[ 00:00:19 ] Digital means something different at every studio.
[ 00:00:22 ] Really every company today but at Lionsgate it means that I help sell our films and television content across transactional platforms globally that is iTunes Google Play VUDU Comcast DirecTV dish all the cable companies plus I do hotels airlines libraries campsites. I mean anything that’s not theatrical pretty much will touch.
[ 00:00:49 ] MARGARET The entertainment business is still built on a windowing model today and I don’t see that going away in the short term or even the long term the success of a film in the theatrical window drives so much of what happens to that film downline and for that we are very dependent on that model today. Lionsgate is a unique company in that we produce film and television across a wide swath of networks. Clients of all kinds. We have 90 shows on 40 networks globally. A lot of people don’t know. For example I was just in this panel and did a little splurge and said orange is New Black is a Lionsgate original series that we produce for Netflix and the moderator stopped me and said How many in the audience know that Orange Is The New Black is a Lionsgate show over well over half the hands went up. And you know Netflix pays us a lot of money for that show. So it is a Netflix original series but we make it not to get out of my lane just talking about Lionsgate as a company. What I do is manage the client set and our product where people are buying where the customer is paying for that particular piece of content whether they’re renting it from their favorite cable platform or iTunes or Google Play or some other platform or they’re renting it. Ansari buying it back or whether they’re buying it from their favorite platform to own as part of their library.
[ 00:02:39 ] We call that in the business Esti or electronic sell through but by no stretch Are we done with physical media.
[ 00:02:54 ] Lionsgate sells lots of discs and particularly in the flyover states we call it. It’s still a wonderful form of media that guess what. Everybody knows how to use and it works. Nobody has to change anything. They’re comfortable with what they’re doing. By the way mom can still put it in the minivan and take it with her. All of these things will catch up and I’m the digital guy but I still believe in this physical media and it’s a very collectible thing that people still like to put on a shelf and line up and show off their collection maybe even loan this to a friend.
[ 00:03:37 ] Absolutely there is there are enough new ancillary windows to help offset any form of an earlier window that is falling off a bit and I’ll give you a perfect example. Netflix has existed for some time but I’ve only been streaming media within the last 6 years or so and I know that because prior to being at Lionsgate I was at another Hollywood studio MGM and MGM did one of the first streaming deals with Netflix on the deep library content. And so here’s a new business that many years ago that didn’t exist.
[ 00:04:16 ] And now look at what it’s become and it has lots of competitors too. Like Amazon Prime Hulu crackle now YouTube bread. Everybody’s doing original content back to mindscape doing 90 shows across 40 networks globally. We have a dog in a lot of those hunts as we say in the south.
[ 00:04:37 ] And we can we consider ourselves to use our line that my Vice-Chairman uses all the time a benevolent arms dealer we make content we know how to make good content and we’ll sell it anywhere that we can when doing today is an important part of film and television entertainment both theatrically released and content as is produced for television. The theatrical windows first and then there’s normally about a 75 to 90 day period before we offer it for sale. And then we offer it for rent and then it goes to a pay network and then there are other ancillary distribution windows down the line all the way to free television. And in some cases subscription networks like those that we’ve talked about Netflix Amazon Prime and others. Television the similar situation in television is it a network buys a show we produce that show for them. They have the first window and some period of exploitation around that. And then we take it to those other windows downstream. Today success in those downstream Windows is largely driven off what happens in the first window. Whether that’s Nielsen ratings of a show on a network or how much box office a movie generated in its first theatrical window and that that’s going to continue for a while the margins vary from window to window and it really has to do with the demand curve of the client or the customer or really the customer today.
[ 00:06:25 ] It is a business that we think and most of our partners think is fair on both sides and it continues to work.
[ 00:06:33 ] There will always be margin pressure in our business. Margin pressure in every business every retail business where the customer was reached. So you know that’s going to be a continuing discussion. So much of it is ad supported. Right. So much of everything that we consume as viewers watchers of entertainment is ad supported.
[ 00:07:00 ] You’ve got to imagine that that’s really going to play a factor in the future. I’ll tell you it’s fun to see how this conference has changed. I was just talking with some of my panelists that were on this panel I was just on. And I realize now I’ve been coming in maybe for 30 years. I started as a college student at the University South Carolina and the media people brought me with them to the for my first B which was in Atlanta that many years ago. And content has become such a cool and relevant part of this conference. It’s been a fun transition to watch.
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Backstage Conversations
Backstage Conversation Season: 2017