Distribution in Hollywood terms is akin to sales; however, it is more complicated than a straightforward notion of sales given the nature of intellectual property and the strategies executed to maximize value over the life of a single property. Intellectual property rights are infinitely divisible, and distributing a film or TV show is the art of maximizing consumption and corresponding revenues across exploitation options. Whereas marketing focuses on awareness and driving consumption, distribution focuses on making that consumption profitable.
Additionally, distribution is also the art of creating opportunities to drive repeat consumption of the same product. This is managed by creating exclusive or otherwise distinct periods of viewing in the context of ensuring that the product is released and customized worldwide. In contrast to a typical software product, the global sales of which are predicated on a particular release version (e.g., Windows 98), a film is released in multiple versions, formats, and consumer markets in each territory in the world.
Figure 1.1 represents what I will call “Ulin’s Rule”: content value is optimized by exploiting the factors of time, repeat consumption (platforms), exclusivity, and differential pricing in a pattern taking into account external market conditions and the interplay of the factors among each other. Launching content via online distribution presents monetization challenges because simultaneous, non-exclusive, flat-priced access Figure 1.1 Four Drivers of Distribution Value Mix of Factors Drive Value TIME Immediacy to see + Longtail DIFFERENTIAL PRICING Buy a ticket, rent a DVD, see free on TV REPEAT CONSUMPTION Theater, Video, TV EXCLUSIVITY ‘only see it here’ competitive effect The Business of Media Distribution:
Monetizing Film, TV, and Video Content 6 does not allow the interplay of the Ulin Rule factors: use of online platforms tend only to drive value by exploiting the time factor. To earn the same lifetime value on the Internet for a product that would otherwise flow through traditional markets, not only must initial consumption expand to compensate for a decline caused by cutting out markets in the chain (or reduced because a driver such as exclusivity is removed), but also it must compensate for the cumulative effect of losing the matrix of drivers that have been honed to optimize long-term value.
When thinking about Internet opportunities and different distribution platforms, keep in mind these elements and ask whether the new system is eliminating one or more of the factors: if the answer is yes, then there is likely a tug-of-war between the old media and new media platforms, with adoption slowed as executives struggle for a method of harmonizing the two that does not shrink the overall pie