Business Intelligence Applied to the Audiovisual Industry
Who are not realize that many of the rules that have been controlling the television business from the beginning have changed, they don’t have to see this document. It will be too much for their hearts.
Before talking about Business Intelligence applied to the audiovisual industry, to the television, to streaming; first, we need to understand what the television is. In other words, we must know the television from its inception. But not from the day of the first transmission, but some centuries before that, because, in that way, we will be able to think the television as a cultural and social phenomenon and as a business (for me those are the three pillars in which the TV is based). The main idea is that of a window to something, to entertainment, to culture, etc. We will see that some characteristics will change, but the scheme will remain basically the same.
This text based on the conference given by Sergio Rentero, founder of GOTIKA, at 24th CAPER, on October 30, 2015.
Gutenberg TV
If we think in the Renaissance –that exploded in Florence around 1500 with the Medici — we see that they discovered something disruptive. But it’s not that they discovered something that had not been done before because many things had already been done, but the Catholic church had erased it . They became aware of that, they did it much better, much nicer — something must be said about the marketing Medici had — and they revolutionized the art. Before the Renaissance people used to look up to God and after the Renaissance the people start looking at their peers. Things start to be more tangible and less divine.
The human being always looked up or to the front but always as a mass. The mass always looked at something that would catch their attention: it could be the Roman circus, the emperors; with the Greeks the Gods of Olympus, in the Middle Ages the figure of the Catholic God. One can take into consideration another religion and the same happens, with Buddha, etc. But what remains constant is a lot of people looking at something that dazzles them. There was not a whole lot more to see. But with Gutenberg Bible we have a lot of people looking at something, looking at that book. And that was the TV of that era.
Television attracts multitudes. First, there was the cinema, but we can agree in that the champion in conducting multitudes through content is the tv. It had something cinema didn‘t: immediacy. At first, it was not entirely immediate, but almost. And then we started having the opinion makers. In the beginning, when we could count TV channels with our fingers (not so long ago), families would gather around two or three channels and whatever it was said was a quasi-absolute truth. If by the end of the 70s we have the first cable channels and before, we had that situation happening, that means it has not been that long since we got out of the pre-Renaissance. Things have not changed all that much. There is not much difference between that unique Bible and the later TV. Few things were said, and few people said things.
This conference does not seek to dig into the recurring themes talked in boring discussion panels. It does not attempt to give answers because there are not in this instance of things, it seeks participants to think about the possibilities that exist at this moment of revolution in a revolutionary industry that does not like to revolutionize behind closed doors.
Few making the decisions
What happens, from now on, with content? Who will decide what we shall see? What happens with the opinion formation? Although nowadays we hear that the people are disconnected, that never had we a society with such levels of lack of communication; I believe we are experimenting a transition. We must be patient with ourselves because something is going on. Today I can ask anything; I can even ask for an opinion to anyone anywhere in the world. We care about global subjects. But how were the international segments in the 80´s TV news? They were just a few minutes long. What did we care about the stock market crashing somewhere or a tsunami in distant places!
We are in the 21st century! They promised me we were going to have space crafts and I have to wait until 10 pm to watch a show… and record it!
And with the last American crisis, we saw that we are a world organization. Globalization starts to be a real thing. What happens in one country, even more, if it’s one of the big ones, does affect us. At that time when the mortgages bubble exploded, GOTIKA’s primary activity was mastering. We would take the film, scan it, do the digital intermediate, etc. And that ended from one day to the next. It didn’t happen throughout a period of 5 or 10 years. One day was the beginning of the end of film manufacturing. But why? Because Kodak had financial problems and the 2008 crisis accelerated the process. The economic chaos exploded, and the industry changed. That being said, thanks to that crisis there was a proliferation of digital cameras.
And so we started realizing that everything affects us. We are not a creature looking at a larger reality, but we realize that whatever happens to the one besides me, or the one who is 15.000 kilometers away can have an effect on me. That doesn’t mean we understand it, but it’s a path we are following.
Coming back to the TV’s classic scheme, what happened with content generation? Who decided what I was going to watch? Who paid for television? Why didn’t we pay (FTA) TV? I wasn’t charged for it; I paid the electricity bill, but I didn’t pay the TV. When the people is not charged for something, they don’t ask who’s paying.
In the classic scheme of advertising in the FTA television as the content generator, we had people that consumed (clothes, food, products, etc.). The ones paying for TV where “the corporations”: people worked, bought and the money would go back to that company. And there were several selling the same product (in the US, hundreds). And so they would ask themselves how to make people buy their product and not the one sold by the competition. They had to let them know what their product was. The television is and started being that: an open window. The executive has an open window in people’s houses and can train opinion. The corporations would pay TV companies to show their commercials. That money was financing the TV. If “Mr. Unilever” liked or disliked a show and he was one of the biggest advertisers then he decided what show could be in the air or not. One might argue it was the rating, but that would be naïf. It’s a vicious circle. Who decides what is going to be popular? Is it the rating or is the rating something that was already planned by a group of people?
And that is how we have been witnesses of the 90% of trash since the beginning of TV. Because there is some amazing stuff, but there is also a lot of garbage. I run a company that restores things and we know the percentage of stuff that are worth and things that are not. Who decided for us then? Experts in content? We must discern. There was a lot of trash, and that’s the way it was for a long time. And what can people say in this situation? It’s free. — Pause — No, it’s not free! It’s a deferral, a movement of money.
Until the classic scheme of subscription and publicity in cable and satellite TV emerges — although the satellite was later — , someone came up with the idea of, without abandoning the FTA scheme, reaching houses with a wire and giving people a couple of new signals and charging for that. Besides the FTA channels, they would have some others that would show something beyond. Why? It’s because they were paying.
Do we go out with placards and fight for our rights because the content is junk? No, because the television generates more signals, more junk so that we end up lost. It’s a swamp in which we get lost with all the content.
FTA TV is still there too. But the truth is that if they had used the money, they used in the last 50 years to invest in other types of nets, in how to reach, today we would have something else. It was all about business! It’s always about business! About what needs to be shown and continuing to be liked by the damned advertiser. I already pay you for my detergent; I don’t want you messing up with what I watch! Why have you to decide by me? If you are not giving me anything for free!
As said by Julio Cortázar — famous Argentinian writer — in the Preamble of Instructions on How to Wind a Watch: “when they present you with a watch they are gifting you with a tiny flowering hell, a wreath of roses, and he ends saying that they aren’t giving you a watch, you are the gift, they’re giving you for the watch’s birthday”. This is the same situation. We don’t decide. We have 700 channels, and we don’t have anything and then with technology we get to record. And we have to record because the documentary I want to watch is being shown at 10 pm and I can’t watch it. We are in the 21st century! They promised me we were going to have space crafts and I have to wait until 10 pm to watch a show… and record it! They tell I have Netflix, YouTube and that everything is there. Yes. FTA TV is still there too. But the truth is that if they had used the money, they used in the last 50 years to invest in other types of nets, in how to reach, today we would have something else. It was all about business! It’s always about business! About what needs to be shown and continuing to be liked by the damned advertiser. I already pay you for my detergent; I don’t want you messing up with what I watch! Why have you to decide by me? If you are not giving me anything for free!
The truth behind curatorship
Would you let a man like Donald Trump be the one deciding the TV content options for your kids? I take as an example because he is an iconography of the disgusting, of rejection. Would you allow it? And what do you think that has been going on for the last decades?
During the last decades, I am sorry to inform you, the decisions regarding contents were made by people that are very similar to that man: executives.
I want us to understand the figure of the executive. It’s a person that can either change the world or do nothing. How was the inception of the companies of, let’s say, laundry detergent or sliced bread? Those were cases in which, for example, a simple guy that owned a bakery, thought in making square bread and slicing it. And that’s how the sliced bread was born. And that ends up turning into something like Unilever, for example.
Then there is a shift of players. The guy that comes in is a guy that says “I’m an expert in doing business,” I will turn this sliced bread into an empire. And the baker ends up being a billionaire, or not, and ends up being kicked out like Edison. And what does the executive invents? The executive does business; he says “in our company we have a research and development department.” A hundred years have gone by, and now the slices are 2 millimeters thinner… the first Baker, who might have not even known how to write, he invented the sliced bread because he used common sense. And the executive, what did he use? He used the research and development department!
At this point, you might notice that many companies are turning private again. There is a need. I don’t think it’s just a trend. For example, Kickstarter. People with an idea, ask money to other individuals to buy their idea, an idea they think can be revolutionary, in advance. It’s fantastic. It’s not the executive. In Kickstarter they are not talking about the particle of God but about things that are logical and that the humanity has been needing for 70 years. Some are innovations, but others are just everyday things. It means something of that was missing. There was a gap that was filled by people who were not as capable, and some of them were executives. And they decided about the content.
Do you know the amount of excellent content that is out there and that we can’t access? Foreign shows, in other languages, etc. And we are not talking only about TV but also books. Movies circulate fast enough because of piracy. Who is measuring the market?
With the cable, some things changed but not that much. Taking into consideration that one paid every month, the changes weren’t quite weak. And what happened afterward? HBO. They are Warner, yes, but they found out that in this model they could be a little bit riskier. The TV we have today, Netflix, they are the ones who changed it, because they took a risk. They left the announcer behind and changed the TV. The one we know today, the one that looks like a film, it’s them. They set the basis on which the work is done today.
For example, Game of Thrones is a series of novels that were bought by some kids that had done nothing before, and they took them to HBO. They had done nothing before. — Pause — And they made Game of Thrones! That’s HBO, a real research and development department and that’s the way others should be. They get the scheme, the model to fight in a battle for the audience. Why? Because they know — some know — that this is going to change. And the change will be radical.
Business Intelligence
This paragraph was transcribed from Gonzalo Fernández Pazos’s (director of Exisoft) participation as a guest speaker at the conference.
What is data? Picture a number. What does it say? Nothing. But we can transform data into information, into billing. How much does the company revenue? Ten thousand dollars? Does it tell me anything? Yes, how much money can I make per month or minute? I have information, but I still don’t have knowledge. And that’s where we work with business intelligence. Data can be transformed into information, but that piece of data that is converted into information must also be transformed into knowledge. Knowing, if those ten thousand dollars are the highest number in turnover in a particular month, in a particular minute. We need to start analyzing, crossing all that information regarding data. From that point, we will be able to make last minute decisions that will help us in our sales and in reaching the client with the content he wants. Today this is very possible. It’s reachable.
The Empire of Data
At last, we arrive at the streaming subscription model as the content generator: Netflix doesn’t have sponsors. It has a lot of people paying to have content on as many screens as possible. Netflix has an IT core. And they thought: “Why don’t we start paying attention to what happens with the audience?” Now we can start seeing what happens to someone in Ohio and someone in Zimbabwe. We know many things because today we have data.
Data was always there. But it used to be harder because it took the time to gather and analyze data. Today people can change their minds every minute. Now we are in a Renaissance. The guys from Netflix recommended a show, and I liked it; Spotify recommended a song, and they guessed right. How did they do it? Magic? That is where we talk about business intelligence.
Netflix’s old interface forced the audience to go constantly back and forward. That means time. They don’t want the user wasting time but everything smooth. Through analysis, they built the new interface. The heat is exactly where they want it to be. What is going to happen ten years from now? These interfaces will be completely dynamic. It’s what they call Web 3.0 which will be modified for each user and will be more and more personalized. That means it will gain ground on traditional TV.
Another example is when Netflix started registering in which episode the audience gets hooked. They studied it all over the world. It is a very simple process in which you begin to notice more and more uses. Amazing things start to explain with Big Data when I start taking data from everywhere and making comparisons. And this is imperative because today’s audience is not the one that bought laundry detergent but the one that pays monthly. Netflix works for us. Of course, everything is not as straightforward and linear as I am explaining here (there are executives in Netflix after all), but the shift in the way of seeing the market needs to be understood.
It’s the beginning of convergence: we are standing in front of artificial intelligence working for the consumer. They are inference systems. The computer starts receiving data and resolving — this has been happening for years — . When Apple launches Apple Music and recommends songs, it’s because years earlier they had bought Genius that was a pioneer company which took information of what you were listening and gave you other similar songs or playlists on the base of what it had learned from thousands of users.
There is also YouTube. India has a large domestic market, and YouTube is opening a studio for content generation. And now there is also the paid service: YouTube Red. Will people pay for something that is otherwise for free? People pay for it, and it was a boom. It worked, people accepted it.
Thus, we are facing an industrial revolution because when the artificial intelligence starts delivering a solution the marketing departments will undergo radical changes. And that might be for the humanity’s sake.
People intercommunicate, that means there is data. In fact, many times Twitter or Facebook are used to save people. But we must teach machines how to think, arrive at conclusions, and we should do that now while they still aren’t selfish. This is an advantage because the computer doesn’t know whether it is helping, it only knows what needs to be done. In any case, there might be an executive that hide information, but that is a different story. But we know one thing: there has to be planning, and we need to start investing in artificial intelligence because today it is essential for the machines to learn so that we can benefit in the future with the results.
