Blast Off, meet Big Brother

Blast Off Video store was a small I business I opened in 1997. With some cash, around 500 movies, and partner Sam McAbee, I opened the store in Chicago. Over time we grew the store to over 3,000 titles, we were featured in newspapers and on television, we were voted 'Best Video Store in Chicago' by the readers of New City Magazine, and we were turning a tidy profit.

In hindsight, our business strategy was PRODUCT FIRST. Our message to the public was WE CARRY THE STUFF YOU CAN'T FIND ANYWHERE ELSE. I say in hindsight because we were really flying by the seat of our pants. It's only with the benefit of time, experience, and education that I can start to see these patterns in how the business operated. Sam and I focused on getting the weirdest, rarest, most esoteric, best, most intriguing films we could find. We weren't customer-centric, for sure. Our collection was solely a reflection of our tastes. What this narrow focus did allow, though, was the formation of an identity. Customers knew we were the place to find random Japanese game-shows with no subtitles, a Turkish version of Star Wars, and the complete works of Fassbinder, all under one roof. We had the cool stuff and people who came into the store quickly found out.

Trouble started when another video store opened up.

Big Brother Video was started by serial-entrepreneur Jason Mojica. Before opening up Big Brother, Jason had established a coffee shop called Jinx in the hip Wicker Park neighborhood. Jinx wasn't anything special, but it was always packed with hipsters. Kids were always hanging out in the shop, out in front of the shop, in the apartment above the shop, working in the shop, and walking to and from the shop. Jinx had a great logo - a black cat with the word Jinx in a cool font. Visitors were greeted by cool music and decent coffee. I liked it. Jason was good at branding.

He certainly brought his branding skills to Big Brother Video. Influenced by our store (I know because Jason came in and asked questions on several occasions), Jason opened up a video rental store specializing in cool movies. He enlisted the help of Rob Lowe, a local musician and socialite (and a close friend of mine to this day). They got a cool logo for the store - a two-tone silk-screened version of the big head from the BIG BROTHER IS WATCHING YOU poster. Before the grand opening day, the Big Brother crew papered the Wicker Park neighborhood with flyers offering free rentals. Soon after the store opened it became the hang out for hipsters.

I decided to close Blast Off about a year after Big Brother opened. We were doing fine financially, I was just ready to move on. Before we closed, though, Big Brother won a people's choice award for best video store in Chicago.

It was a hard lesson to learn. I don't think Big Brother ever had more than 1,000 titles, and it was mostly 80s teen-dramady films. But in the end, Big Brother had won the hearts and the minds of the people. The public perception became that Big Brother was the cool place to find cool movies. My hat is off to Mr. Mojica and to Mr. Lowe.

I feel pretty confident that Blast Off had a better collection of hard to find, rare, and esoteric film than just about anybody Chicago. I feel confident that we had a larger market share and revenues than our friends at Big Brother. But where Big Brother managed to make a serious dent, though, was in brand awareness and public perception. With all due respect to Big Brother and their owners, I feel Blast Off had the superior product but it didn't matter - their branding was just awesome.

This all speaks to the power of marketing and branding. As important as your product is, your branding is equally important. Every aspect of your product, operations, and message should be in sync, reinforcing one other. This is how the little guys compete with and possibly topple the big boys. It happened to me with Big Brother. It has allowed Apple to compete with Microsoft for all these years. Little Miss Sunshine, Toyota Scion, Pabst Blue Ribbon - all have scrapped their way to success in competitive markets through powerful and bold marketing.

Marketing in the age of plenty

Per David Eun, Google's VP of Content Partnerships, “An iPod can hold roughly 10,000 songs. Increase the storage capacity every 13 years, something the size of an iPod could store one year of video in another few years. By 2015, you could store all the music ever produced. By 2019, you could 85 years of video - a lifetime’s worth of video. By 2020, the same sized device could store all the content ever created. I’m not saying it’s going to happen, but it should think about the way we think about our businesses. It’s made the Long Tail viable - the theory is that our culture is shifting away from small number of hits. As costs fall, less need to lump consumers into one size fits all. Narrowly targeted goods can be as successful as mainstream fare. Because there’s no constraints on shelf space, you can get a lot of singles and doubles instead of just a few home runs. There will continue to be room for home runs, To not address the long tail is to miss a huge opportunity.”

What role will marketing play in this world of filter and recommendations and algorithms making the matches for users?

Well for one, the digital shelf space definitely has end-caps: the front page. According to the Wall Street journal,

Apple has jettisoned some of the conventions of traditional music retailing -- notably, the practice of selling prime promotional spots to recording companies willing to pay for better visibility for their acts. But behind the scenes there's plenty of horse-trading going on that influences which songs are seen and purchased by iTunes customers.

Apple -- now one of the largest sellers of music in the U.S. -- offers home-page placement in exchange for things such as exclusive access to new songs, special discount pricing or additional material such as interviews with stars. Most other big retailers, digital and physical, also seek exclusive offerings, but Apple is especially aggressive and has outsize clout when it comes to the slightly out-of-mainstream music it often emphasizes.

Acording to Justin Sinkovich, New Media Manager at Touch and Go records, "Placement on the homepage is a huge, huge deal. It means the difference between charting and not charting." Mr. Sinkovich says he fights hard to get Touch and Go artists on the homepage of any site that is digitally distributing Touch and Go material. He believes good placement is even more important in the digital world because "there is no good digital shelf space."

So there is certainly room for promotions in the digital realm. Ad buys could be necessary if only to give producers the leverage necessary to get their product into the front page.

The marketing team will need to know it's audience and where they are. Yes, there will be times when saturation marketing is necessary, but I suspect that with time the point of diminishing returns on this type of marketing strategy will become lower and lower. Economically it will be better to spend against a target audience much more than spending against the universe.

I think the recent release of Grindhouse is a good example of how this marketing might have worked. Look at opening weekend for Grindhouse. According to the April 10th, 2007 issue of Daily Variety, 4 of the weekend's Top 10 Grossing Theater Engagements were Grindhouse engagements, with a total of gross of $391,474, yielding a per screen average of $97,868.50. Hindsight is 20/20, but what if The Weinstein Co. had held back it's release of Grindhouse to just the major cities plus a few secondary markets? This would have reduced the overall gross, but the per screen-average would be astronomical and those people who wanted to see the movie would have a chance. Then those people could do two things.

1. Give feedback to the Weinstein Co. Grindhouse was an ambitious movie, especially in its 3 hour running time. It was a lot to ask of audiences. Maybe they could have altered their release strategy, showing the films as two separate movies in some instances, back to back in others. They could even include different trailers in different showings, thereby encouraging repeat viewings!

2. The audience could have time to tell their friends how cool it is - the proverbial word of mouth.

Grindhouse isn't one of the numerous titles that can be stored on the iPod yet, but it is in effect in the same environment already. Consumers have more choice and access than ever before. Content providers must address this issue.

Maybe the exhibitors could sell the DVDs?

With all due respect to the 40% of exhibitors who will be losing business (or their entire business), the clock seems to be ticking on their release window. Video Business reports that the Journal of Marketing will soon report Hollywood could increase revenue by closing the release window altogether. This phenomenon holds true only for the U.S. where studios could gain 16% in revenue by releasing DVD sell-through on the same date as theatrical release. On the flip side of the coin, theatrical distributors will see a 40% fall in revenue. Elsewhere in the world, day and date releasing of DVD and theatrical will not have a positive effect on studio revenue.

So, no matter what action is taken someone is going to be worse off. I'm going to assume the window is eventually going to close and movies will be released flat out - DVD, VOD, Theatrical, iTunes, whatever. How can theatrical survive? It's going to be tough while there is a shakedown and financially unstable theaters close. As a consumer I'm kind of excited, though. I like movies and I like seeing them at theaters. I get excited when I get a chance to see a movie at the theater - even something I've seen before, like THE GOOD, THE BAD, AND THE UGLY. I expect the competition to bring out the best in some chains. Better service, more options. DVDs could be sold at the theater - what if I see the movie and then get a discount on the DVD?

I just hope this doesn't lead to the opposite - a homogenization of theaters as the expense for niche theaters becomes to much to bear.

The Future of Film Marketing

Insider information tells me the future of Film Marketing will be the internet. I know, I know, I know - old news. Well, I didn't realize

1. How much of an impact internet technologies have on a film
2. How cost effective method internet marketing is, and
3. How poorly most studios are at utilizing internet marketing.

A Nogoyo studio source actually called the internet "our secret weapon" and cited it's ability to deliver half the audience Television delivers for less than half the cost of T.V. These results are function of the movies' websites alone, mind you - there is no Web 2.0-type marketing really happening with the inernet marketing for these movies.

There must be some great potential here for a studio or distributor willing to take a risk on new internet marketing techniques. I see a general guideline for this type of marketing.

1. Rich. The site must be data rich. Lot's of content.
2. Simple. That content must be easy to access. This is where the future lies for film marketing.
3. Free. The data must be free to be used as user's see fit.

I'm sure step 3 is scary to many marketers. What about brand protection? What if people make money off of our content? What if I canibalize my content?

These are all valid concerns and questions to which I don't have an answer yet. What I'm pretty sure of is the user doesn't even care about the questions. They just want the service and the content. It will be the marketers job to make this available and shape the environment where any direction it heads the film is able to benefit off of the results. This is the future of film marketing.

The Independent Media Thesis

My thesis has had a shift of focus. While I still enjoy considering the possibility of creating a system to quantify the financial prospects of a creative product, the reality is I don't have the time or resources to pursue such an involved task. Consequently I will no longer be exploring this topic in depth.

My new realm of interest will be more general: independent film making and the changing marketplace for film.

Truly independent media is a hard thing to find these days. For all intents and purposes 5 multi-national corporations control nearly all widely distributed media. Through the continual consolidation of media by publicly held companies such as GE and Viacom, independent media has been able to survive for one simple reason: it's often a better business model. For my MEIM Capstone project I will examine the independent media business model.

Successful independent media firms spend less, are (arguably) more efficient with the money they do spend, and have a better relationship with their labor and customers than big-media. Take Touch and Go records, for example. While the rest of the music industry has been reeling due to digital music-downloading and a sharp decline in CD sales, Touch and Go has steadily increased their sales and revenue year to year. While major labels have seen their numbers plummet as fans go explore the wide world of music they never knew was available, Touch and Go's customers have continued to buy Touch and Go's product.

While independent media producers like Touch and Go records have been viable in the past, their success in the future is not guaranteed. Trends may change too quickly for anyone to adjust. Small companies and organizations might not have the money needed to make the changes needed to stay competitive. American’s may start spending their entertainment dollar on movies and music. Ultimately there might not be an economically viable way for independent media producers to continue doing business. It’s hard to say because media is changing at a remarkable pace. What is certain, though, is the changes the music industry faced with MP3s and cheap bandwidth will soon confront the movie industry. How independent film will weather these changes is still unknown.

Independent film making faces challenges and opportunities in 2 broad areas. The first area of interest is economics. There has been a flood of cash into Hollywood and films as Investment Firms, Hedge Funds, and High Net Worth individuals look for ways to partake in the multi-billion dollar movie industry. Whereas investors were once scared of placing money in the notoriously risky and unpredictable single film, new methods of investing have arisen, including film funds which invest in slates of films and co-financing deals, to spread risk, allay fears, and allow Hollywood to tap into a new source of capital. Large amounts of private equity may provide options to filmmakers that were once only available through large studios. Of course the influx of cash will surely flood the market with those seeking to spend it. It may not be long that the currently glut of money flowing into Hollywood will be used up by a corresponding glut of producers. A surplus of cash may turn into a surplus of filmmakers.

At the other end of all this investing is the return. Success for a movie can be measured in many ways, but profitability is certainly one of the most prominent. Blockbuster movies may no longer be the goal or even desirably from a profit maximizing standpoint. The tent-pole feature requires a massive number of ticket-buyers to break even, a proposition that becomes even riskier in light of the audience's increasingly divided attention. In contrast, a studio could develop a slate of 10 smaller movies for the same price, target the marketing to the appropriate audiences, and end up with an equal or greater profit than the tent-pole movie for much less risk.

This change in audience dynamics is a direct result of the second area where independent film (and the movie business as a whole) will face massive uncertainty - the digital realm. Information is cheaper, faster, more plentiful, and more useful than ever before. This is going to cause changes in every single aspect of the film business, from production to marketing to distribution. Film makers will face reduced costs, but this will likely be a double edged sword. The prices studios pay are largely based on budgets, and if budgets go down then so do prices paid for the final product. The reduced cost and increased ease of creating media could create a larger supply of content than is demanded, resulting in fierce competion for sellers and reduced prices paid by the buyers. The means of distribution will be radically different, from movie theatres that can customize their programmnig in real time to the ability to download whole movies wihe greater ease than going to the video store. No segment of the industry will be immune to the transformation. For any entertainment company to be successful they will need to address these changes in innovative ways, possibly even creating new business models.

My new thesis will explore these new models. I'm sure with time and research I may focus in more tightly one specific area (e.g. marketing independent film in light of social networking and specialized audiences).

I found a good starting place for my research - not suprisingly others have considered such topics before me.