Archive

Posts Tagged ‘The X-Files’

TMT Trends 2017 – Oscars Oversight, MWC Mediocrity, Publishing Problems, M&A Mistakes Avoided

roz-chast-five-stores-on-a-street-make-up-the-nostalgia-district-because-all-the-pro-new-yorker-cartoon_a-g-9176856-8419447

Nostalgia as the name of the game

Nostalgia has been the name of the game for many in the world of TMT [technology, media, telecommunications] for a couple of years now, as TV series are rebooted and eras brought back to life (think Fox’s The X-Files and Netflix’s Stranger Things, FX’s The Americans respectively), movie franchises are retooled (think Kong: Skull IslandBeauty and the Beast) and books also drag people back to the 80s (think Entertainment Weekly’s number 1 book of 2016, The Nix).

cqplli4wcaexfpy

Nostalgia is almost certainly an appealing emotion for many media executives today too. In entertainment, they may look back to fond days before PwC screwed up who won an Oscar and who hadn’t; in technology, vendors are leveraging “digital detox” trends as an excuse to remake old products and in publishing many are surely screaming for the days before digital, when staff at the likes of Conde Nast were still allowed to throw “hissy fits” (to quote British Vogue’s Lucinda Chambers from the recent BBC documentary on the magazine). The empire is having to fast come to grips with a world of declining print revenue shared by all in the industry, as comprehensively covered in a recent piece by the Financial Times.

The one outlier to this trend, fortunately for them, is Viacom, which recently decided that instead of seeking refuge in the past (and in sheer scale) by re-teaming with CBS after splitting over ten years ago, it would instead streamline its operations down to six “flagship brands”. Undoubtedly the wiser move (if only based on the above cheat sheet from The Hollywood Reporter).

This article will focus on those first two issues, last weekend’s Academy Awards and last week’s Mobile World Congress event in Barcelona.

best-picture-flub-featured

Oscars oversight

Talk about your burning platform. Last night Zeitgeist sat down to watch Deepwater Horizon, last year’s film an avoidable disaster in an event involving a lot of due diligence, seemingly little of which was executed properly.

So it was – far less catastrophically – with the 89th Academy Awards last weekend. PwC were caught out for the first time, having overseen the awards ceremony’s handing out of winning envelopes, among other things, for 83 years. In their apology, the firm explicitly made reference to the fact that a) such an incident had been foreseen b) protocols had been prepared, in case of such a rare eventuality c) these were not followed through quickly enough on the night. As with many cases of significant error, the fault appears to be with an excess of comfort.

  • Firstly, PwC as a firm, it could be argued, had become too comfortable in the role of auditor. In an interview before the ceremony with one of the two partners involved, it was revealed the opportunity to be auditor for the awards had never gone out to tender. This is poor due diligence on the part of the Academy.
  • Secondly, Brian Cullinan, one of the PwC partners, seemed himself to have acquired too much comfort with his role. Whether this was tweeting (hastily deleted) pictures of Emma Stone at the moment he should have been concentrating on his work (see picture above), as Variety revealed, or – as the same publication also uncovered the other day – that he wanted to have an on-stage presence, involving a skit with the host, Jimmy Kimmel.
  • Thirdly, we would also add that – having worked for Deloitte in a strategy role in days gone by – PwC should never have let these two individuals stand in the limelight. Any project, however glamorous (or not), should always have only one face, that of the company as a whole, not an individual.

The eventual winner, Moonlight, was praised by The Economist (among many others) for being a wonderful film, and one that deserved to win the coveted Best Picture award. Interestingly, it noted how it had been made for “a tenth” of the budget of films that had won in the past several years. This is a worrying trend, as these prior winners were already considered to be of a small budget; minnows that did not attract the attention of the studios, who increasingly find themselves in the comic-book franchise game, rather than the Oscar race. It bodes poorly in the medium-term for the release and backing of films that try to tell human stories about real life; art that may actually have an impact on others. It is these types of films that, with current political turmoil, are needed right now.

zte

MWC mediocrity

Innovation in mobile is becoming harder and harder to come by. If, as Forrester reported recently, smartphones are in the hands of 40% of the global population (even including those people hanging out with penguins in icy tundras and running away from lions on barren plains) then such a product is in need of something new to differentiate the market for consumers. At the annual Mobile World Congress, such things were in short supply. This week’s Economist quoted Ben Wood of CCS Insight summarising the event as a “sea of sameness”.

Indeed, ZTE (as above), had a gloriously twee “fairy garden” on display, which seemed very very similar to the one we saw at MWC in 2016. From a product point of view, Nokia (yes, Nokia) seemed to generate the most buzz for its revamped 3310, a resurrected product from a bygone mobile age. A feeling of sameness hung in the air from those reporting from the ground too; cynicism was prevailing.

Last year, Zeitgeist found that if you didn’t have Oculus at your stand (for any reason, no matter how inconsequential), you were a nobody. You also needed to be talking about 5G (no matter how vaguely). The same seemed to be the case this year, except more so. This, despite the fact that Oculus has squandered an eighteen-month lead in the market, now with a position of third in the VR marketplace by revenue. VR in general has yet to transfer to a mainstream pursuit, to the surprise of analysts. 5G, on the other hand, saw some glacial movement. While operators in Japan and South Korea had already begun investment and deployment of the networks before standardisation, the UN’s ITU body has now set those standards, laying the way for other markets to begin upgrading their networks. Their challenge is a formidable one, and to be honest they should not expect it to be anything other than a thankless task. Their main approach to this eventuality at the moment seems to be bigging the technology up beyond all recognition, which has started a backlash of sorts among the more experienced in the sector.

Advertisements

Media Trends 2016

the-empire-strikes-back-star-warsThe most enjoyable pieces we pen for this blog are our looks ahead to TMT trends in the next year (they also, coincidentally, happen to be our most popular articles). Do check out our 2015 and 2014 trends, too.

We’ll look at trends in the film industry, TV, telco and tech sector. These formerly discrete industries are now all blurring together. This should come as little surprise to most, after years of the word “convergence” being bandied about; AOL Time Warner was a misbegotten adventure on the back of this thesis. However, what is happening now is that these worlds are clashing. Techies push their platforms (e.g. the Amazons and Netflixs of the world), but increasingly follow in the footsteps of legacy media in creating a stable of content to offer viewers. But those legacy media players are fretting, according to the Financial Times,

According to cable industry die-hards who have the most to lose, the digital platforms have not done much to show they are appropriate guardians of media assets like these. According to cable pioneer John Malone, for instance, they do not do enough to differentiate media brands, they make it hard to get feedback about consumers (if the data are not passed on) and they are not conducive to the kind of advertising on which cable networks have long relied. The result is a giant searchable database, like Netflix.

Star Wars and the status quo

It would be difficult to write about the media sector currently without giving Star Wars: The Force Awakens at least a mention. The movie, which Zeitgeist saw last weekend, was huge fun, though we couldn’t help feeling like we were watching a re-imagining of the original, rather than a direct sequel. As fivethirtyeight notes, the prequels are out there now, and not going anywhere; this film faces a steep uphill battle if it is to redeem the franchise from the deficit of awfulness inflicted by the prequel triplets. The amount of money the film has made, and the critical caveats it has received, point to interesting trends in the film industry as a whole.

The Economist rightly points out how Bob Iger, since taking the reins of Disney from the erratic Michael Eisner in 2005, has made wise, savvy strategic moves, not least in content, through the purchases of Pixar, Marvel and Lucasfilm. But while most critics were pleased with the latest product to spring from this studio’s loins, there were some reservations. The FT, while largely positive about the film, lamented there was little in it to distinguish itself from the other tentpole films of the year:

What troubles most is that Star Wars is starting to look like every other franchise epic. Is that the cost of anything-is-possible stories set in elastic universes? I kept having flashes of The Hunger Games and The Lord of the Rings. The characters costumed in quasi-timeless garb (neo-Grecian the favourite). The PlayStation plots with their gauntlets of danger and games of survival.

CJjP-2kUMAAsBtn

Recent releases are increasingly making their way onto the best-performing list, with increasing speed, too. Three films have crossed the $1bn barrier this year alone

There’s no doubt this is a problem. It’s not per se a new problem, as originality has always been something Hollywood has struggled with. Let’s be honest, art has struggled with originality too; Shakespeare’s MO was derivative, and has there been anything new to say in art since Duchamp? But the fact remains that when studios have the technical sophistication to produce any visual feat, and this is executed again and again in much the same mode, the effect on an audience begins to wane, and everything begins to look much of a muchness (if not outright neo-Grecian).

Also somewhat unsettling is the financial performance of these films. Not so much because of the people who will still turn out in droves to see recycled content, but more the pace at which records are now being broken. The new Star Wars made $100m in pre-sales – a record – and went on to make $248m in its opening weekend, beating the previous holder, all the way back in the summer, Jurassic World. The speedy gains of lucre for such fare are increasing. Titanic took three months to reach the $1bn mark at the global box office; Jurassic World took 13 days, beating the previous record holder, Fast and the Furious 7, which had opened only a few months earlier in April. In the ten years after Titanic, only three films crossed the zeitgeist-worthy Rubicon of $1 billion; since 2008, 17 films have done so (see above graphic).

Such potential return on investment ups the ante for ever bigger projects, something Zeitgeist has criticised several times in previous articles, wary of some of the huge, costly flops that have come and gone with little strategic reflection. The latest Bond incarnation, Spectre, was always going to be something of a safe bet. But with so much upfront investment, such vehicles now need to make all the more in order to recoup what has been spent. Or, as Vanity Fair puts it, “yes, 007 made obscene amounts of money. But were they obscene enough?“. Tentpoles have taken on new meaning in an era of Marvel heroes, and even Bond itself has set new benchmarks with Skyfall, which crossed the hallowed billion-dollar barrier referenced earlier. This quickly begins to seem less earth-shattering when you consider the all-in costs for Spectre have been conservatively estimated at $625m. Even with Skyfall, Sony itself made only $57m in return.

Trend implication: There is a glimmer of innovation in the Chinese film market, where blockbusters are being crowdfunded through WeChat. But in Hollywood, the focus of money on one type of film – and the attempt to capture only one type of audience – logically leads to a bifurcation in the market, with bigger hits, bigger misses, and a hole in the middle,which The New York Times points out is usually where Oscars are made. A large problem that will not be addressed in 2016 is the absence of solid research and strategic insight; studios don’t know when or whether they “have released too many movies that go after the same audience — ‘Steve Jobs’ ate into ‘The Walk’ ate into ‘Black Mass’, for example”. With Men in Black 4 on the way, Hunger Games prequels being mulled, another five years of Marvel movies already slated and dates booked in, look for such machinations to continue. Bigger budgets, more frequent records being broken and a stolid resistance to multi-platform releases. Even Star Wars couldn’t get a global release date, with those in China having to wait a month longer than those elsewhere to see it, more or less encouraging piracy. Let’s just pray that Independence Day 2 gets its right…

TV’s tribulations

Despite all our claims of problems with the film industry, we must concede its financial performance this year will be one for the record books (particularly with some added vim from Star Wars). The TV sector, on the other hand, has had a decidedly worse year. For while Hollywood’s problems may be existential and longer-term, television must really start fundamentally addressing existing business models, today.

The rise of OTTs such as Netflix – not to mention the recently launched premium content service from Google, YouTube Red – has no doubt contributed to a sudden hastening in young adults who have dropped (or simply never had) a cable subscription. In the US, latest data recently reported from Pew research show 19% of 18-29s in the US have dropped their TV / cable service to become cord-cutters (or cord-nevers). The pace of change is quickening, according to eMarketer, who recorded a 12.5% leap in cord-cutting activity YoY.

Print

Cognisant of such shifts, organisations have begun seeking remedy. In November, Fox became the first broadcast network to drop same-day ratings provided by Nielsen to the press, recognising that they “don’t reflect how we monetise our content,” and hoping to “move the ratings conversation into the future”. General Electric meanwhile, is stop advertising on prime-time television, instead keeping its budget for live events. This makes sense as it is this type of programming that typically lures large, diverse and timely audiences to content. Most interestingly, however, Disney, who seems to feature a lot in this post, is launching its own digital subscription service, aggregating its film, TV, books and music assets together. The FT notes it will be “the biggest media company yet to stream its content directly to consumers online”.

With the increasing popularity of OTT platforms, some are trying to get audiences to rediscover the joy of serendipity again. A new company, Molotov, aims to combine “the best elements of schedules, streaming and social media… Even if it does not take off, it neatly identifies the challenge facing broadcasters and technology companies: how can TV be better? And is there still life in the television schedule?“. Its UX has been compared to Spotify, allows a personalised programming guide, as well as bookmarking shows, actors and politicians. Moreover, Molotov also lets viewers know which shows are particularly popular on social media, as well as which of their Facebook friends like particular shows. “The idea”, written in the FT,  “is to be a one-stop shop for audiences by replacing dozens of apps on Apple TV, or indeed an entire cable box”. Indeed, China is struggling with the linear world of television and film, uncertain about how to regulate offensive or violent content in a world without watershed or clear boundaries for regulation beyond towing the political line. For its part, the BBC will be fervently hoping that there remains life in the television schedule. With its Charter up for review, the future of the organisation is currently in question, to the extent that anyone can try their hand at getting the appropriate funding for the Beeb, with this handy interactive graphic.

Trend implication: OTTs like Netflix will continue to gain ground as they publish more exclusive content, though there is a risk such actions lead to brand diffusion, and confusion over what audiences should expect from such properties. Business models for content are increasingly being rewritten; excited as we are that The X-Files is returning to Fox in January, the real benefactor is apparently Netflix. Like it or not (we happen to think it’s a savvy strategic move), Disney’s plan to launch a subscription service online is innovative in its ambition to combine multiple media under one roof, and illustrates the company has recognised it has a sufficiently coherent brand (unlike Netflix) that can make for competitive differentiation as it faces off against other walled gardens. Advertising revenues, like cable subscription revenues, will continue to slide; there’s not much anyone, even Disney can do about that. Such slides though are unlikelt to deter continued mergers on the part of telcos; one in five pay TV subscriptions now go to these companies. Molotov sounds like an intriguing approach to reinventing a product long overdue for a renaissance… will such a renaissance come too late for the BBC though?

maxresdefault

The X-Files returns to the Fox network in January, but it is Netflix that will really benefit

Tech opportunities and pitfalls

The tech sector as a whole, which continues to spit out unicorns, was deemed to be heading for a burst bubble, according to The Economist: “There are 144 unicorns valued at $505bn between them, about five times as many as three years ago. Most are unprofitable”. Equally disconcerting for the sector must have been Donald Trump, who has been consistently dismissed by mainstream media types since the summer but continues to roll on through the Republican presidential primaries. In his most recent itchy trigger-finger solution to the world’s woes, he suggested simply turning off the Internet in certain places. Apart from our understanding and appreciation of the Internet as one of the world’s liberating platforms that is one of the most tangible examples of man’s desire to communicate as one, this would apparently also be quite difficult.

Trend implication: Startup valuations do seem to be increasingly on the wild side, and there’s a good case to be made about the double-edged sword of such high valuations that dissuade companies from going public. There may possibly be a correction sometime next year; look for it to separate the wheat from the chaff. And while the idea of turning off the Internet is not without precedent, when did Iran last do something that the rest of the world thought was a good idea to emulate? Depriving people of the internet necessarily deprives people of information. On a macro level this can only be a bad thing. Its technical complexity and ethical murkiness make this an unlikely candidate for impact in 2016.

Amazon is having a rare sojourn in the black of late, with two consecutive quarters of profit. This is a rareity not because of any malpractice on Jeff Bezos’ part, rather because the mantra of the company has consistently been over the years to reinvest revenues into new development. Its brief profitability comes as the company’s cloud services, Amazon Web Services [AWS], become increasingly popular. As the Financial Times notes,

“In the latest quarter, [AWS profits] came to $521m on revenues of $2bn. That is roughly equivalent to the operating income of the entire core North American retail unit — a business with eight times the sales.”

Trend implication: Amazon’s growth may give some investors with a short-term eye succour for 2016 and a more profitable Amazon. But they should not be taken in so easily. Bezos’ long-term strategy remains investment for the future rather than a quick buck.

Facebook has been in the news for things positive and otherwise as it pushes the limits of innovation and unsurprisingly finds itself coming up against vested interests and the remits of regulatory bodies. It must also combat the same issues faced by other maturing companies, that of lower engagement and rising age groups. For example, 37% of users shared photos as of November, down from 59% a year earlier. In the meantime it is deploying some interesting tactical maneuvers, including more prominent featuring of events you are going to go, as well as ones you might be interested in attending. It also suggests events directly into status updates. Other timely reminders, reported in the WSJ, include “On Sept 27, it displayed an image of a crescent moon as a prompt about the supermoon lunar eclipse. In October, it worked with AMC Network Entertainment LLC to remind fans of “The Walking Dead” about the show’s season premiere”.

And while its partnership with Uber – embedding the service directly into its Messanger platform – is to be commended (WeChat’s ARPU by contrast is $7), it has struggled abroad. In India, one of several regions where it has agreed to zero-rated services with operators, net neutrality proponents are lobbying to have its Free Basic services shut down (while also raising noise about T-Mobile’s similar Binge On service in the US). Meanwhile, Whatsapp, the platform Facebook now owns, whose use has exploded in popularity in Jakarta, recently saw its service shut down for 12 hours in Brazil, affecting around 100 million people. Telco operators have been lobbying the government to label OTT services as illegal, but it seems that the government shut the service down in order to prevent gang members from communicating. This provoked much derision.

Trend implication: As Facebook’s audience continues to mature, macro engagement may continue to dip. Data on metrics such as average pieces of content shared by a user per month have not been updated since the company’s IPO. Facebook, as well as other OTT plaforms will continue to struggle in some respects in 2016, as both traditional players (e.g. telecom operators) and regulators seek to contain their plans. Operators in particular will have to increasingly lay ‘frenemies’ with OTTs that may offer value-add and competitive differentiation with the right partnership, yet at the same time eat away at their revenues. Continued security threats, whether cyber or physical terrorism, may mean, that, like Trump’s comments above, services continue to see brief disruption in 2016 in various regions. Net neutrality rulings in the US and Europe will also have an impact on the tech sector at large. It is likely to be laxer in Europe, which The Economist predicts will hurt startups.

Similarly impactful was the recent video of a drone crashing to the ground at a World Cup ski competition this week, which missed a competitor by what looked like a matter of feet and would have caused serious injury otherwise.

Trend implication: Despite such potential for grievous harm, there should generally be a quite liberalised framework for drone use. However, this needs to start with more prescriptive regulation that identifies the need for safety while recognising individual liberty

Oh, and Merry Christmas.

Trials and tribulations for film franchises in 2015

3036973-slide-s-8-50-more-behind-the-scene-photos-from-starIt’s sequel season. While the Mission: Impossible franchise looked set to continue unabated – with, in Zeitgeist’s opinion, a superb Rogue Nation – others were not so fortunate. The revival of the Fantastic Four franchise by Fox saw far less solid returns and though it publicly remains committed to the franchise, it does have several directions it can now go, according to The Hollywood Reporter.

Two of this year’s – and of all time – uber-franchises are of course Star Wars and James Bond. Slated for release at the end of the year (December and November, respectively), trailers for the films are already out in the wild; the Star Wars second trailer set a Guinness World Record. Incidentally, both franchises have made a home out of Pinewood studios in the UK, where a mix of highly-skilled labour and tax incentives are a potent attraction. Both franchises, with roots going back decades, will look to exploit a popular desire for nostalgia that is also playing out in television with the arrival of reboots like Twin Peaks and The X-Files. Recently, however, both franchises have faced existential questions; one over how to promote a film that for many already has high awareness, while managing equally high expectations; the second over ownership.

How to market Star Wars?

Last month’s Comic-Con, a densely-packed meeting place for mega-nerd and studio exec alike, would have been, one would think, a superb place for some exclusive footage, interviews or other filmic crumbs from the Star Wars reboot to be shared to the salivating masses. However, as The New York Times reported, the presence of Star Wars: The Force Awakens was “strangely invisible”, while films as far away as 2017 adorned many a banner or trolley cart. It was not until the end of the week that J. J. Abrams emerged, refusing to divulge any plot details. Much as with knowing the ideal time to start the promotional blitz so that a film remains in an Academy voter’s mind come Oscar voting time, Disney does not want to risk creating excitement in the marketplace too soon, only to have such buzz die down by the time the film is released. Eagle-eyed fans will also be on the lookout for the equivalent of a Jar-Jar Binks in this franchise, something that will immediately turn them off. These fans don’t want to be left out in the cold either, as they very much felt they were when George Lucas tinkered with the original trilogy to add new digital elements (i.e. “Why was I not consulted?”).

Disney have played this long game before. Five years ago we wrote about the careful marketing activity behind the sequel to Tron – another franchise with a long history and a rabid fan base that formed part of a nerd’s cultural pantheon. All in all, the marketing activity spanned three and a half years. Adding to the difficulty of the long lead time is the industry’s second biggest market, China, where Star Wars was never theatrically released. Different tactics for raising awareness might be needed here, but in full knowledge that any materials will quickly make their way online and around the world.

Until now, prominent activity has been otherwise limited to a Vanity Fair cover article and a Secret Cinema screening of Empire Strikes Back that has had most of London’s 20-30somethings raving all summer. It will be difficult to gauge how much or little the marketing activity has to do with the latest iteration of such a powerful icon of culture and film; Disney must do its best to ensure its fans are kept happy but craving until December.

bondWho will own the right to show Bond?

Skyfall, released in 2012, was Bond’s most successful offering to date. But this year’s outing, Spectre, will be the last before a deal ends between Sony Pictures and MGM / EON, the latter being the rights owners, who plan to shop distribution rights to a different studio. This would be a significant hit to the brand equity of a studio that has seen too few box office successes of late, arguably too many Spider-Man reboots, and the too-sorry tale of a cyberattack that exposed painfully frank emails, budgets, and salaries. Its stable of franchises is low compared to its peers; Universal finds itself with a newly-rejuvenated cash cow in the form of Jurassic World; Warner Brothers has its DC Comics franchise.

Outside of the brand though, the financial impact could be limited. While Sony had a 50% equity stake in Casino Royale and Quantum of Solace, according to the FT this was reduced to 20% for Skyfall and Spectre. “While it’s a good piece of business the financial upside or downside is not significant on either end”, a person close to the studio told the paper.

Likely suitors look to be 21st Century Fox – which has enjoyed a long relationship with MGM as its home entertainment distribution partner for a decade – or Warners, which distributed MGM’s Hobbit trilogy. Furthermore, the FT reports that “Kevin Tsujihara, the Warner Bros chairman, is a close friend of Gary Barber, his opposite number at MGM. The two have invested in several racehorses together, including Comma to the Top, which they bought for $22,000 and which had career earnings of more than $1.3m”. As with all things, timing will be everything as MGM ponders an IPO, which might see a higher valuation with a new studio deal in the offing.

“Lots and lots of files” – Privacy, data and a new currency

December 28, 2013 1 comment

cap241

One of the seminal television shows of the 1990s, The X-Files played on myths, legends and government paranoia to worldwide critical and popular acclaim. One of the key episodes of the series found the lead characters, FBI agents Mulder and Scully, happening upon an abandoned mining facility. Contained inside were row upon row of filing cabinets. Inside, thousands of names spilled forth. The sheer number of file drawers is a visual feast for the viewer. But there is more; one of the agent’s names is in those files. Personal data on her (in the form of a tissue sample) has been taken without consent. Down the rabbit hole we go…

We have always operated under the assumption that governments must surveil in order to protect its citizens. The difference today, as Edward Snowden has so plainly shown, is firstly that you are the one being watched, and secondly that the sheer extent of the surveillance and the pervasive nature of its collection is staggering. The pervasiveness of all this is a key point. Not much in the way of policy has changed really in the past fifty years, it’s just that spying on swathes of the world’s population has become increasingly easier and cheaper. Back in 2006, the UK’s Information Commissioner’s Office warned that the country was moving “towards pervasive surveillance”. Such a prophecy seems to have turned into reality. It creates an uncomfortable feeling that those in charge do not have our best interests at heart, or at least that the ends do not justify the means.

Some of the finest publications in the world have been struggling to make sense of what all this means; Zeitgeist is using this post to highlight some of those key thoughts and issues covered. Back in September, The New York Times reported, paradoxically,

“Even agency programs ostensibly intended to guard American communications are sometimes used to weaken protections. The N.S.A.’s Commercial Solutions Center, for instance, invites the makers of encryption technologies to present their products to the agency with the goal of improving American cybersecurity. But a top-secret N.S.A. document suggests that the agency’s hacking division uses that same program to develop and ‘leverage sensitive, cooperative relationships with specific industry partners’ to insert vulnerabilities into Internet security products.”

Zeitgeist remembers dining alone in New York in September poring over the news. The NSA tried to ask for permission to legally insert a ‘backdoor’ into all digital encryption, but were denied. So they went ahead and did it anyway. They influenced government policy that led to fundamental weaknesses in encryption software. Last week, a federal judge considered the constitutionality of the US’s surveillance programmes. He called the technology used by the NSA “almost Orwellian” and ordered it to stop collecting the telephone records of two plaintiffs. It is one of several cases currently underway.

apidatafbk

Click to see The New Yorker’s infographic on what personal data is made available to social networks and their advertisers

Of course, such spying would have not have been possible without the consent – tacit or otherwise – of companies in the private sector. There is clamor in the US, UK, Brazil and other countries for more restrictive regulation that makes it harder to collect consumer data. Such policy could make data analysis and collection onerous and might have a significant impact for those businesses that make a living out of using such data. As The Economist puts it,

“Should all this make it harder and costlier for companies to gather information, that would hurt the likes of Facebook and Google, which depend on knowing enough about their customers to ping them with ads that match their tastes.”

The New Yorker recently featured a fascinating article complete with unnerving infographic (excerpted image above) showing just how much information we display on our various social networks is then shared with the platform and its advertisers. This month, a new film, Her, arrives in cinemas, from the director of Being John Malkovich. The heroine is a disembodied voice – acted by Scarlett Johansson – who serves as operating system. The line between her servitude and rapid consumption of all her user’s data quickly becomes blurred. As the reviewer Anthony Lane puts it, also for The New Yorker,

“Who would have guessed, after a year of headlines about the N.S.A. and about the porousness of life online, that our worries on that score—not so much the political unease as a basic ontological fear that our inmost self is possibly up for grabs—would be best enshrined in a weird little [film]?”

Unsurprisingly, the results of a recent YouGov poll in the UK showed consumers were now far less willing to part with their own data. Almost half would be less willing to share their personal data with companies in the next five years. A mere 2% said they would be more willing to do so. Part of the problem lies in a lack of transparency: who is using my data, which piece of information exactly, and how does it benefit them? More importantly, what am I getting in return for surrendering my data? Steve Wilkinson of Ernst & Young offered little in the way of cheering news, “Many customers have recognised that businesses are using their personal information to help increase revenues, and are starting to withdraw access to their private data… In spite of this, there is a reluctance to adopt incentives that encourage consumers to part with personal data”.

Writing in the FT yesterday, Evgeny Morozov penned an excellent article claiming the media was spending far too much time on the intricacies of government involvement rather than how the whole cocktail mixes together. The overreach, according to the author, is being treated as an aberration, that will disappear in the face of tighter controls and the harsh light of day. It should instead, Morozov argues, be treated as part of a worrying trend in which “personal information – rather than money – becomes the chief way in which we pay for services – and soon, perhaps, everyday objects”. The article continues,

“Now that every piece of data, no matter how trivial, is also an asset in disguise, they just need to find the right buyer. Or the buyer might find them, offering to create a convenient service paid for by their data – which seems to be Google’s model with Gmail, its email service… [W]e might be living through a transformation in how capitalism works, with personal data emerging as an alternative payment regime. The benefits to consumers are already obvious; the potential costs to citizens are not. As markets in personal information proliferate, so do the externalities – with democracy the main victim. This ongoing transition from money to data is unlikely to weaken the clout of the NSA; on the contrary, it might create more and stronger intermediaries that can indulge its data obsession.”
Morozov also questions the meaning behind such data, as Zeitgeist has done in a previous article. Such information risks becoming seen as an objective answer without providing a solution or insight.
“Should we not be more critical of the rationale, advanced by the NSA and other agencies, that they need this data to engage in pre-emptive problem-solving? We should not allow the falling costs of pre-emption to crowd out more systemic attempts to pinpoint the origins of the problems that we are trying to solve. Just because US intelligence agencies hope to one day rank all Yemeni kids based on their propensity to blow up aircraft does not obviate the need to address the sources of their discontent – one of which might be the excessive use of drones to target their fathers. Unfortunately, these issues are not on today’s agenda, in part because many of us have bought into the simplistic narrative – convenient to both Washington and Silicon Valley – that we just need more laws, more tools, more transparency.”
Touching on similar points and themes, the most enjoyable recent article on the subject was written by famed author Margaret Atwood for The New York Times earlier this month. It had recently emerged that intelligence agencies had been using MMO games like World of Warcraft in an attempt to discover terrorists and other less enjoyable parts of the internet. Atwood has predicted just such a thing in her books, written some twelve years ago. Atwood struggles to make sense of her thoughts coming to life, wondering whether to treat it as comedy or tragedy. She elaborates, crystallising all our fears about the empty truth behind data,

“I hope for the comedy… I suspect the horror. Possibly in the future you’ll no longer be permitted to be who you think you are, or even who you’re pretending to be: You will be who they say you are, based on your data-mined, snooped-upon online presence. You’ll be stuck with that definition of yourself. You won’t be able to take off the mask.”

Such disconcerting thoughts on having your own personality dictated to you might once have been the stuff of science-fiction, apt for an episode of The X-Files. Besides adages of truth being stranger than fiction, the clarion call of these publications appears to be that people should be sitting up and taking notice of what has been going on over the last ten years with extensive policy / data / consumerism creep. It is not just the NSA, but the way society intertwines information for monetisation that must be scrutinised if we are to avoid having to worry about trivial things like playing videogames in peace.

Embracing digital – New moves for old companies

chloe_socialmedia

Are incumbent companies starting to see the light when it comes to embracing digital? Evidence is slowly starting to point in that direction.

Artists are known for embracing change and innovation, but the art market itself has been slow to adapt to changing consumer behaviour. Now mega e-tailer Amazon is selling art on its site, and venerable auction house Christie’s is pushing headlong into online-only sales, as Mashable recently reported. And while fashion designers know how to use digital to push the envelope, the fashion industry as a business has been notorious for their skittishness at investing in efficient, immersive digital experiences for their customers, so worried are they about detracting from the brand. So it was reassuring to see during Paris Fashion Week recently that French marque Chloé had gotten the message. As Zeitgeist’s dear friend and fashion aficionado Rachel Arthur details on her blog, the brand launched a dedicated microsite for their runway show. Brands like Burberry and Louis Vuitton have been doing this for at least three years, so in of itself it’s nothing new. What made the experience different were two things. Firstly, the site created a journey that started before the show, and continued after it, rather than merely offering a stream of live video and little else. More importantly, it tried to make the experience one that reflected the influence of those watching. As Rachel points out,

“As the event unfolded, so too did different albums under a moodboard header, including one for the collection looks, one for accessories, another for the guests, and one from backstage. Users could click on individual images and share them via Twitter, Facebook, Pinterest or Weibo, or heart them to add them to their own personal moodboard page.

‘[We] are excited to see how you direct your own Chloé show,’ read the invite.”

The recognition of platforms like Weibo should be seen as another coup for Chloé. Too often, companies send out communications to global audiences with perfunctory links to Facebook and Twitter. Not only is there no call to action for these links (why is it that the user should go there?), but there is no recognition that one of the world’s most populous and prosperous markets are more into their Renren and Weibo.

Elsewhere, despite what seems like some niggling problems, Zeitgeist was excited and intrigued to read about Disney‘s latest foray into embracing how consumers use digital devices, this time creating a second-screen experience in movie theaters. Second Screen Live, as Disney have branded it, doesn’t immediately sound particularly logical, as GigaOm point out,

“Of all the places I’d thought would be forbidden to the second screen experience, movie theaters were near the top of my list. After all, you’re paying a premium ticket price for the opportunity to sit in a dark theater and immerse yourself in a narrative — second screen devices operate in direct opposition to that.”

And yet the Little Mermaid experience that the writer goes on to describe cannot be faulted for its attempt at innovation, at reaching beyond current thinking (not to mention revenue streams), in order to forge a new relationship between the viewer and the product. Kudos.

Lastly, Zeitgeist wanted to mention the US television network Fox as a classic example of a company that has slowly come to realise the power of working with digital, rather than against it. In years passed, companies like Fox were indisputably heavily involved in digital, but only from a punitive standpoint. Fox and others were ruthless in their distribution of takedown notices to sites hosting content they deemed to infringe on their product. Fan sites that exploded in support and admiration for shows like The X-Files were summarily threatened with legal action and closed. There was little thought given to the positive sentiment sites were creating around the product, and little thought given to the destruction of brand equity that such takedown notices brought about. Not to mention the dessication of communities that had come together from different parts of the world, their single shared attribute being that they were evangelists of what you were selling. Clips of shows, such as The Simpsons, appearing on YouTube would be treated with similar disdain. So it shows how far we’ve come in a few years that this morning when Zeitgeist went onto YouTube he was greeted on the homepage with a sponsored link from Fox pointing him to the opening scenes of the latest Simpsons episode, before it aired. Definitely a move in the right direction.

foxsimp

Once notorious for their stringent outlook on content dissemination online, Fox now pushes free content across multiple digital channels

The Big Data Fallacy

Tom-Cruise-Minority-Report

The latest issue of Foreign Affairs features the cover article “The Rise of Big Data” by Kenneth Cukier and Viktor Mayer-Schoenburger, which mostly details some of the incredible ways companies like UPS, Google and Apple have come to rely on vast arrays of numbers in order to run their businesses better. But data has always provided a problem in that it gives a substantive assurance of certainty that has a propensity to foster overconfidence in those relying on it. The article attempts to address this:

“[K]nowing the causes behind things is desirable. The problem is that causes are often extremely hard to figure out… Behavioural economics has shown that humans are conditioned to see causes even where none exist. So we need to be particularly on guard to prevent our cognitive biases from deluding us; sometimes, we just have to let the data speak.”

The sentiment here is admirable, and the context perceptive. But the final part of the quotation (my emphasis) assumes wrongly that data can speak objectively, that there is a fundamental ‘truth’ in a number. All too often though the wrong things are measured, or not all variables are measured. What data does not record, or worse, cannot record, can often be overlooked. While ostensibly data is there to provide assistance with building models and predicting future trends and movements, it sometimes leads to a very narrow view of one particular future, and fails to account for possibilities, that, though while unlikely, could potentially be devastating. This is what Nicholas Taleb writes about in his by turns unreadable but seminal work, Black Swan. The fictional, paranoid loner Fox Mulder of the hit series The X-Files had it right fifteen years ago when he lamented “in a universe of infinite possibilities, we may find ourselves at the mercy of anyone or anything that cannot be programmed, categorised or easily referenced”. The financial system before 2008 was a victim of such narrow thinking. 

Hendrik Hertzberg, in his Talk of the Town column “Preventive Measures” in this week’s The New Yorker, made the adroit analogy with the 2002 film Minority Report in our quest to categorise and predict acts of crime. Hertzberg points out that in reality this “turns out to be a good deal more difficult than investigating such an act once it occurs”. Indeed, such prediction methods are being implemented, just with somewhat less efficacy than in the Tom Cruise movie. The stop-and-frisk procedure currently employed by the New York Police Department points to a sustained effort to engage in preventative measures to reduce crime, effectively what Cruise and his myrmidons were doing, albeit without the help of psychic imagery as in the film. While the psychic “Pre-Cogs” turned out to occasionally disagree, the success rate with stop-and-frisk is even less attractive. “In the final months of 2012”, writes the New York Times, only 4% of stops resulted in an arrest. But what is this low figure telling us…?

Hertzberg also alludes to the dilemma of mountains of data, produced without concern for oversight or management; producing more just because it’s possible to produce it, rather than thinking about the implications:

“This fall, the National Security Agency, the largest and most opaque component of the counter-terrorism behemoth, will [open] a billion-dollar facility [analysing] intercepted telecommunications… each of the Utah Data Center’s two hundred (at most) professionals will be responsible for reviewing five hundred billion terabytes of information each year, the equivalent of twenty-three million years’ worth of Blu-ray DVDs… that’s a lot of overtime.”

The other problem this data poses – and increasingly this goes for many industries that are jumping on the Big Data bandwagon – is that intelligence departments and businesses alike are now technically able to put quantifiable targets and figures to what they want to achieve, without considering whether such targets are actually applicable. Police claim the low stop-to-arrest ratio implies that they are preventing crimes by stopping someone before they act. There is nothing to argue otherwise. The New York Times article alludes to the debate over what ratio or percentage the Supreme Court would be comfortable with under the tenet of “reasonable suspicion”. This leads down a dangerous path where we treat data as an answer to a question, rather than as supporting evidence to an answer.