OTT.X Summit: Cinedigm’s Chris McGurk Says Entertainment Companies Must Quickly Embrace Change

Looking over his long career, Cinedigm chairman and CEO Chris McGurk said adapting to new ideas and technologies quickly is key to successfully navigating the entertainment marketplace.

Speaking during an Aug. 31 presentation at the OTT.X Fall Summit in Los Angeles, he noted that over the years, “The one constant has been profound change.”

“In a business where the only thing for certain is rapid technological change, you’ve got to be ready every year or every two years to revisit your business model,” he said.

He recounted several key experiences during his career that involved embracing new ideas. At the Walt Disney Co. in the early 1990s, he was tasked with visiting tech giant Steve Jobs to discuss distributing Toy Story, with its innovative CGI animation. At the time, Disney was focusing on highlighting its traditional animation business.

“It was going to be the engine that was going to drive the company,” McGurk recalled, adding, “The fact is, there was a huge, raging debate going on whether we should distribute Toy Story or not.”

In a meeting with Jobs, he recalled telling the tech giant, “Some people at Disney don’t want to do this deal because they consider it blasphemy.”

“Some people at Disney are idiots,” Jobs replied, McGurk said.

McGurk noted, “We embraced the new technology and look what happened.”

In a later experience at MGM, he recalled the studio’s successful shift from trying to compete with the major studios on theatrical releases to instead focus on a newfangled product: DVD.

“We looked to technology as the answer, and right at that point the DVD business was beginning to take off,” he said. Thus, MGM made theatrical a “secondary business” and “built an operation that could squeeze more money out of DVD than everybody else.”

At Cinedigm, McGurk embraced new tech as well. After going through a transformation to a streaming company a few years ago, executives began to see that competing in the subscription business might be a “losing proposition for us” with the big players in the market.

“We began looking at the growth of connected TVs and the enhanced lean-back experience,” he said. That shifted the thinking to the free ad-supported model that the company now champions.

“I think we launched our first FAST channel in 2018,” he said.

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Now, big players are getting into the ad-supported model, including Netflix, where executive Reed Hastings had always eschewed ads as hurting the streaming experience.

“He’s eating crow now,” McGurk joked. “But in the long haul, they’ll do just fine.”

Ad-supported streaming has a bright future, he said.

“It’s a given that the ad dollars flowing into the streaming business are going to escalate,” he noted.

Cinedigm plans to sidestep the big players.

“Our strategy is to let the big guys kill each other why we launch channels that are complementary,” he said, noting that the company has channels that are “very targeted at a very specific fan base,” such as the Bob Ross channel.

He sees coming consolidation among the big streamers.

“Those that have big debt loads and are thumbing their nose at the creative community … they’re not going to be around,” he said.

The days of just gathering loads of subscribers and pleasing Wall Street are ending, he said. Profitability and cash flow have become key.

“They look at it differently than they looked at it a year ago,” he said, noting “we were profitable last year.”

Engagement is also important so that streamers can serve up ads.

“We are trying to superserve these enthusiast fan bases,” McGurk said.

For instance, Cinedigm linked with Bloody Disgusting to beef up its horror content, with an accompanying podcast.

The Bob Ross channel, featuring the late painter, is the company’s most successful channel, he said, noting Ross is “like Mister Rogers for millennials and Gen Z.”

As part of Cinedigm’s exploration of AI, recommendation engines and other tech, the company is looking into creating a “deep fake” Bob Ross.

“We’ll see where it goes,” he said.

In addition to ad-supported models, international expansion is also a big opportunity for streamers as most countries outside the United States are behind. Cinedigm likes to partner with local operators to enter foreign markets, he said.

While the company has 46,000 indie titles in its library, on most titles, Cinedigm has just North American rights, so the company is trying to increase the percentage of worldwide rights in its library.

McGurk believes the future is bright for independent content creators. Previously, “You had a system that was controlled by six or seven major studios,” he noted. Now, there are “hundreds of opportunities to get access to eyeballs.”

In the next three to five years, he sees consolidation.

“You’ll probably lose two or three of the bigger streamers,” he said, adding there will be “more channels and fewer companies.”

Bob Iger: Home Entertainment Key to Pixar Acquisition, Movies to Netflix, Disney+ Launch

With Walt Disney Co. CEO Bob Iger in the final years at the helm of the global media brand, the executive has been making the media rounds peddling his memoir, The Ride of a Lifetime.

In an interview with BBC Studios, Iger recounts many aspects of his life and career, including discussions with the late Steve Jobs about acquiring Pixar Animation, which counted the Apple co-founder as its majority stakeholder at the time.

But before that $7.4 billion transaction could be approached, Iger said he had to develop a relationship with the often mercurial Jobs. According to Iger, it was his willingness to put select Disney and ABC TV shows on the upstart Apple iTunes platform, which had just started selling videos, including an iPod capable of playing video in addition to music, that paved the way toward the 2006 Pixar acquisition.

“Steve was immediately impressed with my knowledge of  [iTunes], or my interest in it, my willingness to disrupt using technology current business models, [and] my ability to do a deal very quickly without too much bureaucracy,” Iger said.

The iTunes pact helped migrate the home video industry from purely packaged media distribution to transactional video-on-demand and electronic sellthrough.

As of January 2017, iTunes offered more than 35 million to 40 million songs, 2.2 million apps, 25,000 TV shows and 65,000 films.

Through June 30, 2019, digital sales and rentals of movies and TV shows topped $2.2 billion, according to DEG: The Digital Entertainment Group.

Iger said the key is “owning and controlling content that is so valuable, so important, so loved by consumers that they’ll access it, buy it almost anyway they possibly can.”

Separately, Iger confirmed the pending Disney+ subscription streaming service would be launched in Western Europe within the next year. Calling over-the-top video distribution a “nascent market,” Iger said there remains plenty of room for other players besides Netflix and Amazon Prime Video to succeed.

“You have to launch [your OTT product] when the technology is right and when you have enough content. It takes time to get both of those right,” he said.

The executive reiterated that he does not consider Netflix to be a rival to Disney+, calling the SVOD pioneer a “volume play” service with a lot of quality in it.

“They created the market in the direct-to-consumer space in video — and brilliantly, by the way,” Iger said.

At the same time, he doesn’t regret licensing Disney movies exclusively to Netflix in 2012 — a landmark deal that helped broaden Netflix’s appeal on a global basis.

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“It was an enormously profitable deal for us at a time when we had no ability to launch a Netflix-like service,” he said. “We didn’t have the technology and we didn’t have enough content. We’ve never second-guessed the decision.”

Iger said Disney+ will offer much less volume of content than Netflix, which he contends makes the service less of a direct competitor.

“There may be room for people to have more than one [SVOD] subscription,” Iger said. “I don’t think we know how large the global market is for these products yet.”

When asked about the proliferation of Marvel-themed movies released by Disney, Iger said the comic book brand is as popular as ever. He admitted that Disney has released too many “Star Wars” movies over a short period of time.

“I have not said that they were disappointing in any way. I’ve not said that I’m disappointed in their performance. I just think that there’s something so special about a ‘Star Wars’ film, and less is more,” he said.

Bob Iger: ‘If Steve (Jobs) Were Alive,’ (Disney, Apple) Would be Combined Companies

Pending retirement and 20/20 hindsight can do wonders for the printed page.

With his departure from The Walt Disney Co. set for 2021, CEO Bob Iger has already authored a memoir on his long-running stint heading the world famous brand.

The book, “The Ride of a Lifetime: Lessons Learned from 15 Years as CEO of the Walt Disney Company,” is available everywhere Sept. 23, including Amazon.

In excerpts disclosed on Vanity Fair’s website, Iger delves into his relationship with late Apple co-founder Steve Jobs and how he was stunned to find out 10 minutes before announcing Disney’s $7.4 billion acquisition of Pixar in 2006 that Jobs’ cancer had returned.

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Iger suggests that had Jobs lived (he died in 2011), he believes — surprisingly — that the two would have facilitated a merger of sorts between Disney and Apple.

It’s an interesting revelation, if not unrealistic considering who Jobs was.

The mercurial executive was a majority shareholder of Pixar and a member of Disney’s board. He was also notoriously self-centered in his vision for Apple and the world revolving around it — not the other way around.

While fighting a return of terminal cancer (despite being one of the richest people on Earth) would cloud anyone’s judgment, when it comes to streaming video and content IP, Jobs’ insolence toward the emerging distribution model and owning content was glaring.

Despite pioneering music, TV show and movie distribution through iTunes, Jobs infamously dismissed Apple TV as a “little hobby,” to be re-evaluated in the distant future.

That attitude contributed to Apple (with more than $200 billion in cash) sitting on the sidelines as Iger-led Disney swooped in to buy Pixar, Marvel Studios and Lucasfilm (Star Wars) — the latter two properties for a combined $8 billion.

Disney has made more than $18 billion on its Marvel investment. The first four Star Wars movies produced by Disney-owned Lucasfilm have already paid for that acquisition. And Pixar’s Toy Story 4 is the fourth film from that studio to top $1 billion at the global box office.

It seems doubtful that had Jobs lived, Apple would have jumped into content ownership. Jobs’ successor Tim Cook has only now decided to push Apple TV into the SVOD ecosystem.

Indeed, Iger, in his book, said Jobs had grown frustrated dealing with the Disney culture and former CEO Michael Eisner.

“Among his many frustrations was a feeling that it was often too difficult to get anything done with Disney,” Iger wrote.

Yet, today Apple has ratcheted up original content, spending Netflix-like billions on programming featuring ‘A’-list talent such as Jennifer Aniston and Reese Witherspoon.

The move has generated headlines but comes as Disney, AT&T/WarnerMedia, Comcast and Viacom all bow separate and competing over-the-top video platforms.

Instead of being an innovator as it was with the PC, iTunes, smart phones and tablets, Apple is chasing the competition, a reality noted earlier this year by Netflix’s Ted Sarandos.

“We’ve been competing with 500 channels of cable and penetrated nearly every household in the world for a long time,” Sarandos told the media in March. “So, it’s the same stable of competitors [Apple, Disney, AT&T, Viacom]; just very late to the game.”

 

Apple Expected to Bow Video Streaming Platform March 25

Apple is expected to announce its much-anticipated Apple TV video streaming platform at a special “Apple Event” March 25 at the Steve Jobs Theater in Cupertino, Calif.

The tech giant March 11 sent out “It’s Show Time” media invites without elaborating further details about the contents of the presentation. Media reports suggest that while Apple may announce the streaming service, it may not be functional until later this year.

Apple, which is reportedly spending $2 billion on original content for the rebooted Apple TV app, has been slow to jump on the over-the-top video bandwagon ever since co-founder Steve Jobs infamously characterized online video a hobby.

Now with entertainment management hired, and content deals involving Oprah Winfrey, Jennifer Aniston, Reese Witherspoon, Bill Murray, Sofia Coppola, Brie Larson (Captain Marvel) and Taika Waititi (Thor: Ragnarok) among others, in production, Apple TV reportedly will also offer third-party OTT video subscriptions – notably HBO, CBS All Access, Showtime and Starz — similarly to Amazon Channels.

Separately, Apple and Roku reportedly are finalizing details on an agreement that will enable Roku users to stream content, including video and photos, to and from an iPhone, iPad or Mac to a connected TV through the AirPlay 2 integration on the Roku device.

 

 

 

 

 

 

Report: Apple Video Service Bowing Without Netflix, HBO, Hulu

When it comes to streaming video, Apple has largely been a spectator. In fact, the late Steve Jobs infamously considered Apple TV a “hobby.”

But the company synonymous with consumer electronics innovation is spearheading a major push into OTT video this year, including spending more than $1 billion on original content.

With a brand as powerful as Disney’s, Apple apparently believes it is worth a lot in the OTT ecosystem.

CEO Tim Cook said as much on the recent fiscal call.

“We see huge changes in customer behavior taking place now and we think that it will accelerate as the year goes by with the breakdown of the cable bundle,” he said. “I think that it’ll likely take place at a much faster pace this year.”

Indeed, the Menlo Park, Calif.-based company is upping the ante for third-parties along for the streaming ride on its platform — reportedly set to launch by May without heavyweights Netflix, Hulu and HBO Now.

While both brands are available on the Apple TV streaming media device, CNBC reports the new platform will operate similarly to Amazon Channels as facilitator to original and third-party OTT services — the latter for a cut of the subscriber action.

Apple, which gets 15% commission per third-party subscriber generated through the App store, now wants 30% per sub on the new platform, according to CNBC. The Wall Street Journal previously reported Apple is looking at a 50% split for its pending news streaming service.

Apparently, Netflix, Hulu and HBO aren’t biting, while Lionsgate-owned Starz, Showtime OTT and Viacom are. HBO, Starz and Showtime are available on Amazon Channels.