jacobs digital media...

Welcome to jacobs digital media! 
A place to find and share ideas, trends, innovations and best practices... relating to the transformation of traditional media delivery and consumption
 to the realities of the digital world in which we now live.   

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Strategy Deployment Model: Applications in Digital Media Distribution of Video Games...

At E3 2010 there was certainly sufficient buzz regarding the growth of digital distribution of video games to warrant opening the strategy deployment playbook and move beyond theoretical opportunities to real economic value realization. 

 

In my strategy deployment model, I introduce the five elements of strategy deployment: Push Point, Fulcrum Point, Lift Point, Marketplace, and Business Intelligence Feedback Loop.  And, my current role, transforming a video game developer/publisher from a physical distribution operation to a digital distribution operation has become an ideal strategic change initiative to practice my strategy deployment model. 

 

We all know that a strategic initiative on paper is worthless unless there is equal or greater emphasis placed on tactical execution of the strategy.  Below is a summary of each of the five strategy deployment elements, accompanied by tactical execution considerations for each element, related specifically to moving from a physical distribution operation to a digital distribution operation.

 

Push Point – where executives communicate strategy and influence its effective deployment: 

 

Executives must skillfully communicate to all constituents (shareholders, customers, employees, vendors and other partners), how the company plans to navigate the transition from physical to digital distribution, and what role each of these constituents is expected to play in the transition.  They must balance the need to preserve their existing physical distribution methods, partners and channels; while cultivating new methods, partners and channels… throttling between being proactive and reactive as the transition evolves.   Executives must also understand and support the activities addressed in the other four strategy deployment elements… while bringing seasoned vision, wisdom and inspiration to their youthful, energetic, creative team - which is the hallmark of the videogame industry. 

 
Fulcrum Point - where people, process and technology meet to enable strategy deployment:

 

Opportunities to re-deploy people, process and technology during the transition from physical to digital distribution are abundant, and promise to return tremendous benefits in terms of productivity and profitability.  Digital distribution holds the promise of a lights-out (fully automated) order-to-cash process.  Business systems applications must be configured for b2c and b2b electronic commerce and transaction processing.  User interfaces must be intuitive and robust.  Content and distribution partners must collaborate on EDI (electronic data interchange) protocols, and develop system rules to handle all processing scenarios.  Whether to use off-the-shelf common practices and tools, or to re-engineer and use game-changing best practices and tools to run your operation is something to be considered.  Keeping to a steady/moderate program of continuous operational improvement is always good advice, particularly when marginally value added improvements become necessary because of the ever broadening landscape of regulatory compliance obstacles.

 

Lift Point - where products and services are designed, developed, marketed and delivered according to the strategy:

 

As supply chain, logistics and brick & mortar retail constraints disappear, and the dependency on component availability, manufacturing processes, shipping and shelf space also fades away… the paradigm of long tail economics takes hold.  Blockbuster hits, with their extended development cycles and outsized budgets, hold the promise of high initial sales volumes, tremendous profitability and very long life cycles – resulting in perpetual economic value as a “greatest hit” and/or “classic”.  Of course swinging for the fences also comes at great risk – as failure can be quite costly, both short term and long term.  The decision to create blockbuster versus mediocre content, must be weighed carefully in digital media strategy.  Fortunately, with digital distribution, one blockbuster can be used in bundling strategies to create lift, and raise the appeal and market performance of a mediocre product.  Hence, using “bundling-on-the-fly” promotional strategies will help video game publishers maximize the return on their entire product portfolio.  Also in play with digital media, like all media, is the love/hate co-dependency between content creators and content distributors.  The increasingly common, public, spats between creators and distributors – whether it be production studios versus cable operators, FM radio versus satellite radio, or the battle over net neutrality – is sure to continue, and result in consolidation and vertical integration within the industry.


Marketplace – where opportunities and threats from innovations, customers, competitors, regulators and the economy influence strategy

 

It’s surprising how slowly some technologies come to market.  And, once a technology becomes mainstream we all seem to say “why didn’t I think of that”.  After all, the capability to burn CDs onto a PC hard drive was available some ten years before Apple’s iPod was introduced.  And, long before myspace and facebook, AOL’s slogan “you’ve got mail” and “chat rooms”, were all the rage.   Introducing and marketing technology innovations for economic success is more art than science.  To lead or follow is a prominent question in today’s media industry boardroom.  With content, intellectual property/capital is important, but doesn’t guarantee commercial success.   Especially when protecting your property rights alone can be costly.  With today’s volatile marketplace… fickle consumers, content pirates, litigious partners and competitors, special interest regulators - you name it… a company might even consider deploying a “market teaser” strategy, where you introduce a technological innovation, then let your competition imitate - only to fail by misunderstanding some nuance, then you jump in behind them with the commercial benefit of hindsight.  Digital media, including video games, compete in such a dynamic marketplace with an exciting mix of risks, opportunities and threats, making precise and timely tactical execution of brilliant strategic initiatives, the winning combination.  

 

Business Intelligence Feedback Loop – where performance measurement facilitates learning and continuous improvement, to enable strategy realization

 

Knowing what to do and when to do it comes from the business intelligence feedback loop.  Capturing the right data, as soon as it becomes available, from many sources - internally, externally, locally, regionally and globally – then synthesizing this data into information that can be used to tell you how to improve everything from marketing to pricing to staffing to budgeting and so on and so forth.  A carefully crafted data mart with its dynamic links to all data sources should be accessible through a robust dashboard with not only key performance indicators to provide insight, but also enough intelligence to provide predictive foresight.  With digital distribution, there is no longer a sell-in and sell-through component where the supply chain collaborates to plan and optimize.  Everything is sell-through, and collecting/understanding consumer consumption, electronically, has become an innovative specialty all its own.  Digital distribution and consumption has accelerated the experimental/experiential input/output feedback loop, whereby the one with the most data/information and the best tools to use it comes out the winner.

digital distribution of video games....


after helping my client (take-two interactive) divest of their physical video game distribution business, i am really enjoying the process of building the back office capabilities for their digital video game distribution, to capitalize on the rapid growth of this segment of the business. it's awesome to be on the leading edge of this transition, as more and more consumers purchase and consume their video games through the digital/on-line marketplace. with improving bandwidth and compression technology, this will soon become the standard mode of all video game purchases and consumption - following right behind news, magazines, books, music, TV and movies. in my next blog, i intend to talk more about the impact that digital distribution is having on the economics of these media enterprises.

and now Cable vs. ABC...

 

Here's what I sent to these folks:

 

it seems this is a simple case of what's good for business is not good for the consumer, as we both want more money in our pockets. and during these times of rising costs (for content, production and delivery) and shrinking revenue (from advertising and competitive pressures), a war has broken out. for all i know, this is all a ploy to get customers to speak up, just to collect intelligence/sentiment to understand who has the upper hand in your battle. just be aware that no matter what, the consumer (your customer) is getting a real bad taste in their mouths. because of your public disregard for customers, we might all just get off the sofa and find something else to do with our precious time and money.  after all, we all know the shift to on-line distribution - where the consumer has even more control over their mode of consumption - is coming.  what are you planning to do then?  isn't your current action just a short term tactic in the grand scheme of things?  please stop being so short sighted.

Cable vs. Scripps

No one should be surprised by the recent hard-ball negotiations between cable distributors and Scripps.  The Scripps’ ‘Food Network’ and ‘HGTV’ programs have unique characteristics that give them significant negotiating leverage:

 

These programs offer content that provides; entertainment, information and products to an affluent, active, targeted consumer “Home Maker” audience.  In fact, the “Home Maker” audience for these programs is as good as it gets in TV… middle aged working women with disposable income in charge of their household budgets.  These programs and their audience now trumps the (historic) mother of all TV genres’… the Soap Opera… because unlike the “Soap Opera” audience of days past, the “Home Maker” audience earns a living working out of the home, and has limited time to watch TV.

 

This last phrase bears repeating, and is tantamount to the current economic realities of the media business, and explains why Scripps is taking such a hard stance.  Let’s break it down:

 

Earns a living – giving them their own disposable income and influence over the home budget

  

Working out of the home – giving them strong motivation to make their home (resting place) as comfortable, convenient and pleasant as possible

  

Has limited time to watch TV – use of electronic (DVR) devices allows them to skip through traditional commercial spots, making product placements in “Home Maker” programs an ideal/pervasive advertising medium

  

This is not the last we will hear of this battle, and there are certainly more battles to come as content continues to spread across the media distribution spectrum onto the internet and mobile devices.  We’ll all be watching as the media content and distribution economic landscape evolves.

looks like 2010 will be the year for media restructuring...

deleveraging of media assets will occur as firms file for bankruptcy and work feverishly to restructure and reduce or eliminate their debt, and consolidate and  streamline their operations to develop and deliver content more efficiently.  for those who hold the equity of these deleveraged media entities, what can be expected in the form of revenue and earnings?  the game has changed, and the new rules need to be learned. 

everone has to start somewhere

finally getting around to starting a blog on digital media... having attended new media courses at NYU over the summer, celebrating my one year anniversary working in the video game industry, and with my involvement in the Sirius/XM and PanAmSat/Intelsat mergers and restructurings behind me.

 

through this blog i will share ideas (maybe even knowledge), and solicit contributions regarding the various - evolving - forms of: media talent, media content, media delivery, media consumption, and media monetization.

 

my plans include studying traditional, and evolving, financial restructuring techniques, to understand - and share - which work best in the media industry; and formalizing operational restructuring objectives and roadmaps to help media firms realize greater potential in the new digital world in which we live.  

 

on the operational front, let's begin by making sure that media firms view and treat their assets and constituents in the context of a media enterprise... not a traditional enterprise.  below are the traditional vs. media enterprise views:

 

Traditional => Media 

People => Talent

Product/Service => Content

End Customers => Audience

Trade Customers => Clients

Technology for Automation => Technology for Delivery

Financing =>  Investment

 

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Strategy Deployment Model