Sunday, November 06, 2005
Media 1.0 vs Media 2.0
"..."Marketing costs are just skyrocketing, and if we don't address this we are going to put ourselves out of business," said Dawn Taubin, the president of Warner Brothers Pictures' domestic theatrical marketing, speaking about the industry.
Consider this: the average cost to market a film domestically in 2004 was $34 million, roughly half the $64 million average price tag to make one, according to the Motion Picture Association of America. Blockbusters cost even more to market: as much as $60 million domestically and $125 million worldwide.
On Wednesday, Time Warner announced that operating income before depreciation and amortization for filmed entertainment - which includes New Line Cinema, Warner's sister company - was down 30 percent, in part because of movie marketing costs.
These are confusing times for marketers like Ms. Taubin, who have found that spending buckets of money on traditional advertising - including newspapers and television - doesn't corral moviegoers the way it used to."
Link. A nice, intuitive datapoint for my fundamental hypothesis about media economics: that attention is becoming increasingly scarce at the margin, because of the micromedia explosion, and so returns to marketing are going to erode, causing the old dominant strategy in many markets - the blockbuster - to fail (you can check this ppt for more).
This is nothing less than an inversion of mass media economics, where attention has traditionally been the most abundant resource in the value chain. The new economics of media - Media 2.0 - require new dominant strategies.
Incumbents, however, find themselves in competence traps, as illustrated above - big marketing is more a liability than an asset, as it's returns fall below the point of newer competences competitors are developing: edge competences, like search, plasticity, and liquidity (you can check this ppt for more).
If you're affected by this tectonic shift in industry economics, want to find out more about 2.0 dominant strategies, or edge competences, you can contact me to arrange a workshop or seminar about Media 2.0.