I spend a lot of time thinking about digital content. When I started in the entertainment business 18 years ago, it was all celluloid and broadcast television. I'm proud to have been an early mover in Hollywood's digital space, and I've defined the last 10 years of my career by guiding many private equity groups and major film studios into this unknown digital frontier. I've always enjoyed trying to capitalize on "the next big thing" before most other people see the trend-whether it's pushing Hollywood to focus on teen movies for the first time in 20 years or hoping to discover what premium original content should look like on the internet. So it's awkward for me to shift my gaze from the future to the here and now, but that's just what I've done recently.
Over the past few years, I was lucky enough to play minor roles in two of Hollywood's biggest deals-the $660 million sale of Miramax by Disney and the restructuring of MGM. Miramax was particularly interesting because, of the 700 movies that sold, three were mine from my days as a film producer.
Those deals focused me on the value of film libraries in a digital age, and, a few months ago, I led a group of investors who acquired what we believe is the largest Spanish-language film library in the U.S. While we have a huge volume of about 1,000 films, these are movies that appeal to a value-oriented consumer. In other words, what I only recently learned is that my audience for these films doesn't yet own an iPad, doesn't do mobile "check ins" when they go to a bar, and only recently bought a DVD player. But they are driven to purchase by a good value.
Whereas my personal Los Angeles community of technological early adopters tends to be driven to buy the coolest, most cutting-edge gadgets, we often forget (and I'm the most guilty here) that a huge chunk of the population is driven more by a good value. It could be a function of generation, socioeconomic status, the overall economy, or simply priorities, but while I expected to immediately put digital deals in place with my new film library, I've been forced to recognize that I must first focus on selling this audience entertainment in the way that it wants it right now. That just happens to be on the uber-traditional DVD.
It's true that there are plenty of digitally savvy Latinos in the U.S., but there's also a huge portion who are not-and there's room for them all. The new 2011 census data shows that there are now 50 million Hispanics in the U.S. who account for one in every six people, and they represent a massive $1 trillion economy. It's a demo that's growing a whopping four times faster than the rest of the population. Not surprisingly, just pick up The Wall Street Journal and you'll see U.S. advertisers suddenly falling all over themselves to get access to this consumer.
Sure, I expect to be well-positioned with my new Spanish film library at the moment when everyone in the demo gets an iPad; pays to stream Netflix, Inc.; and buys their first internet-enabled TV. I spend a large amount of each day working on deals and infrastructure that will help me capitalize on that, but the reality is that this audience is just not there yet.
It has all caused me to think about the opportunities we miss that are right under our noses. Businesses must constantly be building for the future, but, in doing so, how much money are they leaving on the table with their current consumers? There's still a segment of America whose idea of a good time on a Friday night is to walk the aisles of their convenience stores and figure out what movies to rent for the weekend. DISH Network, LLC seems to understand this because, while it appears to have bought Blockbuster, LLC in the hopes of launching a streaming competitor to Netflix, it's still bleeding out the immediate rental opportunities at Blockbuster's remaining brick-and-mortar stores.
In my case, I'm hoping that this is all one step back in order to take two steps forward. There has been no bigger digital advocate than I--encouraging businesses to push the envelope with constant digital experimentation. But I'm now also learning that sometimes a little dose of the current can drive your revenue up as you work to propel yourself into the future.