Reports Previous Workshops
Seventh Workshop – 27 to 29 September 2017 – Finstadjordet, Norway
Module 5 – How to integrate new technologies and players in the value chain?
Introduction
Finding an audience became inseparable from the creative process.
Or, in other words,
- How do other sectors of entertainment, available on various broadcast media, cope with that?
- Are there any strategies that the audiovisual sector, and in particular cinema, can adopt?
Case study 1 / Lessons Learned – Stories from the Game Industry
Elisabet Gretarsdottir/DICE – Sweden
www.dice.se
See Elisabet Gretarsdottir’s presentation (PDF)
Gaming industry crisis
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The gaming industry has become an extremely dynamic sector due to the ongoing technological revolution. The years of rising social media, Facebook, iPhones heavily influenced the video game industry.
But,
- 10-15 years ago, the gaming industry was in a serious crisis. We were dealing with multiple issues:
- The industry was based on the following business model: 1) creation of a game, 2) put it on a disk, 3) pack it and 4) ship it to the retail stores to be sold as boxes. The emergence of piracy led to a large decline in sales. Anybody could make a copy of a game and share it online for free. It decreased the quality of the game and gaming experience, and influenced also sales and revenues.
- At the same time, another type of game emerged. It is free-to-play games – high-quality games - that producers put online for free and players would just download them and play. It was frightening for us. We were afraid we would not be able to sustain our industry.
- Also, democratization of game development happened at the same time. Thanks to new technology, anybody can create games and share them with friends. People could also modify existing games themselves. It completely disrupted our traditional distribution model because we did not know what kind of version of the game would reach the players.
- All this was tough and confusing, and many studios and distributors went bankrupt during this process.
When the crisis becomes an opportunity
- However, we tried to be optimistic and perceive the crisis as a moment when people should stop and think about what they need to do to adapt. You will not change anything until you reach the point when you have to. It is hard; you need to learn a lot, but you eventually learn to see crises as opportunities.
- Over 56% of CEOs in the entertainment and media industry believed technology will reshape or disrupt their industry. It is not surprising, because if you look at what has been happening with music, the audiovisual sector (new platforms and content), the game industry, the news, and linear TV for the past 10-15 years, why anybody would think that their industry is any different.
What did this technological revolution do for the game industry?
- We decided to get closer to our consumers. We decided to approach our customers via the platforms where games were already playing independently from us. We accepted that digitization completely replaced boxed goods sold in retail stores. We also realized that the digital platforms led to a larger and more diverse audience.
- Piracy got designed out. We realized that piracy is bearing a significant social component that works for video games as an added value. Suddenly we saw piracy as an opportunity not as a threat. Piracy created a massive audience for some games. In China, for example, PC-cafés were full of people playing pirated games. Thus, piracy showed where the audience was concentrated and created new channels for reaching them. We started wondering how we ourselves can directly reach those already existing audiences. We came up with new distribution models, found a distributor in China, etc. and demonstrated that piracy can be monetized and included into new business models.
- Business models should be diversified. Today you can get online access to 50 games at the same time. Traditional box business model has been transformed into subscription model that provides a simultaneous access to multiple games. This has also changed the way we create the content.
- Technology-led democratization created new talent – the pool of new, amazing game makers. For our company that produces game blockbusters, it resolved the talent development issue that existed for a long time. Democratization also led to emergence of new platforms where people could realize revolutionary ideas, develop innovative concepts, and create user-generated content. The game industry got married with new platforms that, with their own business model, started supporting indie games – small, often very niche, but very interesting games.
Our new business models
- As a studio, we create only “AAA games” – games produced and distributed by major publishers, typically having high development and marketing budgets, whose development is associated with high economic risk, with high levels of sales required to obtain profitability. In our company, there are 800 full-time employed people (in Stockholm and Uppsala).
- Example: A typical example of our AAA games is FIFA. It is a blockbuster. The preproduction and production of such games can take years with a budget - typical for AAA games – of around 100 million dollars. There are around 1200 people working on FIFA, and it is only the core team. The production phase is followed by marketing and distribution phase when we have 8 800 people working.
- User-generated content is something that I find very fascinating. In the past the user-generated content was considered piracy and threat since users would create illegal changes to the existing games. Players would be pirates who stole, modified and then distribute games to other people. Initially the game industry was fighting hard against this. Game producers were angry that somebody was changing what they had created. But what is happening now is that we are creating platforms where we incorporate players who contribute to the creation of content. Our plan is to find a model in which designer and player can co-create together. There are already examples of games where a game designer wants to make changes and then they open a forum where they ask players to (co-) design some elements. The players also crowd-source, modify content and thus create a new ecosystem and new business model that constantly generate funding for keeping the business alive. Players love being part of the business model. So you need to embrace the fandom and incorporate it into the new business model.
- Example: Our game “Battlefield” is an example where players interact with each other because while playing the game you can also see the advice of other players about how to play. This helps distributors and attracts a lot of subscribers. Some versions of “Battlefield” have over 40 million subscribers.
- There are also the indie, small developers that can consist of the teams of two to twenty people who create their own games and launch them on platforms in cheap, but efficient ways. These small companies are important because large studios cannot afford to develop those indie-games themselves, because studios target only the games that are going to be sold in millions of copies.
Conclusions
- We understood how technology creates changes and innovations in one industry will fuel the changes in your own industry.
- Today, the game industry focuses more on creating relationships with the players instead of assembling and distributing physical boxes of games. Using online platforms and through democratization of content, the industry provides a much more convenient access to content and has pacified piracy. In the past, piracy was only a result of expensive access. Now, the players have the right price and right place for a game.
- We stopped thinking about how to sell this product, but how to reach the player. We also changed the way we measure success. Today, it is all about creating engagement. The more engagement we create, the more successful our sale will be. When you know your player and understand your audience, and their behavior, you also know who is not your player.
- But my experiences show that the group of people who engage in games is very homogenous. And if you want to grow, you have to diversify your audience. And you do it by designing more inclusive games. For example, there was a problem with female characters in games. They were not made to make women identify with them. They were presented rather as objects for young men. So we want to create both characters and the playing experiences more thoughtfully and inclusively.
- A study shows that 98 percent of women in the US play games. Some content is created for kids, but you can follow them while they are growing up by creating new content all the time. You follow their needs and they keep playing. Also, some studies from Hollywood showed that games introducing characters with different backgrounds create a better box office.
- For most of the games, the ratio between male and female players is 50%-50%. However, when it comes to blockbuster games, we cannot really count, because there is often the problem of toxicity. Women players sometimes hide their identity and pretend to be men while playing to avoid bashing, so you do not know how many women are playing and what kind of content they would need.
Questions from the audience
- How do you collect data?
- We gather data easily because our content is digital. We just need expertise in data-analysis methods. We follow our users’ behaviors, identities, playing frequency, game features they use; we do surveys, polls and focus groups. We know them; we listen to what they are asking for. And they ask for innovation, for something different, something that feels more human, that involves more emotions. They are tired of super-hero stereotypes.
- How do you keep your audience?
- You have to look beyond the data you have in front of you. Our strategy is to capture their hearts and know how to create an excitement for them before they become aware of it. We keep things secret, nothing leaks out until the last moment – the official release. 24-hour live stream before the release creates anticipation. We make loud trailers that would appeal to the players, then you post it on social media and the whole thing explodes (example of Battlefield related to WWI). We turn a game into a global moment. And it easy to tell the players stories because we know who our players are and where they are; we talked to them.
- FIFA has been released today. I did not notice because I am not a player. How do you advertise? Does everybody who plays it know that it has been released today?
- We keep in contact with the fan pool. They have accounts in our system. We identify them and have their data in our base. We make the marketing strategy on the basis of that data about our users. This is for our core audience (10-12 million people). But we then spread the news further through digital marketing, paid media, trailers, etc. Also, the way we make trailers and visual material has changed dramatically. The production value is different.
- How do you regulate the copyrights in FIFA considering that many famous football players appear?
- They benefit from being in FIFA. It is a cultural phenomenon and it just contributes to their popularity.
Case study 2 / New Technology Schemes in Chile
Nikolas Mladinic, Advisor - Creative Economics Sector / Directorate of Strategic Programs (CORFO – The National Agency for Economic Development Chile)
www.corfo.cl
We believe that the so-called “new technologies” are not new at all but their application into today’s storytelling IS, especially when it comes to VR, AR and transmedia. We also believe that there’s a lot of ignorance about how to use or, better said, how to approach “new technologies” when it comes to building a project from the bottom up.
Our strategy is to support projects that would use new technologies and generate more data on audience, and more audience reports and studies. Our main challenge is that a lot of cinema theaters in Chile do not have a proper ticketing system. The only information we have is what they report in surveys but we do not actually know how many people see films or what are the demographics of people who see films. Therefore, CORFO has several schemes whose purpose is to improve the situation.
- Next year, we are launching the programme called Digital Intermediates for platforms that will serve as content aggregators. We will finance people who want to provide content for our digital platforms. They will be granted around 55,000 dollars to come up with a platform or work within the existing platform, but also to buy content and promote it. They will be in-between distributors and content producers. Their role will be also to collect data, do the digital marketing, etc.
- Prototype is the fund you apply to to solve a technological problem that you may encounter. You can be awarded around 25,000 dollars for that. It is not the platform or producer that get funding, but the recommendation system.
- Another fund that we are developing is called Validation and Packaging. It is meant for testing the developed concepts and platforms. Beneficiaries could receive up to 360,000 dollars.
- Another interesting fund is Human Resources for Innovation where you can apply with innovative projects such as cross media. We would give 50,000 euro for an expert person to work with producers inside their company for a certain period of time. If it is a male applicant, we cover 80% of the costs and if it is a woman we cover 90%.
- In Chile we do not have sales agents or sales companies but we have just launched, under our Distribution Fund, a Scheme for International Sales, pushing companies to gather two or more projects and see if they can have an international premiere, or more than one, with our grant. The grant amounts to around 30,000 dollars.
Outcomes of group discussions
Can the funds use crisis and disruption to make innovations? What can film funds learn from the gaming industry?
- Piracy can also be perceived as an opportunity within the film industry. Funds should make a difference between piracy as a threat and as an opportunity.
- Funds can learn new skills from the game industry. These skills include special effects, animation techniques and marketing skills.
- The game producers developed a complex method of approaching potential audiences. Film distributors could be persuaded to communicate with their audience in the same way and then know better how and where to distribute their films.
- Funds can know that some audiences want a certain film, but how to make them know that the film is out there? Can game industry’s experiences help?
- Transferring the model that the game industry uses to communicate with the audience to films would be difficult in cases of single films. But it can work in the case of sequels and franchises when audience is coming back and can be cumulatively built. Another option is to build a devoted audience around directors.
- The challenge is also to make producers use the new digital knowledge more. The funds should also set a stricter requirement for the producers when it comes to audience research. Producers should analyze every niche audience for every single film and fight for it for the development stage. Production side should engage in raising the awareness. Everyone should get involved.
- What we can learn from the game industry is positive thinking and not to use a crisis to dig a deeper whole, but to become innovative.
- How should we engage young audiences that do not go to cinema but spends a lot of time on social media?
What data do you have regarding the cinema audience and how do you use it?
- In Switzerland, the Federal Office of Culture collects all data from the cinemas, providing statistics and using data mostly for the purpose of automatic funding. All the data they collect from distributors and exhibitors (admissions, box office, etc.) are publically available. Theaters provide statistics weekly and every competitor knows one another’s data. But they know only the number of tickets; they do not know the audience profiles. There should be more qualitative studies on what audiences need, how they behave, how diverse they are, what kind of social interaction they like.
- Many film funds have new frameworks within which they demand that global digital players, such as Netflix, should communicate data on their VoD platforms. The funds create guidelines and requirements for this, but usually there are no results. The problem is that Netflix keeps saying that even them do not know the data.
- Building relationship with the audience is another major challenge. There is a huge potential in analyzing audience. The Norwegian Film Institute started doing surveys. In Sweden and Denmark, they are doing focus groups and they share the results with the producers. With the emergence of new technology, when the audience increasingly fragmentizes, it is getting more and more important to get this information both for funders and producers.
- Special laws should regulate the access to data. We need more open data. Cinemas have been traditionally open about their operation and their data. But in case of VoD platforms, it is difficult even though they have more knowledge about audience than cinemas.
- The Norwegian Film Institute has introduced a mandatory marketing plan as part of the production support application. They ask for the level of expected audience and a demographic analysis. They also do a survey together with a company that sells commercials in cinemas. They get in this way information on demographics of the Norwegian audience (age, gender) so it helps them predict some audiences’ expectations and see how the supported content performs in relation to the audiences’ expectations.
- The Swedish Film Institute introduced pre-production meetings that gather all parties involved in the project (financers, distributors, director, producers, screenwriter….) to discuss, among other things, where the audience is. This meeting is a requirement for getting a production support.
- Funds cannot punish producers if it turns out that the film does not attract the expected audience because it should become more and more easier with new technology and digital platforms. Audience is not only in the cinema. Documentary films show that very well. Especially the ones that use crowd-funding.
- There is no coherence among distributors, producers and cinema owners about the audience for the same film. You will get three different numbers. That should not happen.
- Data can also be obtained through subscribing to different social media that follow the audiences’ behavior (such as Facebook).
- In Chile, the fund supported one project where body reactions were measured. People were exposed to certain films and music and it was evaluated how bodies were responding to the watched content. Such neurological studies generate information about what people like. It is valuable for both producers and distributors.
- There are also always some perpetual audience myths that we follow but are simply not true. In the game industry, there was always a myth that players are only young people and kids and that the content should be adjusted to their needs. But a recent study showed that the biggest group is women aged 42.
The Role of Public Film Funds in the Future
- Introduction
- Module 1 – What are the essential and relevant core values of public funds?
- Module 2 – How to design funding programs today?
- Module 3 – How to take risk and experiment?
- Module 4 – Is diversity essential for reaching the audiences? Are there tools for evaluating the diversity of audiences?
- Presentation of the study “Current state of investment of national and regional public funds in Europe for professional training”
- Module 5 – How to integrate new technologies and players in the value chain?
- Module 6 – Distribution and Promotion Schemes
- Module 7 – Engaging with Future