From managing excess DVD inventory to optimizing digital distribution channels, Hollywood’s supply chain transformation in the last decade has been massive.
Knowing this background, and having spent a good part of my life surrounded by the entertainment industry, I was intrigued and inspired by the recent Entertainment Supply Chain Academy (ESCA) digital event in LA.
During my childhood and teenage years, I spent numerous days in NYC auditioning and acting in TV commercials and extra roles in movies such as Goodfellas and Wall Street. This experience gave me an intimate perspective on television and film production and fueled my fascination for the media and entertainment industries. As such, I went to work for two top global advertising agencies in NYC to live marketing communications from the business side.
For studios, the tablet has changed everything. Eleven years ago, I worked with a major Hollywood studio to improve their DVD forecasting and supply chain. They had a branding issue with excess DVDs. If they overproduced, the DVDs had to be destroyed since they could not risk discounting their brand to deplete inventory. The days are gone when the most complex problem a studio faces is forecasting how many DVDs to ship and send to distributors. This problem, though it seemed complicated at the time, is easy compared to the digital supply chain!
At the ESCA meeting, several studio executives described how content is available on more devices than they ever thought possible. Audiences have different ways to interact with content and these interactions continue to grow. International titles can further complicate matters since studios need to make sure content hits the market correctly (dubs or subs, for example, is market dependent), and certain countries have specific titles that sell well.
In broad digital distribution, like Netflix and Amazon, systems need to be transparent and updated quickly and supported in multiple digital file formats. With the proliferation of new devices, retailers and distributors have new business standards. Some are putting HD tags on studio artwork but this can cover up an actor or movie title. Studios are then forced to change the format to adhere to different standards. Devices also change how art looks per device. What looks good on big screen may not on an Android.
In planning for the future, studios are now anticipating the adoption of 4K TVs. They need to know when and where consumers will buy these to be equipped to distribute content and anticipate consumption.
Time is of the essence. Studios need to make decisions and transactions quickly. The studios aren’t trying to compete on who has the better digital supply chain but rather are collaborating to develop standards. Content is the differentiator, and is where they will compete.
The opportunity for the studios to do things faster and more efficiently is to approach digital distribution as an optimization problem. The digital supply chain for studios is a multifaceted network of inputs. There are numerous permutations of possible decision points, and information is scattered in multiple systems. As Programming and Digital Distribution executives are trying for the best outcomes, they need to streamline the data collection process and optimize digital supply chain decision-making.
For example, SAS is helping a major broadcast network optimize its sales planning process. The sales planners were spending enormous hours generating proposals. They found it hard to determine the best tradeoff between competing priorities, such as inventory attributes, mix of impressions and distribution across time periods. Also, during the planning process, inventory was changing constantly so information was already outdated by the time planners completed their reports or extracts.
SAS helped the broadcaster reduce their proposal creation time from hours to minutes by automating the process of feeding data about pricing, inventory and advertiser requirements into SAS optimization models. The heavy lifting is done by data management capabilities and advanced analytics, while the sales planners have more time to spend on account management.
This is just one example of how SAS is helping media companies optimize their business. I challenge the studios to take the same plunge and use science to solve this complex issue of optimizing the digital supply chain.
Image created with the Hollywood Walk of Fame Star Generator.
