If you’ve ever wondered why Amazon, Netflix, Hulu and YouTube are producing their own original content and programming, the answer is clear. None of them want to be a “dumb pipe.” Being a utility that carries someone else’s original work, ideas, creativity and “content” is a recipe for low margins and commoditization.
Just this week, Disney took a hard line with the release of its newest installment of the franchise blockbuster coming out in December, Star Wars: The Last Jedi. Disney is dictating secret terms to movie theaters who are lucky enough to be showing this film. The reported terms are that Disney gets 65% of the ticket price, a new high-water mark for the industry. In addition, theaters must agree to show the film on their largest screens for at least four weeks. Disney is imposing a 5% penalty to any theater that violates these rules, raising their take to 70% of revenue.
Why can and does Disney do this, and why do theaters comply? Competition. There are now so many ways to get content to the audience via every and any screen a viewer might like—right in the comfort of your home, hotel room, airline seat or beach chair.
As long as Disney wants to preserve the model of the big blockbuster movie release in theaters, the theaters will comply; they have no choice. They are just boxes with seats, a concession stand and a big screen. Important, yes, but not indispensable. As soon as a studio decides it can launch a movie like a pay-per-view boxing match, theaters will be on the ropes.
I, for one, love seeing a movie in a theater. And the good ones now have better seating, better food, better sound systems, reserved seating and bigger screens, which all result in much higher ticket prices.
Here’s my point: Are you Disney or the theater? Are you the medium that allows your audience to consume someone else’s content? Yes, you have a loyal audience; yes, you have media channels your audience consumes such as magazines, websites, live meetings, conferences and trade shows, but whose content are you distributing? What original content do you produce? Who are the authors of what you distribute?
Disney animators, writers, artists and creators are what allows Disney to command that 65% cut of the revenue. Disney also owns a number of important media outlets to distribute their own content. Amazon, Hulu and Netflix know that being beholden to a studio, writers, publishing houses and other original content providers is a path to lower margins and a weakened market position.
If you are a non-profit, association or professional society that relies on your members for content, it’s time to think about getting into the original content business. I know it’s a big departure, but the writing is on the wall. Content is king, and it’s only a matter of time before the alternatives to your current content model will be challenged.
Start small, but start now.