital options we put through the prism of: Is it going to cannibalize another business? And if the answer is yes, we might ask: Are we getting compensated for it in a way that makes that risk appropriate? It is important that we don't trade customers who are providing great margins for customers who aren't, because we simply won't be able to afford to make the kind of programs we want to make. That being said, this movement to consumer convenience, ubiquity of content, and portability is vital. It is here to stay, and no one is interested in trying to block that. In fact, we want to support it. We just want to make sure we get compensated for financing and producing the content.

As a studio head, what does the revenue pie look like today? Where do you make your money?

You will probably get a different answer from every studio because it really depends upon what shows you have. I can only speak to what we have, but our home entertainment revenue, which includes physical sales (DVD) and digital revenue (such as that from Netflix and Hulu), has remained relatively flat with where we were during the height of the DVD market a few years ago. Whereas DVD revenue was 90 percent of the piece and digital was 10 percent, it's now approximately the same. Consumers are still paying for our product, but the revenue is just coming in differently, and, for us, that's very encouraging.

Right now, digital sales are more of a domestic phenomenon. International revenues haven't really grown yet the way domestic revenues have, although we expect that to change over the next several years as Netflix expands into foreign territories. Anyway, where people thought you were going to trade analog dollars for digital dimes, that hasn't really been the case. We are finding that digital growth has exceeded what we would have expected, and so we feel pretty bullish about the home entertainment sector.

(Continues...)

Excerpted from Distribution Revolution by Michael Curtin, Jennifer Holt, Kevin Sanson. Copyright © 2014 The Regents of the University of California. Excerpted by permission of UNIVERSITY OF CALIFORNIA PRESS.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Edition details

• Publisher: University of California Press
• Publication date: 2014
• Language: English
• ISBN 10: 0520283252
• ISBN 13: 9780520283251
• Binding: Paperback
• Edition number: 1
• Number of pages: 272
• Editor: Michael Curtin, Jennifer Holt, Kevin Sanson