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If it weren’t for my wife, Cerece, I wouldn’t have given the appreciation for Twilight that it’s due. The books have sold millions, easily making the NY Times Best Seller List. I’ve seen that before, no biggie. Twilight, the movie, grossed over $382 million in the US (I’m scared to see how little they actually spent), and ranked #115 all time (Summit Entertainment said that the DVD sold 3 million copies on the first day). The book series have sold millions (Wikipedia has it at 42 million, and while it’s Wikipedia, I don’t doubt a figure near this number; each of the four books and the 4-book saga collection are in Amazon’s top 10 sales rank as of June 7, 2009). But I’ve heard stories about big box books translating into big office smashes (like the Da Vinci Code: #27 all-time and $758 million at the box office worldwide; Wikipedia: 57 million).

What is amazing is is the rabidity of the fan base. Outside of the official websites for Stephenie Meyer and the movie, there are countless fan sites. Two of Cerece’s favorites are the Twilight Saga, a social network thanks to the geniuses at Ning and New Moon Movie.

The Twilight Saga has over 300,000 unique visitors US (almost 1 million total visitors US). What’s compelling is a group of fans who are into fan fiction. Fan fiction is when fans write chapters or complete books based on characters and themes from the source (book, movie, etc.). Cerece was up from 10pm to 6am Saturday morning reading a 36 chapter piece. Needless to say she said it was amazing. New Moon Movie generates about 400,000 uniques, but over 1.6 million people visit the site (so they’re coming back in a BIG way).

It’s absolutely incredible.

On the New Moon Movie site, fans are so talented that they’ve created and altered posters, professionally. And they’re really, really good.

Here are a few examples.

Original for New Movie, New Moon

Fan Created Examples:

My hope is that some of these creators are offered their own gigs.

What I like about Stephenie Meyer, Little, Brown Young Readers (publishers), Summit Entertainment (movie producers), is that they aren’t trying to control and monetize (i.e., squash) the creative buzz around her books and movies. As someone who loves business and finance, this might sound strange, but I believe that you can generate more revenue from allowing fans to do their own thing.

The movie Snakes on a Plane is my poster child for this. The movie was going straight to DVD to die a slow, but potentially profitable death. But there was so much buzz around the movie, the distributers figured that it should hit the theatres. It generated $62 million worldwide, but production was only $33 million. Assuming not a lot was put in for marketing (since there was already a lot of buzz), the movie produced maybe 50% returns for stakeholders, all in. Not too shabby.

Unfortunately, stifling buzz is common in media in an attempt to control the message. When I helped run an online tv network, I saw this all the time. Media companies (not ours) were always trying to limit media sharing. But they missed a key point…so much buzz was created around the media that it actually generated additional revenue (by the way, record companies used to…and still do…assume that if someone illegally downloads content, then it’s a lost sale…this is a fallacy because the same person may not have purchased the content if it weren’t available to them for free…I know a lot of people like this).

Nonetheless, Stephenie Meyers is a talent. I’m really happy for her and her team. Cerece certainly likes her.

It’s a shame that people are so ready to call an end to GameStop because of a start-up company, OnLive, that hasn’t launched yet.

Some of the headlines were puns off of the GameStop name, but pretty much read the pretty much the same…streaming video games online to PCs and TVs would crush GameStop’s brick and mortar business model.

There are several observations/questions…

1) It’s not the idea, but the execution that counts. It won’t launch until Winter 09, and many things can change, like product delays, lack of funding (remember, the business is a start-up)

2)  Will pricing and demand be enough to pay for the costs of running the business while enticing games to use the service?

3) Will latency and other major technical potential problems be worked out by the time of launch or soon enough after

Nonetheless, this COULD be another Blockbuster v Netflix (remember, people said that no one wanted to wait for DVDs in the mail).

No question that management at GameStop should watch OnLive and see how they are doing and formulate Plan B (I really do hope they don’t think they’re Superman) just in case.  I mean, EA, Take-Two and other major publishers have apparently signed on, so there HAS to be something to it.

Actually, if customers want another distribution channel, GameStop should work on  anyway to meet that demand, as a practical business exercise.   CEO, Daniel Matteo, said on the 4th quarter earnings call that they’ve seen these types of things come and go.  I have no doubt about it.  Again, it’s not about the idea, but execution.

It’s just too soon to tell.

RealNetworks created software, RealDVD, that allows you to copy a DVD, on up to 5 computers for $30 (can get additional coverage for $20 each).

Studios (Paramount, Warner Brothers, 20^th Century Fox, Sony and Universal) are like, “Screw that!  We’re building a download biz and we’ll be damned if we lose any revenues from DVD sales.”  So studios are trying to establish a moat around this business to protect it…by suing the hell out of RNWK.

RNWK is saying that copying one’s personal collection of DVDs is cool and covered under fair use.

But given the limits software makers place on the number of copies of software licenses, isn’t RealNetworks being hypocritical?

What if I wanted to buy a copy of RNWKs software (any software) and put it on four computers instead of the three limit (mine, my wife’s laptop, her kid sister – who can’t afford it on her own, and my brother’s laptop).

RNWK would probably have a conniption!

Am I missing something???

As a consumer, I’d like RNWK software, since I’m not trying to make money off of this stuff.

I may want to mix some footage of home video of my 10 month old, with scenes from Star Wars and my mom’s amazing piano and vocal performance in 1989 J.  Again, this is for personal usage, so I’d hate to be limited on usage.

Yet, part of me wonders if the studios are going down the wrong path.  These are the same people who said the home entertainment market (i.e., video rentals) would kill its business.  Now the home entertainment market is massive and actually saves the bottom line for movies that either didn’t or couldn’t make it in theatres.  Adams Media Research estimates lost revenues from DVDs will be about $15B if consumers stop buying DVDs and instead copy DVDs from friends or rental outlets like Netflix or Blockbusters.

The other part wonders if the studios are borrowing a page from the old “failed” record label playbook, “sue anything that moves” philosophy.  In that case, when people virally spread music around the net, it actually created buzz for the artist, which reflected in concert ticket and merchandising sales, paid appearances in movies, etc.  The labels didn’t push to get any of that alternative revenue though.  This could drive merchandising, etc.  George Lucas realized this and built a massive empire (no pun intended) out of it.

But I have to admit, about this last point…it generally doesn’t cost as much to produce good music as it does a good movie.  So in theory, you have to recoup more of the cost from DVD than, say music CD sales.

Daniel Craig is the freakin’ coolest Bond ever!

There, I said it.   You know it’s true.  He’s built, rugged and has that swagger…not the kind of Pierce Bronson or Roger Moore, but the kind that says, “I wonder if he listens to rap music?”

He does all the cool stunts too…like free running in Casino Royale, besides the norml cadre of cool gadgets.  Beat that, other 007s!

This episode of 007 also has Jeffrey Wright in it, an amazing actor who you don’t really recognize in many movies…he’s so talented that he’s able to make his characters so distinct from any others he’s done.

Can’t wait for this puppy to hit the theaters Nov 14.

Here’s a Free Running Vid that’s pretty good.

A little bit ago, I wrote a blog on why video games are recession proof. The theory is that people want a nice form of entertainment that, in a recession, is extremely low cost. Think about it. For about $50 for a brand new game, you get unlimited play for the LIFE of the game. The means the cost/play or cost/hour of play is as close to zero as you can get. Compare that to the movies. That cost is $9/play or maybe $4.50/hour. It’s off the chain for most popular concerts.

So why would movies do well in a recession? I have a couple of thoughts…

1. People like going out. In a recession, this truth still holds. And in an environment when there are so many reasons to stay home, it’s still true. For example, the ungodly number of social networks, video chat, AIM and other ways (like the phone) to maintain contact with friends, in addition to movies on demand and the old tried and true, TV, are some of these reasons to stay home. These should not be underestimated.

2. Compared to other forms of entertainment, going to the movies is relatively cheap (assuming that you eat before/after the movies and avoid the concessions, which can eat a whole in your pocket). It always gives you something to talk about afterwards too.

3. The reason to go out to a movie is because something is good. There were so many movies I wanted to see this summer it’s ridiculous (The Hulk and Batman being two of them). This is very crucial. If there were horrid movies at the box office, theatres would not be doing well at all.

What’s interesting is that some theatre chains (the industry is coming off of a period of consolidation) are doing okay. Theoretically, consolidations should be good since you can squeeze synergies out of most of them. With the theatre consolidations, initially, I was wondering whether it would good, since the industry wasn’t doing that well. I kept myself in check, because you can never scold good companies in a bad industry (don’t throw the baby out with the bathwater – type of thing).

Here’s a wonderful blog from Wired.com that gives some stats on the matter.

Don’t know if this has been talked about a lot before, so here it goes.  There are flaws in the logic so hit me back if there’s a better way to think about this…koe@TechMediums.com.  

What if traditional media companies were able to use predictive models to lower their inherent risk profile?

 The Risk Profile

So, think of media companies (like Disney, EA, Bad Boy) as a series of formal start-up ventures, where the business model requires the constant formation of start-ups (e.g.., new artists, games, movies) to make money. 

However, unlike normal start-ups, each media start-up utilizes common administrative systems like legal, accounting, marketing, etc., and, for the most part, they are more efficient, since this is what they do day-in and day-out.

Some of these businesses already have a library of content (franchises like Madden, or Disney’s Classics) that they milk to lower the risk profile – making the business model more like software – build it once and charge “rents” and/or offer updated versions for a fee.

But unless you have people who consistently pick out winning “ventures” (Diddy, Clive Davis and DJ Drama come to mind), then you’re at a much higher risk.

 Predictive Models

So what if predictive models (PM) could be used to lower the risk profile by refining the kinds of potential audiences, venues, alternative media, (like video games for film or music), price points, additional merchandise that could be sold to fans? 

Predictive models use a series of data (like whether someone buys a product on sale, what day, what kinds of products, etc.) to anticipate future behavior, like other products they would buy or what day they’d buy in on.  It’s a way to drastically improve the click-through rates of customers.  Obviously, the most widely known models are the ones used by Netflix and Amazon.  Insurance companies have been doing this for years, though, in determining likelihood of getting into accidents or dieing.

  Application to Media?

So how can it be applied to media?

Example questions that can be answered:

·        Music –

o       What extras, if any, should be given away with the CDs?

o       Should CDs even be made?

o       Would demand increase by offering the music for free (then charge for concerts and merchandise) or charge for music, lower price for concerts or no change?

o       What kind of merchandise should be sold?

·        Movies –

o       Should advertising be 100% online? 

o       What other product tie-ins could be developed?

o       What products should be licensed?

·        TV –

o       Which shows or episodes should be broadcast on internet only?

o       What other product tie-ins could be developed?

o       What products should be licensed?

Notice that none of these deal with content.  Entertainment is such a different animal.  You can do all the right research – type of movie to produce, the actors and directors to hire, etc, – and still fall flat because the actor didn’t put in his/her best performance, etc., etc. 

Nonetheless, constant research, polling – on and offline, are critical to gaining as much detail as possible.

 While many of these questions have already been answered, to varying degrees of success, PM (like the one developed by Proclivity Systems) seeks to maximize the effectiveness of the marketing, product development, licensing, etc., and lower the risk profile of the business (not necessarily eliminate it).

Before we get into piracy, a word from McLovin (of SuperBad) on the topic.

Matt Mason, in his book “Pirate’s Dilemma: How Youth Culture is Reinventing Capitalism” discusses a fascinating look into what is very possible a mega trend…piracy in other forms – not just music but everything, how technology is making piracy easier and how, on some level, it should be embraced.

As far as the first two points, sure, there have been bootleg BMWs, watches, software, but Matt’s talking about a world where it’s becoming much easier.

An example, is the 3D printer, which has been talked about for a while (heard about this at about the same time I heard that someone built a PC accessory that could replicate smells over the internet).

As far as it being embraced, I remember an old professor of mine, Pete Fader, a marketing professor at Wharton who’s known for his patented rants, arguing that file sharing was actually good for copyright holders (primarily record labels and their artists). It created buzz. Matt also talks about this in that the demographic who would get pirated material is not the demographic who would actually buy the material. Fader argued that the labels were wrong when saying that they lost $X amount in revenues due to pirated materials. “That’s ridiculous!” Fader said. Just because you can’t get something for free, doesn’t mean you’ll buy it otherwise.

While thinking that copyright laws should be updated, Matt likes the idea of piracy (mentioning that he can’t wait for his book to be pirated).

I actually agree, in concept. I like the idea that new business models need to emerge. That’s why I like open markets. It forces companies, and thus, products, to evolve.

But if I spend a lot of money to make intellectual property, I deserve the right to protect it, regardless of borders.

That notwithstanding, I also think some forms of IP can be seen as marketing materials for a greater thing. Classic example is music. Because of the amount of music put out yearly and the lack of distinguishing characteristics of some tracks to others, music seems more like a commodity. As such, it could be effectively used to market the artist. Artists can let viral marketing take over, bootlegged or not. In fact, in this scenario, you want people to pirate it because it costs you nothing…free marketing to create demand.

The model that I favor is a controlled “open” IP.

Software companies have been doing things like this for a LONG time. Adobe let people get Reader (reads pdf documents) for free to help create demand for Acrobat (to make pdf), for which it charges.

This model might be able to be used consistently for all IP and is a direct link to revenue– that’s why I like it.

Here’s Matt’s video. Enjoy!

Thanks to ProHipHop.com for the video.

Say what you want you want to about Spike Lee, but he’s someone you always think something about.  That’s power.  Think about it…

Well, that has nothing to do with what I’m about to write J 

Nokia did some research and realized that in the next 4 years, 1 in 4 people will create, edit and share entertainment, versus getting it from traditional sources like the TV, radio…a theatre. 

This, combined with a theme of more and more content being used, edited through mobile devices made Nokia, based in Finland, think that a Spike Lee Joint/Nokia Collabo a good deal.

 The Quicks:

Aspiring filmmakers will upload their videos, music and photos to www.nokiaproductions.com using their mobile devises (ideally Nokia devices).  Visitors to the site will vote on their favorites separated into acts.  Lee and a few assistant directors will review the material and pick the winner in each of the acts for inclusion in a final short film.  

For Nokia, it’s a chance to use their technology at the front side of a mega trend and the chance to work with a brand name director.  For Lee, it’s a chance to work in a medium that he’s admittedly a fish out of water.

So not only is Street Racer coming out on May 9, but we get a double dose of the Incredible Hulk coming out on June 13, 2008!  

 Trailer

The Quicks

Brucey B is the scientist whose cells were infected by radiation that causes him to transform into the Incredible Hulk when under extreme stress.  The new angle…after days of testing a captured Hulk (Bruce Banner), the Russians collect enough DNA to infect Emil Blonsky (Tim Roth), a KGB spy, with the same radiation to create the Abomination, who is billed as being badder and stronger than the Hulk, in calm state.  Until the Abomination, Banner (Norton), was trying to get rid of the Hulk…but now realizes that the only hope for the world is become the very thing he hates.

Let’s get down to it…

 Pros

·        CGI looks really good.

·        Looks like this will be much better than Ang Lee’s version a few years ago.  Then again, the bar is pretty low.

·        It’s got Ed Norton as Bruce Banner who should do right by Bill Bixby (for those who don’t know, Bixby was Bruce Banner in the TV series that helped bring Hulk to the mainstream).

·        Story line sounds sick

 Cons (or Fears)

·        While CGI is really good, is doesn’t appear to be as fluid (i.e., looks a little below the Pixar standard – which admittedly is the platinum standard).

·        I pray it’s not like the 2003 version.  That one took way too long for the Hulk to appear and some scenes really should’ve been cut out – like then one when Banner’s Father (Nick Nolte) and Banner (Eric Bana) discuss how bad a father he was to Banner – ugh.  My wife (then girlfriend) still has this as a black mark on my, otherwise, record J  - Ang Lee (director of 2003 Hulk) did a phenomenal job on CGO, though.  

·        Trailers sometimes don’t do the film justice (in good and bad ways).

All-in-all, I’m really excited about the spring with Speed Racer on the docket, backed w/ Hulk!!!

Quick side by side comparison of Hulk and Abomination…

As a CGI buff, I can’t want to see Speed Racer.  Admittedly, I watched the anime, but never converted to hard core fan.  But the trailers have gotten me interested and if the movie lives up to the hype, then I’ll be a fan.  Based on the trailers, the gods of CGI, aka the Wachowski Brothers, are staying very true to the anime: from the style of cars, to angles of the camera (even passing fans will reminisce over this and how well it’s done).

Honestly, with the Brothers at the helm, the question is how much better than other CGIs films is this going to be?  In theatres…May 9 (and on iMax too…that’s gonna be ridiculous).

Check the trailer for your self (there are more at SpeedRacertheMovie.com!

FYI – my short list of best CGI films…including animated flicks…(in now order because it depends on what mood I’m in)

Matrix (all of them)

Star Wars Episode III

Finding Nemo

Lord of the Rings (all of them – Gollum is ridiculously sick)

Emeritus

Star Wars Episode IV (obviously)