Up in smoke: Trends in buying movies and content ownership

Like the main protagonist in The Artist, film audiences are increasingly falling out of love with physical film. A recent IHS Screen Digest webinar presented some interesting notes on home entertainment trends around the world. Most of it was far from good news for media companies.

Emerging markets are where a lot of industries are currently looking to for growth, from WPP to the Catholic church. The film industry is seeing growth here, too. China, which last year relaxed its quota on the number of foreign films it allows into the market every year, has seen record box office takings of late, with the release of Titanic being a major highlight. Russia, too, is seeing a new audience for film. On a macro level, countries like India and Brazil are seeing a significant growth in the middle classes. In other words, a group of consumers that has a larger amount of discretionary spending. Some of this spending will be allocated to home entertainment, in the form of video players, be they DVD or Blu-ray. However, this jars with the global decline in physical media spend, as viewers switch in droves to streaming platforms like Netflix and Amazon’s Lovefilm. Data from the IHS webinar revealed that the global growth in video players will not serve to offset the decline of spend on physical media.

As well as shifting from hard copy to soft copy products, consumers are also beginning to show a marked preference for renting over owning. This trend extends far beyond the film industry of course. Companies like Spotify spearheaded the idea in the music industry, the phrase “access trumps ownership” has long been a mantra there. The philosophy is affecting many lifestyle aspects, as demonstrated by The Economist’s recent front cover article. In Western Europe, rental is now the transactional consumption choice for digital movies. IHS data reported that the average US citizen rented 5.3 films last year. The company predicted that revenue from rentals will go up, returning to where they were in 2009, but in large part only because rental prices will go up. Dovetailing with the increasing consumer reluctance to buy physical discs is that the medium also appears “less and less attractive” for retailers. Blu-ray, which was supposed to revive the disc format, has not taken off in the way that was hoped; IHS data showed most Blu-ray owners still purchase a lot of movies on DVD rather than paying a premium for the HD version.

The move from physical to digital formats is troubling to media companies because, IHS report, “transactional online movie spending will not reach levels of physical spend” anytime soon. Indeed, theatrical is predicted to take up an ever larger slice of the pie (see above). This is without considering relative externalities, such as piracy, which remains a huge problem in Asia. And while consumer spending on online movies will almost double in AsPac, the share in wider consumer spending on movies in the region will not move beyond the current share before 2016.

One solace could be found in cinemas, a special haven for a medium without distractions, providing ample opportunity to leverage some of the more irrational desires and behaviours of consumers. We wrote briefly about various opportunities recently, and it’s reassuring to see the news earlier this month that Digital Cinema Media in the UK, an advertising sales house jointly owned by Odeon and Cineworld, will “in the coming months” launch a mobile app that will attempt to track cinema visits in order to feed data back to advertisers. In return, audiences will get exclusive content, vouchers or free ice cream. Given that the cinema is surely one of the few areas where you can pretty much guarantee a captive audience, this sounds like a great idea. How much it will offset lost revenues from home entertainment though remains an open question.

UPDATE (30/4/13): Data gathered can sometimes be misleading of course because it fails to report things that are not being measured. Such is the case with the current trend, recently reported by The New York Times, of sharing multi-platform viewing accounts for products like HBO Go among friends and even strangers. This trend represents a threat to revenue, but also an opportunity to create further loyalty, if used wisely. Forbes questioned the legality of such activity in a follow-up article.

On the contemporary art market – Expertise, Marketing and Money

“If all signs are autonomous and refer only to one another, it must seem to follow that no image is truer or deeper than the next, and that the artist is absolved from his or her struggle for authenticity.”

– Robert Hughes, 1989

Tom Wolfe, one of America’s greatest living writers, recently had his latest work, Back to Blood, excerpted in Vanity Fair. In it, the author excoriates the miasma of power, money, influence and ignorance that surrounds the contemporary art market. Wolfe describes the billionaires descending on Art Basel Miami as a “raveling, wrestling swarm of maggots”. What has become of art, its pursuit and its collection?

The pursuit of excellence can sometimes can be a quixotic quest, all the more so when dealing with something as ephemeral as art, and particularly with the contemporary art market today. But how does excellence, or authenticity, in art cope with a nexus of questionable experts and highly liquid but bifurcating market, in a world where promotion is all?

Part of this problem resides in the question of expertise, its influence and its value. If one thinks of artists in the period of the Italian Renaissance, the quality of the fresco or sculpture is mostly self-evident in the verisimilitude of the work. Moreover, the media worked with often necessarily involved painstaking, long-term commitment and toil. What artists like Marcel Duchamp began and Andy Warhol perfected was the thought that works of art should be valued by their conceptualism. In other words, not necessarily how much time or effort was put into making an object, or whether it was any “good”, aesthetically speaking, but with more emphasis on the power of the underlying idea – representation – behind the work. “Art can be expressed purely as a thought or action”, wrote the FT recently. This postmodern concept has not evolved since the time of Warhol. Without being able to critique the amount of expertise in the manufacturing of an object, it becomes harder to address the worth of an object, unless you are in the presence of a designated ‘expert’. The situation risks creating an echo chamber of unedifying art that speaks to no-one and is so self-reflexive it loses all meaning. It also allows for an artificial inflation of prices, creating a false market that shuts out all but the ultra-rich, whose tiny but influential numbers can significantly skew the market. One need only look at how much the Chinese taste for wine is influencing global production to see such an instance in action.

Such points were neatly summed up recently by the prestigious art critic and lecturer Dave Hickey, when he announced he was leaving the art world:

Writers, dealers, curators, advisers have become “a courtier class – intellectual headwaiters to very rich people”. For this 0.01%, “art is cheaper than it’s ever been” but “nobody cares if it’s any good, and everybody hates it when something’s really great”

The ‘experts’ who assign value to contemporary art objects have come full circle. Rightly recognising that there is art worth shouting about beyond an arbitrary, Westernised canon, it has now gone too far in the other direction. As a brilliant FT article on the subject recently pointed out, “The market loves theory because it spares the need for discrimination.” Making matters worse, the article quotes gallerist David Zwirner lamenting, “connoisseurship is really not valued, sometimes it is even looked down upon”. All of which leads to a highly fragile concentration of expertise and financial capital sitting with a select few. If we look again at the wine industry, American wine critic Robert Parker was at one time so influential that growers in France began changing their product purely to suit his taste so as to earn a higher rating on his guide. Zeitgeist asked art critic Brian Sewell at a debate earlier this year whether influential patrons such as Charles Saatchi and Francois-Henri Pinault were playing a similar role in the contemporary art world; shifting value perceptions of art and artists according to their personal whim. It helps little when major collectors like Frank Cohen admit publicly that they have “bought a load of bullshit”. The quotation may sound flippant, but it underscores the massive influence the bullshit they have bought has on the broader prices in the art market.

Auction turnover returns to pre-recession highs… just in time for slowing growth in BRIC regions?

Art adviser Lisa Schiff spoke openly about this recently to Forbes magazine, saying she was “worried that there are a lot of young artists that could really take a nosedive”.This influence is being felt keenly right now with small but highly influential – and influenced – groups of buyers in Russia, Brazil and China. But as the BRIC regions continue to stall, what will happen to arbitrarily in-demand art and artists if these markets suffer further losses or even a sudden shock? Such problems are further compounded by the massive rise and fear of litigation, as previous, bona fide experts able to certify works as being genuine are being scared away by the threat of legal action.

So there’s an expertise fallacy here, one which is not restricted to the world of art. Elsewhere, marketing, something that admittedly has always been part of the selling of art to an extent, is becoming increasingly essential for a successful artist or studio. The Montoya exhibition currently on at The Halcyon Gallery in London represents the epitome of this new trend. Full-page ads in The Economist and 30-second spots on CNBC (see beginning of article) are being taken out for the exhibition, placed seemingly without irony at the feet of the very audience the art seems to be mocking, or at least parodying. It is the increasing lack of ironic awareness that creates an emptiness in the purchase and reputation of some of today’s bigger artists, including Jeff Koons, Richard Prince and Takashi Murakami. Interestingly, the latter two have both seen stratospheric success that goes beyond the confines of the art world, helped in part by collaborations with luxury goods company Louis Vuitton.

Richard Prince’s famous Nurse motif was used for the Spring/Summer ’08 Vuitton show

The marketing of art is at its most visible at contemporary art fairs – of which there are now more than 200 annually around the world – mentioned earlier as a subject of Tom Wolfe’s new work. Frieze, which takes place annually in London, is one of the most well-known. It was intriguing to see that this year saw the debut of Frieze Masters, which some saw as an attempt to breathe new life into an event that had begun to lose its ability to surprise. It was also seen as a deliberate attempt to focus attention on more established names in order to avoid some of the volatility the market has seen with newer, less-known artists. So the market isn’t so insular that it doesn’t recognise the need for significant change.

Collecting art is something that few of us can turn into a committed past-time. Moreover, the vagaries of art over the past ten years-plus have been such that only a select few would be able to decipher the worth of a current artist’s produce. The value of their art has been dulled by demographic shifts and concentrations, by overly-excessive marketing tactics and by a reduction and muddling of the nature of what it means to be an expert. Regulation of the sector seems overdue, as conflicts of interest and an oligopolistic marketplace seem to cry out for legal oversight. Some of these problems are not restricted to the art world and it will be interesting to see if a paradigm shift sits on the horizon. The Internet is providing some antidote to this. Recent online-only auctions by Christies – one of ArtInfo’s top ten stories that moved the art market in 2012 – have made the process of bidding for items extremely popular, and small art-sellers like Exhibition A are illustrating there is room for innovation in the industry. Is the art market in an aesthetic and financial bubble, and will it burst? Time will tell.

They think it’s all over. It never even started.

The lessons marketers can learn from Englands World Cup bid.

One of the things Zeitgeist likes to do when not identifying first class insights is finding inspiration in the real world that can be brought into the world of marketing.

Sometimes it is as simple as this deconstruction of the Rolling Stones Gimme Shelter that demonstrates how a fantastic creative execution is made during the fusion and collaboration of individual genius contributing their own part to the mix.

However over the past week one half of Zeitgeist has been lucky enough to be given an insight of their own into the pitch process.

Last week I was lucky enough to attend the excellent APG Battle of Big Thinking which pitted planners from around the industry against each other as they debated their big thoughts.

In the semi-informal atmosphere of the architecturally interesting British Library the style and charisma of the presenters was often more influential that their actual idea.

Trapped by the snow and a lack of faith in the UK rail infrastructure, Zeitgeist was able to watch the doomed English bid for the FIFA 2018 World Cup from the comfort of the sofa.

It is rare to be able to watch another team pitch and in the much more serious arena of the Messe Zurich it provided a few more lessons that we can bring into our own business.

Lesson One
The most important of which is to understand the criteria against which you will be judged. This isn’t always as simple as looking at the brief. You have to understand what your audience really want and why you are there.

England received a glowing report for infrastructure and facilities and a 100% rating by McKinsey. They were even acknowledged as being the only bidders who could ‘hold the World Cup tomorrow‘.

However a quick look at previous World Cup hosts suggests that much of that is irrelevant and what FIFA want is to enter new markets and leave a legacy.

Up to 1990 the World Cup was alternatively hosted between South and Central America and Europe. In the 90’s with the break up of the Eastern Bloc and growth of technology like the internet and mass broadcasting the world and the world of football changed dramatically.

By the time those changes began to take effect the 1994 and 1998 World Cups had already been awarded to USA and France respectively.

Then in 1996, FIFA awarded the 2002 World Cup to Japan and South Korea for what was the first Asian World Cup.

The 2006 World Cup went to Germany but was supposed to go to South Africa. The influence of Kaiser Franz Beckenbauer and other shenanigans saw to that.

In 2010 the World Cup was indeed held in South Africa breaking a new frontier.

In 2014 it will be held in Brazil, the nation that puts the ‘B’ into ‘BRIC’. They haven’t hosted it since 1950 and it will be the first time the event has been hosted in South America since Argentina invited the world to sample the delights of a military dictatorship in 1978.

So with this knowledge at hand the question arises as to whether England really thought they stood a chance of winning the 2018 bid. All the attributes that would have made them a stand out candidate as hosts before 2000 now count against them. The irony is that before then, the Taylor Report had only just forced clubs to upgrade their dilapidated facilities so they wouldn’t have been ideal candidates for earlier World Cups either.

The pitch itself was excellent.

If FIFA president Sepp Blatter was a balloon he’d have popped as he introduced the future King, current Prime Minister and icon David Beckham to plead with him and his mates for the right to host the World Cup.

Opened by the excellent Eddy Afekafe the presentation answered exactly what England would have wanted to see if they were choosing the venue.

Unfortunately FIFA’s criteria was different and that’s why the bid failed.

So what other lessons can we learn that will help us when we pitch to prospective clients?

Lesson Two
It doesn’t matter how well you present if you don’t tick their requirements.

Lesson Three
It doesn’t matter who pitches if you don’t meet their requirements.

Lesson Four
It doesn’t matter how in love you are with your own solution if it doesn’t meet their requirements.

For all the claims of corruption and a stitch up, England were fighting a losing battle from the beginning. In any case, the idea that good Olde English values of fair play would somehow infect an international cabal of sports administrators when national and personal fortunes are waiting to be made does seem naive to say the least.

With the newly branded St George’s Park finally getting the go-ahead after years of delay it looks as though we might finally be investing in training a team of World Cup winners rather than trying to get home advantage. Maybe our efforts should have been spent getting it finished sooner instead of chasing impossible dreams.

And that’s the fifth and final lesson for agencies. Next time you get the chance to pitch, stop and think about whether you actually really stand a chance.

Does this company always appoint local or global agencies? Is the pitch just an excuse to justify giving it to the incumbant? What is your role in the process? Are they just after some new ideas? Who is actually making the decision?

Be brutally honest. If you don’t think you stand a chance, work out how much you would have wasted pitching and instead invest it in developing your own staff and boosting their morale. They already believe in you and will service your existing accounts all the better for it.