Content Goes Hollywood—How the Film Industry is Struggling with Digital Content

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In the mid 1990's, the buzzword in Hollywood was "convergence." Everyone in Tinseltown sought desperately to solve the riddle of how Hollywood's content would merge with emerging digital technologies. The bigwigs at Microsoft made a bold march onto studio lots and proclaimed that they held the keys to the convergence kingdom. Yet in a short time, the two sides called a truce and returned to their respective corners, declaring that Hollywood would stick to content, while Microsoft would stick to technology.

Ten years have passed and, after getting its proverbial bubble burst, Hollywood has timidly started to embrace the online world once again. Will it be for real this time? And if so, how is Hollywood seeking to get the most bang for its online content buck?

Success and Failure
Ask anyone in the movie business about Hollywood's most high-profile online success and he or she will tell you about The Blair Witch Project when the stars truly aligned. "We caught lightning in a bottle," says Kevin J. Foxe, the film's executive producer. "The online community took the film's marketing materials and passed them around virally in such a way that audiences showed up in droves for opening night." Clearly, without the online buzz, it is a film that would have never been discovered by mainstream audiences. Instead, the movie—made on a $35,000 budget—went on to gross more $350 million worldwide.

Of course, this well-worn success story took place five years ago. Common sense would dictate that this should have been the first splash of an inevitable tidal wave that blended Hollywood's content and the Internet. Instead, the well quickly ran dry. And in Hollywood's what-have-you-done-for-me-lately culture, hanging your hat on a success five years in the past doesn't get you invited to too many lunches.

Now for the first time in years, Hollywood's online ad spending is up, and the backrooms of Sunset Boulevard eateries are once again abuzz with producers talking about the Internet. According to figures from the Motion Picture Association of America, online advertising budgets for its member studios nearly doubled from 2002 to 2003. "And the news for 2004 is even better," according to Ian Schafer, president of Deep Focus, a leading online marketer of studio movies for clients such as MGM, Miramax, and Dreamworks. "We're seeing at least five percent of overall marketing budgets for a film being allocated for online promotion, and this is up considerably even since the beginning of this year." While these numbers can't compete with budgets for television and print, they do indicate a steady improvement in Hollywood's attention to online audiences.

So why has Hollywood only just recently returned its attentions to the online world? In order to understand the answer, it's important to realize that, for Hollywood content-makers, the Internet boils down to only two things—marketing and distribution. And each represents a double-edged sword.

The upside in the marketing arena is that the Internet has joined the ranks of bona fide mediums that can be used to galvanize the audiences who fill theaters on opening nights; the downside is that, if not done properly, it can severely damage or even destroy hard-won brands. For distribution, the coming years might very well prove the Internet to be an additional and enormous revenue stream, while the downside entails the hot-button issue of content piracy.

Only in the past few years have Hollywood new media staffs migrated from beneath the umbrellas of the IT departments to those of marketing. And Hollywood marketing these days is all about opening weekend box office. "The biggest challenge in online movie marketing right now is to make sure that showtimes, theaters, and viewable trailers are accessible to a user at all the right times," says Deep Focus' Schafer. People still need to constantly be reminded that they need to get out of their seats and go to the theater.

And while they're surely limited by budget, online marketers are also constrained by limited available content and how they can access it. Many outsourced online marketers complain of having to sift through shipments of unlabeled CD's containing non-catalogued cast photographs and movie graphics. The new rules are clearly being written as we speak.

"Rather than being an end-all, be-all…the Internet has become simply a piece of the marketing pie," says Hollywood movie producer Andrew Panay. "Just as with movie marketing in general, we've learned that some audiences respond to online marketing, and some don't." For instance, Panay is currently finishing the Miramax film Underclassman starring Nick Cannon of Nickelodeon fame. "We've already started discussing online promotions that will catch the attention of youth audiences for this film," says Panay. Whereas on The Wedding Crashers—another film Panay is finishing for New Line Cinema that stars Owen Wilson and Vince Vaughn—he expects the studio to rely less on online marketing, as the audience skews somewhat older.

Robert Levy, producer of the phenomenally successful Mary Kate and Ashley Olsen direct-to-video movies, agrees. "Young audiences are online. We play extensively to these kids online because we're both encouraging them to buy these movies and we're reinforcing Mary Kate and Ashley as a brand."

While studios struggle with using the Internet as a tool to create box office punch, many Hollywood content-makers feel that using it to develop and extend a brand is the real untapped power of the Internet. Marc Levey, founder of the Producer's Guild of America's New Media Council and managing director of Pacific Media Ventures, insists, "The Internet for Hollywood is about community. If you build a branded community that people can participate in, they'll come back over and over." Levey points to Hollywood film franchises such as Spiderman, Harry Potter, and Lord Of The Rings. "The online communities for these types of franchises can be huge when they emulate the ‘water cooler' atmosphere, giving visitors the ability to chat and exchange ideas between installments of movie episodes."

But branding is serious business. In movies, the brands tend to be movie specific, rather than company specific. With the possible exception of Disney, few people rush out to see the new Universal or Sony film. Because of this reality, each movie's branded marketing assets—logos, artwork, photographs, movie clips, trailers, and the like—must be created on very short timelines. Digital management of these assets is even more cumbersome.

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