Entertainment Distribution & Revenue Streams in the Digital Transmedia Age

I’ve been following the first quarter earnings calls for media companies and retailers with great interest. There have been a number of statements made – from distributors talking about synergy and social media (also a recurring theme at the TV upfronts), to video game publishers discussing strengthening and extending their IP, to a softening of the studios’ public stance towards Netflix – that may suggest that a genuine paradigm shift in the creation and distribution of entertainment may be on its way.

The changing shape of distribution and the redefinition of the entertainment industry’s business models is a minor obsession of mine. I’ve been giving it a tremendous amount of thought, particularly from the perspective of monetizing transmedia creative development models that are already quite well evolved. The conclusion that I am beginning to draw is that distribution is as important a piece of the transmedia storytelling puzzle as the creative methods that allow for intertwining stories, expansive worlds and thematic continuity across stories.

I’m going to outline what I perceive to be one possibility for the direction of the entertainment industry. There are numerous barriers to this becoming a reality, which I will discuss later. Nonetheless, this constitutes a “best case” scenario in terms of maximizing the value of content and creating new opportunities for visionary transmedia storytellers.

Ease-of-Use

One thing that has troubled me in the transmedia space is that much of the emphasis has been on making the experience of consuming content more difficult for the customer. Many fledging “transmedia” stories require the audience to visit numerous different websites, mess around with obscure mobile apps, or – worst of all – attend live functions or dig around in web code. There’s nothing inherently wrong with these notions; from a creative perspective they help engage a small, core audience and may serve some marketing functionality as well. From a business perspective, however, they fly in the face of what most consumers want: ease-of-use and accessibility.

Transmedia storytelling can allow the creation of deeper, more interesting stories and increased audience loyalty, engagement and consumption. In order for these benefits to be maximized, barriers to engagement should be removed wherever possible. Consumers should be free to hunt down story elements and exercise themselves intellectually in order to access content. However, they should not be required to. Accordingly, I foresee the entertainment content of the future – across all media – being distributed through a central hub.

Making content easily available from a central hub benefits creators and IP owners (who can create knowing that audiences know where to find and access their stories) and consumers, who can easily find things they love and consume more of them. Reinforcing the relationship between creators and audiences in this way will facilitate content creation and, ultimately, lead to more creative risks as segmented and niche products can be released to a large and captive fanbase.

Customer Choice

In addition to utility and ease-of-use, consumers like choice. One of the important notions with transmedia storytelling is that each platform is put to its best use – so an iPhone may be better for an interactive game than an HD video. I agree with that notion, and I think the transmedia content of the future should contain a “recommended” path, or similar.

However, that should not preclude the audience from making that informed choice. If a user intends to consume every part of a transmedia property, from eBooks to graphic novels to games to motion picture, on an iPad, he should be free to do exactly that. Of course, from a narrative standpoint, this content must be complementary, not overlapping; transmedia storytelling is not about telling the same story through text and screen (unless, perhaps, a different point-of-view is incorporated). Nonetheless, there is nothing that precludes the application of Jeff Gomez’s transmedia development principles to a property that can be consumed entirely through an iPad, desktop computer or even a SmartTV.

What I am talking about, of course, is a cloud storage solution whereby a party maintains a central personal account and can access a piece of digital content from anywhere. We’re well on the way towards that, naturally, but we haven’t seen a cloud solution blended with the kind of transmedia storytelling devices that a few transmedia experts like Gomez, Brent Friedman and Mike Monello are using to create plot and thematic links between stories.

Distributors

The right distribution platform can therefore facilitate transmedia storytelling from a creative perspective, and greatly enhance the experience for the audience. What are the necessary qualities for the ideal transmedia distribution platform? Ideally, it should be a cloud based platform with a large user base that is extremely trusting towards the underlying company and technology. It needs to allow seamless integration of transactions, preferably one-click, so that the audience can easily purchase more content. It must also be capable of supporting co-branding initiatives and easy brand integration. Of course, it must support at least one major mobile device (if not all of Apple iOS, Android and Windows Phone).

So which distribution platforms would work? Amazon.com immediately comes to mind, with its huge and trusting established user base and maturing digital distribution arms. Apple, Google and Facebook also come to mind, although Apple purchases tend to be tied to Apple devices, Facebook is relatively unproven, and Google has yet to successfully make the leap to transactions (and social, although it does have Youtube).  Netflix is an excellent option, with a proven distribution model and great deal of audience trust. Xbox Live and PSN are also options, recent problems notwithstanding along with the cable/satellite companies (Comcast, Verizon, Sky) and – on a limited basis – even social gaming companies such as Zynga and Moshi. Finally, although it may be absurd, brick and mortar companies such as Walmart and Target could move into the space since they have huge, loyal consumer bases and excellent ability to weave the sale of physical goods into stories.

There’s a lot of information there, so I want to unpack it slightly. The first issue is trust. We often talk about trust in storytelling – the implicit promise to an audience that the story is going somewhere and that you will pay off your story plants. This goes hand in hand with trust in a platform. People will be sharing personal details, including financial information, and that information must remain privileged and confidential.

Trust is important in part because of the second part of the puzzle – the seamless integration of transactions. Consumers should be able to purchase more content within a fictional universe with one-click, without being pulled out of the story. Of course, many properties will move to either a subscription (flat fee) or auto-purchase (all a la carte content is automatically purchased) model to maximize revenue and minimize intrusion for the audience.

Next comes brand integration. If I strike a deal for a feature film to incorporate a product or a brand, I should be able to weave it across all iterations of the project. It’s about creating a stronger connection between the story brand and the product brand. That extends to product placement; ultimately it seems likely that the audience will be able to instantly purchase anything they see on screen. Of course, this will require revised deal forms, which I will deal with later. This is the real advantage of a platform like Amazon, Walmart or Target, as all three will be able to facilitate the shipping of goods to customers.  Naturally, this goes both ways – customers who purchase physical products in a story universe, or consumer products that are acting as promotional partners, should be rewarded in their “hub,” with online currency, new story elements or something similar.

Role of the IP Owner

It becomes clear, then, that intellectual property – particular that which can be extended across multiple platforms (meaning text, video, games etc.) and stories – is extraordinarily valuable.  While the evolved distribution platforms of tomorrow will present multiple revenue streams, none of them are possible without strong content to support them.

What this means is that initial forays into this kind of platform will require a partnership between the platform and the content provider. This is good news for the movie studios, which will be given the opportunity to maximize the value of their brands, and will be considerably bolstered in the consumer products divisions as well. I anticipate a revenue-splitting model of the kind initially pioneered by Viacom when it purchased Blockbuster video. This might be as simple as a percentage split across the entire property, or it might be broken down by specific media in a way that complements the addition of other commercial partners. Of course, this presents a problem for companies not in the habit of retaining all rights to an IP – they will have to rethink their strategies in a way that allows them to best exploit the IP across all media.

This is a great setup for IP owners because it not only permits the cross-promotion of content within the same fictional universe (movie downloads, books, games etc.) but also permits synergy across different IPs through some kind of customer incentive/basic game mechanics. So when I buy my season pass to Tron (complete with all the movies, the TV show etc.), I get “Disney cash” that I can use towards some Toy Story or Pirates of the Caribbean content – giving me a taste of another property. It’s about extending the brand of the content owner so it is easily consumed by the audience, allowing it to make the IP owner a part of their life every day.

This setup is also tremendous in that it discourages piracy. I anticipate that piracy will eventually become less of a problem for IP owners over time as laws are amended to allow the protection of content. Nonetheless, under this model, anybody who operates outside of the distribution platform misses out on exclusive content and special transmedia functionality. Some of the separate content may be easily pirated, but the connective tissue between story installments (allowing the big picture to form) will be absent. Naturally, most smart transmedia strategies will give away certain parts of content for free in order to introduce an audience to an IP or promote an upcoming release (through an opt-in procedure, this content will be pushed automatically to cellphones. tablets and TVs).

While partners with IP owners will set the pace in this sector, I expect that eventually the platforms themselves will become major content providers in their own right. Netflix is already acquiring original content, and it is not a stretch to suggest that it could eventually leverage its position in video into other media. Amazon is taking an interesting approach by setting up initiatives such as Amazon Studios to give itself a foothold in the content market by taking an interest in content at the development stage. Apple, Facebook and Google will not be far behind.

Ultimately, we will be left with an infrastructure that permits anybody to create a transmedia project through these platforms. It will be a proven platform for creators to reach sizeable audiences who are now accustomed to transmedia. The platforms will make money through brand integration and commissions on purchases (like Amazon’s current self-publishing unit). Most importantly, it will be a great platform for the audience because suitable content will be easy to find and, most importantly, filtered. To give an example of the necessity of filtering, Netflix’s acquisition of content is great news for subscribers (it licensed Miramax today), but as anyone who has taken Psych 101 knows, the more options that are provided, the harder it is to make a choice. Filtering will enable me to limit what I see to things that are highly relevant to me (and there is also the possibility of social curation). Ultimately, this should create a more flexible market as some projects take the Sam Walton approach of low price/high volume, while other premium projects retain according pricing.

Role of Creators and Transmedia Producers

Making these kind of transmedia stories more accessible, and more easily monetizable, will provide great opportunities for creators in the space.  The need for creators and producers who can operate in the transmedia vernacular and craft story universes that permit many strong stories will be increased. Moreover, there will be increased demand for programmers, marketers and writers who can deal with transmedia projects.

The key to this setup, and why it will be immensely valuable in the entertainment marketplace, is meaning. As content creation continues to escalate, and vast libraries amass, people are seeking meaning in the entertainment content they consume. A unrelated, unassociated story presents a deterrent to an audience with limited time and unlimited options. The modern audience wants something that it can relate to, or which is going to open up possibilities for a longer term bond to form (with the content and, ultimately, with others). The success of Marvel’s Thor to date is testament to that. It has reaped $300m worldwide so far – a figure that I suspect would be nowhere near as high if the audience was not already emotionally invested in a story universe that it knew was going to be continued to be expanded and enriched (although only in motion pictures, regrettably).

While transmedia content in the new distribution era will be more easily discoverable, there will be a sustained onus on creators who can derive creative ways to engage viewers and “push” them from one story to the next. It is likely, I suspect, that audiences will have the option to enable or disable prompts in their stories, whether on video, game or text, that clue them in on the connections between plots and events. In all instances, it is critical that viewers who join a property late can catch up easily, and prompts – whether in the form of pop-ups , tags or subtitles – could be an easy way to do this. Part creative, part marketing, part game designer, the ability to create these “bridges” between content will be a highly coveted skill set in coming years.

None of this precludes a lot of the more niche elements of transmedia storytelling. Live events and ARG-style scavenger hunts can be incorporated into the property – but they are perhaps incentivized by some kind of reward or currency and, of course, they are restated or reframed so that the mass audience does not miss out on the story. Transmedia producers will likely take on this task as part of a larger responsibility to maintain narrative consistency and a uniform level of storytelling quality.

By the same token, I do not necessary consider the transmedia producer role limited to fiction alone (although that is where there are most applications). I can imagine creating a distribution platform for non-fiction properties as well. For instance, a hub for the X-Factor TV show would allow the viewing of episodes and behind-the-scenes content, the purchase of music and partner products (if it’s on screen, you can buy it), and fan interaction in one place (with limited information gathered so that the broadcaster could push or recommend additional programming to the viewer).

Barriers to Adoption

These thoughts represent a best-case scenario for IP owners and the audience at large (although I know there are those that would consider them worst case). However, there are at least a couple of sizeable barriers that would need to be overcome in order to facilitate their adoption.

The first is that – and this is something that already hampered transmedia storytelling – most corporations are not structured to permit this kind of synergy. Divisions are oceans apart and staff are compensated on the performance of their group, not the company (or even product line) at large. This setup would require much greater cooperation within companies, as well as between the IP owner and the platform.

Second, we have to consider dealmaking. There are very few existing deal structures in the entertainment world that contemplate these kind of setups. Talent deals in particular could be problematic because then we get into the realm of profit participation and image rights. Of course, there is the constant consideration of guilds and unions. A company that had previously functioned as a traditional publisher might create a hub that expanded its world with video and gaming content that aroused the attentions of the unions. There may also be state or federal regulations to be followed regarding payment and transaction structures that are somehow triggered by a system such as this – not to mention taxes.

Thirdly, of course, a company needs to build the platform. From a technical perspective, any of the companies I mentioned earlier should have the capacity to put something like this in place. The issue, of course, is that most technology companies have a very poor understanding of creative content – and virtually no companies, period, understand how to successfully implement transmedia stories. Thus, I would anticipate leaders in the field being recruited to consult on the building of these platforms and possibly incentivized to provide original content.

Interactivity and Fan Community

The structures I have outlined represent common sense for the entertainment industry at large, and may represent precisely the kind of disruptive maneuver that a Google or Netflix might make in the next ten to fifteen years. It simply makes sense to maximize the value of intellectual property, and the best way to do that is to provide the audience with an array of excellent interlinked content that it is easy for them to purchase.

With that said, transmedia storytelling is defined by interactivity with the audience, so no effective distribution platform would be optimal without some kind of vehicle for this. I suspect that two years from now we will see some implementations that shatter current industry preconceptions of what that might mean. For now though, that’s a story for another day.