Delivering immersive entertainment.
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1 Delivering immersive entertainment. How changing technology and consumer expectations are disrupting media and entertainment business models. 34,179 LIKES 3
2 Changing consumer behaviors are driving rapid changes in the media and entertainment (M&E) industry. Companies must adapt to survive. Technology has a key role to play. What s changing? Everything. M&E companies must adapt both their technology and their business models to cope with changes in how content is produced, distributed and consumed. If they don t, they risk obsolescence. New formats The industry is undergoing massive changes in delivery formats. Changes to theatrical movie-going experiences, with 3D and even 4D, are increasing demand for enriched home entertainment experiences. Technologies like highdynamic range (HDR), virtual reality (VR), augmented reality (AR) and 4K ultra-high definition Blu-ray (4K UHD Blu-ray) are quickly becoming widespread. Video gaming is now fully mainstream 1. New delivery methods Over-the-top (OTT) companies like Netflix and Hulu are developing their own unique properties to differentiate themselves from their competitors, including the major studios and other OTT players. And they re making a significant splash, racking up Emmys and Golden Globes. New ways to interact There are now many platforms to help consumers engage with digital content more deeply. As home entertainment technology evolves, theaters will need to emphasize the social benefits of the shared group experience to keep consumers going to the movies. In the home and on the move, multi-screen social viewing will become an ingrained part of how we consume content. The ongoing collision of new technology and compelling content will result in new interactive storytelling environments. The technologies that prosper will be those with clear business models that create value for content developers, distributors and technology companies. Once seen as a niche, stunning visuals and movie-quality storytelling have helped gaming grow to rival traditional entertainment formats. 2 November 2015
3 Networks and storage are key to future success. New delivery methods, formats and consumer interactions are creating new opportunities. Workflows and technology must keep pace. Upping the standard New standards for 4K UHD Blu-Ray are now starting to get locked down and players and other hardware supporting the standards will be available very soon. We expect to see additional elements, like HDR, integrated into hardware in Most TV and film productions can capture and store full HDR images. Today, most of the extra information is discarded because current production, postproduction and end-distribution pipelines don t need it. As content developers and manufacturers of digital cameras (both professional and consumer) and displays incorporate new technologies like HDR, we ll learn if there s an economic case for the increased picture quality. To fully realize the promise, the industry must adopt HDR throughout production, postproduction and the distribution pipeline. This will put greater stress on networks and digital workflows, and increase demands on storage and compute resources. To maintain quality standards the final output will require HDR displays for both consumer and professional applications. At this time, very few OEMs offer HDR displays. This limits the ability of the major studios and consumer electronics manufacturers to assess new products for quality and alignment with evolving standards. Moving beyond 3D Predictions for VR and AR are so bullish partly because of the tremendous success of current interactive video games, new video game platforms and the intrinsic linear storylines framed in cinematic environments. Just as with 4K, the spread of VR and AR will demand changes to workflows and infrastructure. This extends from content development practises to consumer devices such as the new generation of VR headsets coming to market. The network infrastructure will play a critical role in delivering the immersive user experience which will be wholly dependent on reliable, high-speed transmission of data. VR and AR hold great promise, with Digi-Capital forecasting that the market will be worth $150 billion by If VR takes off, there will be demand for higher bandwidth to support a fuller resolution 3D spherical VR experience. Phillip Lelyveld, Program Manager, VR/AR Initiative, USC School of Cinematic Arts. November
4 Creating more distinctive content Over the years, we ve seen development costs for feature film, feature animation and high-end video games skyrocket. Major entertainment companies have sought to reduce financial risk by focusing on building successful franchises. Whether it s James Bond in theaters or Call of Duty on video game platforms, content developers are looking to leverage sequels to improve their cashflows. This approach has significantly reduced the amount of unique content created by both major studios and independent production companies. Newer OTT companies are taking more risks, and often prospering. The popularity of shows like Orange Is the New Black has proven that unique content can be a powerful differentiator for OTT platforms. It can increase demand for their brand (platform), viewer loyalty and subscription revenues. Accordingly, OTT companies are dedicating more capital to developing original content. This is driving them to pay greater attention to IT security to protect precious digital assets, and the performance of their infrastructure to deliver a great experience for viewers. The OTT phenomenon has started to impact broadcast media companies. Many viewers have moved online, hurting advertising revenues. Millennials and generation Z continue to abandon conventional media, so it s imperative for traditional M&E conglomerates to adopt OTT delivery models to maintain revenues as their conventional terrestrial broadcast businesses decline. Embracing mobile Many studio executives are starting to champion mobile content strategies to increase viewership. Technology is changing what people consume and how they consume it. Entertainment companies must change their approaches to prosper. Some studios are even working on new formats specifically designed for mobile viewing. These align better with the shorter time periods people have to consume content when on the move. An example is cutting up traditional episodic shows into standalone five-minute clips. Each clip would have its own story arc composed of start, incident, obstacle to overcome, climax and end; all with an overarching theme that follows the entire series. New formats like this could be an important part of the future for content consumption. Mobile networks will have to expand to support the increased amount of content consumed on smartphones and tablets. Distribution companies will need to change their workflows and technologies to cope with the numerous formats and sizes required, and prevent it adversely impacting the production pipeline. They will also have to consider how to implement rights management across multiple devices without compromising the user experience. Advanced content distribution networks will be critical to success. 4 November 2015
5 Get ready for a rollercoaster ride. Technology change is both a risk and an irresistible opportunity. How you react to it can make the difference between success and failure. There s no question: M&E companies need to adopt technologies like OTT, HDR, VR, AR and 4K UHD throughout their workflows. But it s not just new technologies, M&E companies must also adapt their business models to cope with trends like OTT if they re to successfully monetize their assets. This change may be painful but the alternative would be worse. New digital environments offer opportunities to differentiate with engaging new kinds of immersive storytelling and new delivery mechanisms that are just too big to ignore. The challenge is that companies must make these changes in a market characterized by fluctuating consumer habits, in which the cost of content development discourages risk-taking, but where new entrants are placing bold bets on original properties. Rich new content types like 4K UHD will put a huge burden on companies networks, processing facilities and storage. The good news is that new technologies like media cloud and advanced content delivery networks are cutting the cost of computing power, data storage and content transmission. There are other benefits too. As the use of OTT and internet protocol (IP) increases, M&E companies will be able to capture more data to feed predictive analytics. This will enable them to target content more accurately, glean greater real-time insights from media analytics, and drive improvements to programmatic advertising platforms. This will help them to keep audiences engaged longer, assess the success of digital assets more quickly, and increase advertising revenues. Find out more and get in touch with our media and entertainment team at: verizonenterprise.com/industry/media verizonenterprise.com 2015 Verizon. All Rights Reserved. The Verizon name and logo and all other names, logos, and slogans identifying Verizon s products and services are trademarks and service marks or registered trademarks and service marks of Verizon Trademark Services LLC or its affiliates in the United States and/or other countries. All other trademarks and service marks are the property of their respective owners. WPWP /
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