New media – the changing face of the motion picture industry

New media – the changing face

of the motion picture industry

This is the first article in a feature series on new media and how it is changing the face of the motion picture industry. This series will provide an initial road map for Canadian motion picture producers and distributors entering into this exciting new business. Future articles will deal with licensing, production, interactive television, new technologies, distribution, regulation and investment.

ben mair is the president of Quantum Leap, a Toronto-based consulting firm specializing in new media business development. He is also a founding member and president of the International Multimedia Development Association.

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‘interactive multimedia’ and the ‘information highway’ are likely the most overused and misunderstood words in the world press today. New digital technologies now provide for the delivery of high-quality voice, video, graphics, text and other digitized information simultaneously and interactively to a computer screen or over a single wire to a station on a network (interactive television).

Best attributes

A new communications medium, interactive multimedia, empowers the consumer by combining the best attributes of computers and telecommunications with those of the visual arts in a compelling interactive presentation. The computer is becoming a multimedia tool which will change the way we communicate, explore, work, learn and play.

Interactive multimedia programs, games and services are typically distributed on cd-rom and delivered via pc, mac or an interactive multiplayer (integrated computer) attached to a television set. Examples of consumer cd-rom multiplayers include 3DO, Philips cd-i, sega cd and Amiga’s CD32.

Everyone linked

One day, every single household will be linked to an (oh no, that word again!) information highway that is now under construction. Consumers will be able to access such services as ‘video on demand,’ educational programming, games (multiplayer, too), health services, government services, consumer reports, shopping, banking, bulletin boards and more.

The Information Technology Association of Canada predicts the value of the digital network will exceed $2 trillion by the year 2000.

Interactive multimedia programming will likely be distributed on cd-rom for the rest of the decade given that the economy is experiencing slow growth and the construction of the information highway infrastructure will be expensive. cd-rom is inexpensive, reliable and ideal for the storage, distribution and playback of the large amounts of digital information associated with multimedia – high-quality images, video, audio and graphics.

The lion’s share of revenues and profits in multimedia will be generated from the sale of content (programming) or services as opposed to hardware as we are seeing now. From 1992 to 1997, the u.s. market is expected to see a 45% annual compound growth in multimedia hardware and a 102% annual compound growth in interactive multimedia software or content.

Hottest sellers

cd-rom drives are the hottest selling computer peripherals on the market today with over 200,000 units shipping per month in the u.s. alone. The installed base in the u.s., although in its infancy, is approximately five million units. ibm is forecasting that 30% of all pcs will ship with a cd-rom drive this year. By the year 2000, every computer shipped will be multimedia-ready.

The multimedia industry is positioned as the computer industry was in 1976 when the first pc was introduced. Most of the profits in the computer industry are now generated by software and the software companies are fast becoming ‘content publishers’ for the new medium. The worldwide home market for cd-roms is expected to exceed 60 million units within two years.

Value-adders

Successful applications of computer technology have always depended on people value-adders such as systems programmers, language developers, application designers, database creators and an army of customizers not to mention the users themselves. With art, music and filmmaking coming to the computer screen, the motion picture industry must take a leading role. There is tremendous opportunity in Canada for interactive multimedia content publishing, but little room for new activity in application software.

The environment is ripe within the motion picture industry for new business development, joint ventures, coproductions and licensing of existing properties for ‘repurposing to new media.’ Some factors contributing to the current success in new media of motion picture companies (eg. Paramount) include:

– pc software is going consumer: With the changing market dynamics (30% of u.s. households now have at least one computer), pc software revenues are moving from business to consumer.

In order to make a successful product, Hollywood skills are required more than programming skills. The multimedia development team must now include producers, actors, film crew, artists and licensing people. Project management becomes even more critical with interactive projects and scripts may be five to seven times longer.

Motion picture producers will create more compelling consumer programming than multimedia engineers.

– Access to content: tv networks and producers, with access to large film and video libraries, are very well positioned to profit from new media. In addition, every time a new feature film is shot, extra footage can be filmed for multimedia applications, including games. Paramount is releasing a new Star Trek film before Christmas along with an interactive Star Trek cd-rom and theme park ride.

– Changing consumer: A u.s. Gallop poll commissioned by cnn in December, 1993 shows that consumers will pay for ‘video on demand’ (63%), ‘programming on demand’ (57%) and ‘customized news’ (46%). Consumer patterns and expectations are changing radically. When time is at such a premium, the consumer wants the power to navigate, choose and learn.

– Technological advancements: Digital dbs (Deathstar) and fibre technologies promise to deliver 500 channels to households but the availability of content is lagging behind. Inexpensive full-motion video playback boards (less than $300 for pc) are also on the market, driving demand for video-based interactive programs. The demand for quality programming will outstrip supply for many years.

– Established product/ market: u.s. revenues for cd-rom through the first three quarters of 1993 were $97 million and growing exponentially. Paramount Interactive, a division of Paramount, closed out its first year at close to $10 million and already has a Richard Scarry title on the top 10 cd-rom sellers list!

– Cross-platform delivery: The consumer market has been held back due to incompatibilities between delivery platforms (eg. cd-roms for mac, pc and sega are not interchangeable). True ‘cross-platform delivery’ software tools will be available later this year enabling producers to provide interactive content on any of the different consumer delivery platforms.

Programming or content will be accessible to a much larger market. Consumers will accelerate their purchases of multimedia and cd-rom delivery platforms with the confidence that they will not become obsolete like Beta vcrs. Cross-platform delivery will take control away from hardware manufacturers such as sega which charges significant royalty fees from all suppliers of software for use on its proprietary systems.

– Established distribution channels: Software retailers and superstores are moving most of the cd-rom product today. u.s. a/v retailers started stocking cd-roms last year and book retailers are getting into the act this year. Canada is following about one year behind.

– Deregulation: A deregulated broadcast environment will attract new competition from different technologies, alternative architectures and other specialty interests. Creating new, unique programming for less money will be a big challenge.

– cd-rom rental programs will fuel demand: Blockbuster Video will soon be providing a complete cd-rom rental (titles and players) and preview program to establish a leadership position in the market. This will have a profound effect on consumer demand.

– Demand for interactive multimedia in video: Video producers are incorporating interactive capabilities in order to address the emerging demand for multimedia products in training, education and corporate communications.

Well-positioned

Vancouver, Ottawa, Montreal, and in particular Toronto, are well positioned to address the opportunity raised by multimedia content development. Toronto is home to several world-class industries strategic to the development of multimedia content. These include film, graphic arts, video, post-production, music, animation, publishing and software development.

Many u.s. multimedia companies are setting up operations in Toronto to take advantage of the talent pool that exists here. Canada must pay attention to the needs of multimedia professionals or start losing talent to the u.s., as has happened in other strategic professions.

Walt Disney, Electronic Arts and Microsoft continue to recruit Canadian talent for the development of their interactive multimedia content. Recent u.s. investments in Canada include Microsoft’s impending $130 million purchase of Softimage in Montreal, one of Canada’s premier imaging companies and a major contributor to the animation in Spielberg’s Jurassic Park. Torstar, through its Harlequin Enterprises division, spent $4 million to purchase 16% of Discis, a Toronto-based producer, publisher and distributor of new media products.

Learn more

In the short term, Canadian motion picture professionals need to learn more about interactive multimedia. Look at your properties or libraries to determine which products can be repurposed to interactive. Look for licensing and joint venture opportunities with new media developers. Establish strategic relationships and search for coproduction opportunities in new media.

There is no question those in the best position to take advantage of the future may be those who had the least to do with creating it – the motion picture industry.

membership in the International Multimedia Development Association, a Canadian association based in Toronto, has been growing exponentially over the past year. Over 100 new companies have joined since May 1993 bringing the membership to 200 at the end of the first year. Membership consists of individuals and companies from computing, publishing, artistic, music, education, video, film and graphic arts sectors. Central to its membership are about 50 multimedia content developers, most of whom are moving toward the content publishing side. imda anticipates membership will exceed 500 by the summer of 1994.

For information on imda and upcoming events call (416) 233-2227.