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Tom Gewecke Keynote at MEFCon

Right after Fake Steve, Thomas Gewecke, President, Warner Bros. Digital Distribution, came up and give a lot of insight to Warner Brother’s digital strategy, including a piece on mobile video. While Gewecke admits that mobile is about 2.4% of their total digital revenue, there is a lot of potential, due to the dramatic shift in habits of viewing content. The shift comes from altering the where, when and how a consumer views content. With portable media devices (including mobile phones), viewing can happen virtually anywhere. Shifting when people view their program has been made possible through DVRs (digital video recorders) allows you to pause, record and replay live TV. Customers now given the choice and flexibility are demanding that the maximum amount of content be available in almost any form (television, portable media (DVD), digital (file download/streaming for PC) and mobile. Well it sounds pretty simple to just re-purpose and reformat for all types of viewing mediums, the issue becomes tricky since the work flow to take the master recordings into all the different formats is not a push button mechanism of copy and duplication. Instead what is happening is a bunch of large scale one-offs, particularly for mobile, which is a logistical nightmare. Compound the problem with a rather limited distribution channel which is “un-natural” for a studio and you get a lot of potentially lackluster experiences on the other end. While larger studios like Warner Bros. can deal with taking technology in-house, the technology risk and capital outlay have caused entertainment companies to partner and/or outsource their digital publishing needs to hedge against ever-changing standards and consumers willingness to consume content in various forms. One case in point, building digital assets for mobile such as a Looney Tunes or Scooby Doo game is more cost-effective to outsource to a mobile game developer house than build and hire an in-house production team. But this still does not eliminate the tedious path of utilizing mobile operators, instead of existing media distribution outlets such as retail chains and video specialty shops. The direct reach partnering with a HMV or Vigin Music Store in comparison to a AT&T or Verizon is the round peg through a square hole problem.

Warner Bros. reacted to some trends observed about its consumers. Through technology, it changes how customers find, buy, watch and share video. The number of networked devices, faster bandwidth and tremendous storage solutions for consumers increase the potential appetite to consume content, particular through a digital channel. This is further extended as portable devices (including all mobile phones) have dramatically increase the number of viewing mediums that can play video content. Based on these trends, Gewecke states that his company has taken on some changes in their thinking about how to continually meet the needs of their consumers. He admits that the consumer, now more than ever, is in control. Consumers choose how, where and when to watch, not exclusively through daily programming or movie theaters or video rentals. The number of choices are many, which creates tremendous opportunity to address untapped markets and build more revenue streams leveraging existing assets, tempered with the number of challenges of delivering to these channels in a cost-effective and timely manner. Finally, beyond the assets that Warner Bros. has in their immense collection over the past 85 years of being in business, they are taking a hard look at complimentary services and the community becoming an important part of the content and consumption experience.

Two examples were mentioned to show promise that progressive thinking can produce tangible results. The first example is the cycle of releasing a movie. In the past, a movie would be released in the theaters, followed by PPV (Pay Per View), then available for rental, finally available for consumer purchase. To replace this cycle, Warner Bros. created the Day & Date Digital Rental. This allows the customer a choice for consuming new release by making the “on demand” rental and the DVD release available simultaneously. Initially launched in August of 2007, it was tested out with a select number of titles in the US and some locations internationally. The results show that there was a higher increase in “on demand” *and* DVD sales as well as an increase in customer satisfaction. While this doesn’t seem to be large change, this radical thinking proved that you can improve on an existing system.

The second example is addressing Digital Ownership. This is where Warner Bros. provides a digital version of a movie that *can* be copied to a computer for view and/or backup as part of a DVD purchase. This allows the consumer choice in how, when and where they view content that has been purchased. Again, this progressive thinking appeals to changing needs and improves customer satisfaction.

At the end of the keynote, I tried to tie in my experience with a recent meeting that I had with NBC Universal. A pattern is starting to emerge where the movie studios, in comparison to music studios, are becoming much more progressive and open-minded about how to make money in the mobile space. Gewecke said that he is willing to take some technology risks and experiment, since creating new streams of revenue will ensure the longevity of the company. Music companies seem to be more restrictive and trying to find all kinds of ways to make money, but feel that their only avenues are streaming and mp3 music stores. While I am sure that more can be done in this area, particular search and discovery, which leads to a transaction, I will be following up on this with another article due shortly.

Thanks again to Peggy Anne Salz at MSearchGroove for helping me access the MEF event.

Tags:   digital distribution · keynote address · MEF · MEFCon LA · Mobile · Mobile Entertainment Forum · mobile video · NBC · NBC Universal · Tom Gewecke · video · Warner Bros · Warner Brothers1 Comment