In their annual DoubleClick Live Stream, Google hosted Jeffrey Katzenberg, Chief Executive Officer and Co-Founder and Director of DreamWorks Animation, for a fireside chat. His most compelling statements about the state of the industry came late in the chat, but were, for me, the most interesting part.
Keep in mind that Katzenberg is a long-time representative of what he calls a “heritage business,” one that has been around for years, has found great success, and is worried about maintaining that success in the future. Yet he is open-minded about where the video content creation industry is headed. He’s completely aware of the current consumer trends in the industry, he knows that the businesses active in the industry today are not meeting those trends and he understands that in the end, “consumers will get what they want.”
But I’m getting a bit ahead of myself here. Mr. Katzenberg first talked about the current state of mobile video content and summed it up in one word: silos. The players in the field are each tying up their own content on their own platform and are fighting for consumer mindshare. Companies like HBO and ESPN are creating apps for their own content and making that content very hard to access. Companies like Netflix and Hulu are packaging similar content and offering it in a lumped subscription model while companies like Google and Apple are offering video content for sale in a more expensive pay-per-item model.
However, as Katzenberg pointed out, consumers are clear about their product needs:
1. They don’t want friction.
2. They want choice.
3. They want it to be social, to have a conversation.
Today’s silos don’t deliver on those attributes. Some might deliver some of them, but no one entity offers all three. There are social companies trying to deliver content and there are content providers trying to do social, but the ultimate merged product is not there yet. The silos are frustrating consumers and the providers don’t seem to care.
In the near future, says Mr. Katzenberg, this will change. The consumers will get what they want because it will be the only way to stay profitable.
Finally, here’s just one example of the fractured offering Mr. Katzenberg referred to: HBO and ESPN are doing their best to prevent consumers from paying for the content they want how they want it. They want to make sure that consumers continue to pay for something they don’t need (a cable subscription) in order to get access to what they really want (mobile access to content.) As a result, consumers are finding workarounds, sharing passwords and pirating content.
It’s time to wake up. Take a good, hard look at your products and business models, and make a change.
Even Mr. Katzenberg thinks it’s time.