Manatt Digital Media - May 2015

Manatt, Phelps & Phillips, LLP

In This Issue:

  • The Rise of the Global Digital Content Market—Esprit de Corps at MIP Digital Fronts
  • MCNs No More, “MPN” Please! (or, What’s in a “P”?)
  • Digital Influencers, Millennials and the New Rules of Engagement
  • 5 Questions with New Form Digital SVP JC Cangilla—Exclusive Q&A
  • MDM Spotlight Profile

In the last two months, Virtual Reality (VR) has become the featured event in the media and in industry events, creating great buzz and excitement around the possibilities for transforming user experiences across all domains. Although it has been more accessible, VR is still in its early stages in terms of user experience, technology and business models. The VR ecosystem is continually evolving and maturing as entrepreneurs, tech, media companies and brands continue to experiment and learn from success metrics and analytics to date. In this edition, we give you an overview of the VR landscape, from the perspective of observers as well as those immersed in the creative world of VR.

The Rise of the Global Digital Content Market—Esprit de Corps at MIP Digital Fronts

By Eunice Shin

Warm weather with a gentle breeze on the French Riviera is pretty fantastic. Add to that a wave of excitement in seeing the growth and potential of the global digital market—and there you have an incredible MIP Digital Front event.

Clearly, to date the United States has been a leading force in the world of digital media. Certain parts of the world have been slower on the uptake (hint: where Millennials don’t make up the majority of the population), but there is no doubt that digital media buying is now a global opportunity.

Here are some of the big trends we saw at MIP TV 2015:

MCNs and other digital-first players have grown into multi-platform media and entertainment companies, developing content in films, music and scripted TV. Buzzfeed, Vice, CDS, and AwesomenessTV are in the film business as well. Many of the leaders in this space are growing into their own skin and have a better sense of identity. It’s exciting to see differentiation of focus starting to take place among them—Stylehaul and Collective Digital Studios with brands; VICE with Millennial-only media programming channels; and New Form Digital with scripted, original content.

  • Digital content, short and long form, are getting licensing deals with international streaming services and partners
    • Maker Studios will have a channel with over 2,000 videos on CanalPlus’ streaming service, CanalPlay
    • AwesomenessTV will provide over 200 hours of original content for Verizon’s mobile platform
    • Numerous deals initiated at MIP and still underway will soon be announced
  • Social media is a distribution platform. Facebook and Snapchat were mentioned in every single presentation and meeting I attended. Without a doubt, effectively leveraging social platforms will be key for digital content companies in 2015.
  • Live streaming is on the rise—creating more opportunities around events, sports, music and gaming
  • Dailymotion served 150 million hours of live streaming in 2014
  • Vice and LiveNation announced at MIP a new partnership to deliver live music videos—applying the cinematic nature of music videos to live performances and streaming them live from a variety of major music concerts
  • YouTube has 300 hours of content uploaded every minute
  • Machinima’s audience consumes 3.8 billion videos per month; and in one month, Machinima produces more than 10 times the annual output of the largest fully-distributed cable network in the United States.
  • The most social film of 2014 was AwesomenessTV’s Expelled, beyond Guardians of the Galaxy, The Maze Runner, and The Fault In Our Stars.
  • When it comes to digital, scale still is crazy impressive

As Brian Robbins, Founder/CEO of AwesomenessTV puts it: “Traditional TV viewing among teens and tweens is dead. Not dying, dead.”

MCNs No More, “MPN” Please! (or, What’s in a “P”?)

By Peter Csathy

As many of you know, we write regularly about MCNs (multi-channel networks). But, just in the past few months—reflecting how fast things are moving in this space—the relevant lexicon has changed.

You see, several of the leading digital-first video networks formerly known as “MCNs” no longer answer to that name/acronym. They prefer (justifiably) the new significantly expanded label “MPN”—as in, multi-platform network.

What’s in a name?

In this case, a lot! “MPN” connotes mass distribution of videos across multiple distribution platforms—not just YouTube. While these mobile/Millennial-focused new media companies initially birthed and aggregated their videos as channels on YouTube only (hence, the moniker “multi-channel” networks), now YouTube is only one of many (to be sure, still the most critical one). The new MPN game for many is to initially build mass audiences on YouTube, but then take those audiences—and monetize them—off YouTube. That’s why these MPNs seek the widest spray of their video programming across the widest array of distribution platforms (including the likes of Facebook, Snapchat, Twitter, Vessel, Xbox—just to name a few).

Call it simple evolution in the over-the-top (OTT) video world. Just like Webster’s continuously expands to meet the changing language of the times, the OTT video and digital media/tech dictionary expands to more accurately reflect movement in the overall space.

And, significant meaning in that movement there is . . .

Digital Influencers, Millennials and the New Rules of Engagement

By Mary Ermitanio

Digital influencers—popular personalities on YouTube, Twitter, Vine, Instagram and other social platforms—are increasingly attracting a large share of the consumer attention pie and are transforming the rules of engagement with Millennials. A survey conducted for Variety last year concluded that YouTube stars were more influential than mainstream celebs among U.S. teens.

What’s made them so powerful? “Digital influencers” have been around since the dawn of blogging in the early 2000s. However, the accelerated growth of mobile devices and online video has created unprecedented opportunity for this new crop of influencers to reach massive audiences and to engage at a whole new level. Kids and teens are growing up with their phones in hand everywhere they go and with the ability to access content 24/7. The content creators on the other side of the screen make themselves and their content available 24/7, developing a level of intimacy with their viewers that brands and traditional media companies don’t have. The medium of communication—video—is also more personal and engaging than plain text, with the visual and the audio commanding a stronger influence on a viewer’s emotions.

How has the conversation with Millennials changed? In a panel on Digital Stars and Brands during Variety’s Entertainment Marketing Summit, Sam Wick, EVP of business development at Maker Studios, laid out some lessons for brands on building digital influence: (1) create mobile-friendly content; (2) respond quickly; and (3) always be on. Brand marketers traditionally work on a campaign basis, quarterly, monthly, etc., but the voice and presence of digital influencers are consistent and unrestricted to a time period.

Besides mobile-friendliness, responsiveness and accessibility, brands must be authentic. All members of the panel, which was comprised of marketing and media executives and a digital influencer, echoed the importance of authenticity in cultivating the conversation with Millennials. Scott Birnbaum, SVP of marketing at Aeropostale, shared an anecdote from a campaign with YouTube star Bethany Mota. When Aeropostale released a photo of the star that looked overly retouched, her fans on social media were outraged. “Kids can smell fake,” confirms Birnbaum. The great thing about digital is that brands get immediate feedback on the content they put out there, enabling real-time optimization.

So how are forward-thinking brands who target Millennials changing the game? Aeropostale’s relationship with Bethany Mota—a fashion-focused, teenage video blogger with more Instagram followers than Vogue, Cosmopolitan and Glamour combined—began as an endorsement deal. Gaining insight into the relationship between a YouTube star and her fans, Birnbaum realized the opportunity to make that digital influence more tangible and transform it into a lifestyle. Aeropostale worked with Bethany to release her own line of products under the brand. To prevent alienating her fans during this move to commercial, they kept the fans involved in the entire process, creating a sense of ownership that drove brand loyalty.

Another brand creating a sense of ownership among its audience is Marriott. Moxy hotels, Marriott’s new line of boutique hotels for budget savvy travelers, incorporates the concept of the “Global Guestbook,” a curation of social media content generated by individuals staying at the hotels. The Global Guestbook is found online as well as on oversized screens in the hotels, integrating the digital and physical experiences. According to Amy Sherman, head of digital marketing at Marriott, the Global Guestbook lets the audience command and create the “visual identity” of the brand.

From partnering with a digital influencer to embracing user-generated content, companies can more effectively reach and engage Millennials by delivering authentic experiences both online and offline.

5 Questions with New Form Digital SVP JC Cangilla—Exclusive Q&A

By Peter Csathy

New Form Digital, a digital-first studio, was launched with great fanfare almost exactly one year ago by Hollywood legends Ron Howard and Bryan Grazer, who joined forces with Discovery Communications. I recently spent some time with SVP JC Cangilla who runs overall operations, among his many other tasks. Cangilla previously worked as a senior executive in video at Yahoo! and has been a digital dealmaker for years. In a digital video world still dominated by low production values and large doses of serendipity (not necessarily bad traits, by the way), New Form Digital’s approach is very different and, well, a bit more “traditional”—focused on high production values and scripted story-telling—but with digital, mobile and Millennials top of mind.

Despite New Form Digital’s high profile roots, most of you likely still don’t know much about the company. JC changes that here—giving extremely detailed responses that offer real insights about the company. It’s definitely worthy of reading and consideration, since New Form Digital is a “must know” company in the digital media “space.”

Here are our 5 questions to JC—and his unedited answers. Enjoy.

(1) What is the reason your company exists (and what problem(s) are you looking to solve)?

New Form fills a white space that exists in the digital landscape: we are solely focused on developing, producing and releasing scripted series on digital platforms.

We’re an entertainment company with a technology mindset. Our scripted originals (typically episodic shows in sci-fi, drama, comedy, horror genres) feature digital-native talent (typically from Youtube, Vimeo, Instagram and Vine). We use data to make informed choices in the development, packaging and distribution of our scripted originals. And we tie it all together with really compelling story.

Our creative team is led by Kathleen Grace, our chief creative officer, who works with our head of development and production, Melissa Schneider to find talent, develop the projects and build out a complete story. We are producing great stuff, with 14 series sold since we launched just one year ago. Some of my favorites are here.

My job is to take these great stories and use my knowledge of the larger video ecosystem to find the right homes for the stories and the right models for the business. It’s a fun job. We’ve done great deals with major media companies, MCNs, marketers and agencies. This content market has exploded in the past few years and there is significant demand for high-quality scripted series.

It’s hard to believe how much we have grown in just one year—with nearly 25 pilots in development and 14 series sold and going into production over the next year. We’ve already announced 4 shows with Vimeo and have a number of deals on the horizon that we will be announcing in the weeks ahead.

(2) How are you different from your competitors?

We are the only entertainment studio built specifically to focus solely on scripted originals for digital platforms.

We’re not a multi-channel network (but we work and partner with MCNs like Fullscreen, Maker and Machinima); we’re not simply a production company (because we’re focused on developing story and talent) and we’re not a media company.

We are huge fans of creators and digital video in general; and we are in an explosive market with an incredible product. The digital video business is seeing record investment from traditional media holders, new platforms and, increasingly, marketers. We look to partner in each of those spaces.

(3) Why will you succeed (and what is your single most important ingredient for success)?

Scripted content and cinematic stories have historically shown massive value—both to the content creators (e.g., studios) and to the distributors (e.g., TV channels like AMC going big into scripted originals in the early 2000s, or more recently with premium subscription platforms like Netflix and Amazon developing their own original programming). Our continued success will be dependent on successful stories and listening to the audience and creators.

As one example of our model in action, we recently released 14 “shows” on YouTube, within the channels of the most prominent actor or director on that show. We looked at performance of New Form Digital’s content versus mostly non-scripted, conversational content that was consumed over the last 90 days on those channels. Our shows had a significantly longer watch time (+262%) and more shares and likes (+60%) than anything else in that time period. So we are excited to replicate that success with individual series across multiple platforms.

We’re uniquely positioned in the digital space to leverage the vast amount of data like this to help make the right creative choices. Digital efficiencies allow us to ideate, create and release quickly. We’re building the business to support scaled development and release.

(4) What makes you unique (and what do you enjoy most outside of building your business)?

The company is unique because of what we talk about above: focus on scripted originals, marrying tech into the entertainment process and focusing on digital talent, distribution and audience.

I’ve been fortunate enough to be involved in digital video for the last 10 years (first at Spot Runner, then at Yahoo! and now at New Form) and have seen growth and challenges in the space. The business that I’ve been able to generate is always dependent on having a wide knowledge of the entire ecosystem while being opportunistic. Flexibility, deep relationships, perseverance and willingness to try new things are all important qualities that lead to success in this space.

From a professional standpoint, it’s never been a better time to be in digital video and yet the opportunity is still growing and evolving.

On a personal level, my son Jack is eighteen months old and nothing gives me greater joy than spending time with him and his mother. Jack’s favorite toy is a pink stroller and Sundays typically find him pushing through a crowded local farmer’s market so we can get to the strawberries he loves the most.

(5) What digital media trend is most interesting to you (and what is the least)?

It’s fascinating to see how quickly the video consumption experience is changing; it feels like tectonic shifts are all happening at the same time. They include (but are not limited to): 1. major media embracing direct-to-consumer services and OTT experiences; 2. audiences, especially younger audiences, flocking to digital platforms; and 3. marketers investing in content as means-in-itself and not just around the content. All three of these make us excited about the potential of our own projects.

Least interesting question that I get asked daily: Are you making short-form or long-form? Our episode lengths fit the story they are telling. Some are long, some are shorter. There is a structural legacy from TV that leads to assumptions that episode lengths less than 22 minutes in length aren’t “high-quality.” With binge consumption, DVR, and Millennial video consumption patterns, we don’t think 22s are necessarily the best ways to engage and retain audiences. Thus you’ll see 10 minute episodes, 15 minute episodes and 5 minute episodes from New Form. And we’re confident that distributors and platforms will love the content, the audience engagement will be significant and then the monetization rates and the ad-serving technology will fall in line.

MDM Spotlight Profile

MDM’s multi-disciplinary team of business consultants, lawyers and venture capitalists provides a unique perspective in addressing the challenges and opportunities our clients face. Eunice Shin leads MDM’s consulting team and advises media, technology and emerging growth companies on business strategy, organizational priorities and business development.

With over 18 years of industry experience, Eunice has provided strategic consulting services as a trusted advisor to the major studios, broadcasters, and other leading media and entertainment and brand companies. Eunice is passionate about the transformative opportunity with customer engagement and analytics in the digital media space, and bridges her network of innovators, thought leaders and digital media trailblazers to deliver game-changing results.

View her full profile here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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