There’s an epic battle brewing within the entertainment industry for the minds and wallets of consumers, and custom integrators are perfectly positioned to reap its benefits.
That was the message delivered Wednesday afternoon by CEDIA Expo keynoter John Penney of 20th Century Fox, and he ought to know: after seven years each at Starz and HBO, Penney now serves as executive VP of consumer business development and strategic parterships for 20th Century Fox, and is a member of the Academy of Television Arts & Sciences.
Taking the stage at the San Diego Convention Center, Penney described a show business in transition, as the mega-mergers of content producers (i.e. Hollywood studios) and content distributors (i.e. cable companies and telcos) radically reshape the entertainment landscape. Think Comcast and NBCUniversal, and AT&T and WarnerMedia.
This new breed of content conglomerate was created to better compete with digital disruptors like Amazon, Google, Facebook and Netflix, he said, which are providing their own entertainment—be it social media or professionally produced—and are delivering it directly to consumers through IP services. This provides a powerful one-two punch for the new media giants, who are saving money by bypassing theater owners, cable operators and video game developers, and are using artificial intelligence, machine learning and untold terabytes of customer data to tailor content and advertising to consumers.
“Data is the new energy source of content monetization,” Penney told attendees, and the affordable, recurring-revenue subscription model that Hulu, Netflix and Amazon employ is “the new Holy Grail.”
To underscore the potency of the new cord-cutting paradigm, Penney pointed out that Netflix, in a scant seven years, has amassed more subscribers than all of cable TV, and a market cap that equals Disney’s.
So how does this impact the integrator community? Greatly. The new entertainment platforms, along with whole-home control and security, require increased software integration and encourage more and different devices throughout the household, putting the installer/integrator in the catbird seat.
“The ability to integrate different software systems is a prized art,” Penney said. “You are in a privileged position to make the complex simple. You are wonderfully positioned to be an advocate in the home, a trusted provider.”
And there will be plenty to provide for. Penney anticipates some 55 million cord-cutters by 2022, and suggests that integrators mirror the media companies by serving those customers with suites of subscription services.
His final encouragement: “Ultimately you are on the front lines of the new business model,” he told the crowd. “We are entering a golden age of content and technology, and you are ideally positioned to take those spoils of war.”