FEATURE As is the case with music, iTunes has become
a nascent distribution point for movies unable to attract decent offers from more traditional outlets. Edward Burns’ Purple Violets, a $4m feature which premiered at the Tribeca Film Festival in 2007, was the first to bypass the cin- ema circuit in favour of an iTunes premiere. “My style of film-making is dying on the vine,” explained Burns at the time. “These small, talky movies have a hard time finding an audience theatrically, so you need to adapt.” While offering a lifeline to indies, Apple poses
major problems for the TV ecosystem and all the various Hollywood studios, cable operators and network conglomerates which feed off it with high-margin subscriptions. Customers no longer have to access programming bundled together to maximise profits, but can choose instead from a self-service kiosk with personal- ised menus and no real hierarchies. Apple is just one of several heavyweights
threatening to upset TV’s lucrative bundling paradigm in favour of an individually custom- ised approach. Joining the fray of high-tech video aggregators are Amazon (owner of Love- Film), and the one arch enemy with arguably more computer-crunching power: Google. Armed to the teeth with data centres — includ- ing a $600m facility of its own in North Caro- lina — the search giant is already a force in the video world as a result of YouTube, which now plays full-length movies. Now rumours suggest under Google’s entertainment czar Robert Kyncl, YouTube wants to go one further and spend $100m acquiring content for a Netflix- style unlimited subscription service in Europe, which would start in the UK.
Matching content to viewer In the meantime, there is Google TV. By embed- ding its Android operating system into internet- enabled HDTV sets, Blu-ray players and other boxes, Google wants to bring web-like search to traditional channel surfing. Who needs pro- gramme schedulers and content packagers when you can simply type in what you are look- ing for and let the algorithms work their match- making magic? “Search by its nature is the enemy of bun-
dling. It’s user-centric, idiosyncratic and inher- ently a la carte,” notes Paul Sweeting, an analyst at the US’s GigaOM Pro. “Google TV’s inte- grated search, combining results from the web and from traditional sources in a single user interface, encourages the user to separate the content from its source, or at least to treat the source as irrelevant.” This has not gone unnoticed among Europe’s
cable television operators, judging by comments at the recent Cable Congress in Lucerne. “It’s an existential threat, in the sense that it leads to cord-cutting,” said Shane O’Neill, chief strategy officer at international cable operator Liberty Global, referring to the threat of customers deserting their high-revenue subscriptions for so-called ‘over-the-top’ TV providers which pro- vide content directly through web browsers. “Google, Apple, these are powerful, well- financed companies that have started to stray into our path and it behoves us to pick up the pace of innovation.” “Cable has to look over its shoulder in a big
way,” agreed Tom Rogers, the CEO of TiVo, the digital video recording service. “Cable operators are the largest providers of content and choice,
n 50 Screen International at the Cannes Film Festival May 12, 2011
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Edward Burns’ Purple Violets premiered on iTunes
but it wouldn’t take a whole lot for the con- sumer to go elsewhere if the amount of that choice or the presentation of it would excel somewhere else.” Crucial here is the proven ability of Google,
‘It wouldn’t take a lot for the consumer to go elsewhere if the amount of choice or the presentation of it excelled
Apple and Amazon in designing effortless user interfaces for navigating vast inventories of content and information. Even now, smart- phone wands and touch-sensitive tablets make for far more intuitive devices when controlling televisions screens than the clumsy TV remote control. Unless cable improves the user experience
with features such as social networking, Rogers warns the TV establishment “will be overcome by Google, Apple and others who want that cus- tomer relationship the cable operators have built up over the last couple of decades”.
somewhere else’ Tom Rogers, TiVo
Devil in Apple’s detail That relationship with customers has become something of a flashpoint as a result of Apple’s new rules for selling subscriptions through its phenomenally successful App Store. Not only does Apple take a 30% cut of all such transac- tions, it is refusing to hand over the personal details of customers making in-app purchases/ subscriptions without the permission of those customers. This is a serious double-whammy for the digital content publishers: 30% in perpe- tuity would wipe out most profit margins for wholesale suppliers of video and music content which have to license those titles from studios and producers. And for decades, publishers have relied on that precious customer data as marketing lifeblood and advertising goldmine. Apple’s closed walled-garden approach has
made Hollywood loath to play along with any ambitions in the content streaming arena — other than now Warner Bros and perhaps Walt Disney, where Jobs is the largest shareholder. Studios are insisting Apple opens up its tightly
knit universe of hardware devices and software systems to accommodate competing outlets. “The studios are very concerned they’re
going to get roped into somebody’s proprietary platform,” James McQuivey, a media analyst at Forrester Research has noted. “They want a world where consumers have a relationship with the content and not with the device or the service.” The attitude does not get much warmer
towards Google, despite its competing One Pass subscription service for Android-based devices, which takes just 10% from publishers. There the fear is Google’s ability to unpick the advertising business using the same data-har- vesting skills which have created an online bonanza based around search words. Google could make TV ads potentially much less expensive, leveraging pay-per-click pricing, says Sweeting — a boon for independent film- makers looking to market their films, but a nightmare for ad-supported networks which underpin film studio economics. So entrenched is the fear over Google and
Apple that some believe change will be ushered in by a different Trojan horse. “My view is that games consoles really are over the next two to three years going to take off as a device to watch TV and films,” Simon Calver, chief executive of LoveFilm told the Financial Times digital media and broadcasting conference in London this March. “A lot of it is completely backwards com- patible, so the day you launch, you’re in millions of homes.” Even then it promises to be a slower evolu-
tion then many have imagined. As Peter Fader, a marketing professor at the University of Penn- sylvania’s Wharton business school observes wryly: “Some superpower tries to take it over and set it straight, but the people don’t want to be taken over. The digital living room is a lot like Afghanistan.” n
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