What’s Next For Premium Entertainment?

Every January, people ask me about my predictions for the coming year. I usually quip “Ask me again in November” in an attempt to avoid the question.

When I look back at 2010, however, I recognise that it has truly been a singular year for the entertainment industry. Consumer demand for quality entertainment has never been higher. Whether it’s sports, episodic television, feature films, crazy one-offs from YouTube, regular Web series or some TV show no one’s heard about in 23 years, we’ve never had a more voracious appetite.

What makes the times we live in even more amazing is the way we demand access to the programming we love. Our options and habits have never been more varied, more accessible, or more controversial. From PC to TV, browsers to devices, Android to iOS to whatever will become of DiVX, HD to 3D to XD, cable set top boxes to satellite set top boxes to internet set top boxes to digital terrestrial conditional access set top boxes to Boxee boxes – the choices are staggering. And as a consumer, my attitude is “Get out of my way because I want my entertainment how I want it, when I want it and where I want it!”

From my perspective, Hollywood’s licence models have always been tied to technology: Theatrical releases are celluloid technology secured in theatres; home video is magnetic tape, optical disc and more recently DRM’d downloaded files; first-run premium is conditional access broadcast network; and so on. Each of those technologies power rights windows that are tied to large, established licensors and distributors.

As the technology and platforms emerge, expand, evolve, and explode, the business models and fees paid by licensors on those existing platforms are changing. Anytime you start to move billions of dollars, you have pain… and ultimately, winners and losers.

While these pains will continue to play out over the next several years, it’s clear that first-run premium entertainment is in the midst of a massive sea change. In 2011, like many years before, it will all come down to the need for businesses to respond to audience demand. Today, that means removing barriers to platform choice and enabling ubiquitous access to the hits we consumers love.

So, with that said, let’s take a look at how I, as a consumer, would like to see this begin to play out in 2011:

1. The Shrinking (or Disappearing) VOD Windows

I really enjoyed “TRON: Legacy” when I saw it last month at my local theatre on 42nd Street here in New York City. What I didn’t like was the guy behind me with the candy wrappers that he wouldn’t stop fidgeting with, the kid three rows in front of me who was texting on a cell phone that lit up the theatre like a beacon, and the part where I had to pee right as that guy in the white suit… well, I won’t spoil it for you.

Imagine being able to watch a new movie at home, on demand, courtesy of your pay-per-view provider within a few weeks – or even days – of its theatrical release. Hell, maybe even before it’s available in theatres. Sound too good to be true? Some independent studios have already begun experimenting with pre-releasing films on VOD before they’re shown in theatres to surprising results. According to some research, word-of-mouth buzz actually helped boosts ticket sales for films like Magnolia Pictures’ “All Good Things.” In 2011 I wouldn’t be surprised to see the bigger studios start to experiment with similar release strategies.

Of course, the biggest obstacle here is business. All subsequent licenses for theatrically released films are tied to that box office number, so we need to work on a new, universally accepted fee structure based on mixed-mode first-run releases.

2. Increased Payment Flexibility

Some of you reading this may be saying, “Get real! We’ve got day-and-date releases with movie theatres and it’s called Usenet, torrents, and that guy who goes to school with my kid and gives me movies for my iPad.”  I could go on all day about value, quality, piracy, DRM, etc. But the fact remains: Stuff costs money and if you want the artists who keep you entertained to keep doing just that, you need to pay every now and then.

That said, it makes sense for cable operators to begin offering more varied payment methods like the “TV Essentials” package being heavily marketed in New York by Time Warner. In 2011, I believe we’ll see more things like that as well as more “a la carte” options for cable subscribers.

It’s these kinds of changes that are coming in response to a new breed of entertainment consumers who, if they’re getting the majority of their entertainment from the Internet, likely want more flexibility in the packages they purchase. Time-Warner TV Essentials plus EPIX? Sign me up!

3. Programming Evolves to Meet Technological Bells and Whistles 

With the explosion of online video as well as basic cable’s own original series, there’s been an ever-increasing number of shows to watch — both online and on-air. A few years ago, Ze Frank pushed the limits of technology with “The Show.” (Remember “Earth Sandwich?”  How much fun was that?) Soon the experience of watching TV will come in entirely new forms.

Manufacturers like Samsung, Panasonic and Sony have already started introducing 3D flat screens, Samsung has a great widget and app platform similar to what Verizon FiOS offers, and upstarts like Starling TV are pioneering new multi-platform story telling technologies.

Over the coming year, we’ll start to see programming leverage that technology from talent we already know and love and talent we’ve yet to discover. A new generation of storytellers, world creators, scriptwriters, and stars is among us and they’re ready to start working on new ways of entertaining us!  (If you’re a Lady Gaga fan who follows her on Twitter, you know what I’m talking about.)

The desire for audiences to know and have a true insider’s intimacy with their entertainment has never been more real or attainable – and the two-way nature of the Internet is making that a reality along with those new ways to tell stories, create stars, and develop franchises.

 4. TV Gets More Social

Television has always been social. I wasn’t around when Kennedy was shot, but I was around when JR was shot. I remember my parents having a “Dallas” party for that infamous TV moment. My aunts, uncles, and their friends all came to our house to watch on our behemoth 42″ Sony Trinitron, while my sister and I were sent to bed early. I remember catching up with my friends at recess in grade school and talking about shows like “Air Wolf,” “Knight Rider,” “The A-Team,” and “Today’s FBI.” My point? Television has always been social.

Today, we use Facebook “likes” and Twitter hash tags to do the same thing I used to do on a poorly maintained ball field on Long Island: express our enthusiasm – with our network of friends, family, ex-girlfriends, business associates and even those grade-school pals. “American Idol,” and the entire Freemantle global media empire is one of the most striking examples of this trend.

In addition to voting, which originally used no more advanced technology than a telephone, now allows viewers to text in votes. The show now enables viewers to interact with other each other and the contestants themselves – a behaviour that happened organically on a variety of online platforms and has now been recognised, endorsed, supported, and integrated with the actual show.

In a recent Fast Company article that outlined the history of modern social TV, Chloe Sladden, who heads up Twitter’s media team, was quoted as saying “If you’re not watching live and reading comments from friends, your favourite celebrities and even total strangers via Twitter – you’re missing half the show.” In many cases, I totally agree with her. Some media properties truly lend themselves to the passion of the fans. At EPIX, one of our most fan-centric initiatives has been EPIX Live, an initiative we partnered on with ClipSync. EPIX Live events with Kevin Smith, Lewis Black, and others have brought our viewers in direct contact with their favourite entertainers in a way that’s never been done before. In 2011, I hope that the industry will find even more ways to make the experience of watching TV a social one.

Thomas Edison invented the phonograph in 1877. Emile Berliner’s United States Gramophone Company sold what were arguably the first real “records” in 1894. That’s a 17-year gap from the time the technology was invented to the time the business began in earnest. The Internet is very much in the “in between” years and we’re all working hard to figure it out.

The good news for us in the television business is that we’ve got a lot of learning from our friends in the music, travel agency and phone businesses. The bottom line is that the Internet is here. It may not be forever but it’s omnipresent today and will be for some time. It’s important that all of us in this industry work hard to create the products, services, and businesses that give consumers more control over their ever-increasing entertainment choices. We consumers are asking for new and better options, and the rest of us should strive every moment of every day to deliver what the audience is asking. The changes that are happening now will make movie and TV watching more fun than it has ever been before.

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