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SHANE ROBISON
Keynote
NAB 2007
Las Vegas
© Copyright 2007 Hewlett-Packard Development Company, L.P.
All rights reserved. Do not use without written permission from HP.
Good morning everybody. Thanks for coming. It's good to be back at NAB.
At HP, our goal is to be the world's leading information technology company.
And it's important to understand that when we say information — our definition of information includes rich digital media.
For years we've had large teams working to develop IT solutions specifically for the media and entertainment and broadcasting and production industries.
We've been working in the media and entertainment industry long enough to have heard a lot of hype — the same hype all of you have heard through the years. Lots of speeches about: "Transformation" of the industry... Revolution in the air... A ground shift underway...
But here's the thing — we're at that crucial turning point right now. The point where hype turns into reality. Everyone in this room will agree: We live in interesting times in the world of media and entertainment.
This industry is in the midst of a fairly massive transformation. And that's no exaggeration. It's a fact.
Today, we're on a path to digitize every step in the production and use of media, from how you create content to how you manage and distribute it, right down to the end user experience.
The tire-kicking phase is over!
Tire-kicking phase is over
Everything is going digital.
Let me say that again: The tire kicking is over. Now, we're leaving behind the physical, manual processes that drove the industry for decades. Taking center stage is an end-to-end digital supply chain for media and entertainment.
The industry has made big strides in moving to digital content. Things such as new DVD formats and HDTV are great examples. But those advances wound up sitting in isolated islands of digital automation.
Here's the big change that's happening in 2007: We're connecting those islands.
Connecting the dots
We're connecting the dots.
And when every process in the value chain is fully digitized and connected — that's when interesting things are going to happen.
We're already seeing big distribution opportunities open up across the industry, from movies and TV to advertising and production, mobile communications, Internet commerce. And the list goes on.
Someone asked me a couple months ago: How would you describe the technology infrastructure that supports the media and entertainment industry? An image popped into my head right away.
It's like a speedway, but one that's in the middle of a big renovation. Some sections of track are state-of-the-art so the cars fly along at maximum speed. But then you hit stretches of road that were built a hundred years ago. And that's where the pace slows down. And efficiency really drops off.
Case in point: For decades, most film and TV-show assets have been stored in metal containers inside air-conditioned warehouses the size of a football stadium.
When a downstream distribution opportunity popped up — say, Italian TV wanted to air a movie — someone literally jumped on a bicycle, rode out through the racks in the warehouse to find that movie. Then they'd begin the process of making a hard-copy duplicate for distribution.
That's one of those sections of track that was built a hundred years ago. But as we speak it's being replaced with a digital, automated approach that's exponentially faster.
From now on, all filmed entertainment will be captured and stored as a digital master, making it easy to find assets and quickly repurpose them for any format — or any channel.
We're about to see an explosion in the number of downstream distribution channels. As that happens, content owners have to move quickly to capture those new opportunities. Once all your assets are digitized, then you're in a position to place some big bets on new business models.
The same kind of acceleration is happening on the content creation side.
IT's role in media and entertainment
Creative professionals want to experiment more and try out different ideas — now they can because the systems they use are faster and more sophisticated.
IT is opening up new capabilities, and new ways for them to realize their creative and artistic visions.
With our new digital production pipline, Information Technology is making a big contribution.
As someone who's worked in 'IT' for a long time, let me be very clear: We'll never claim to have any expertise in creating great content. And we're not the experts in structuring lucrative distribution deals. We leave that to all of you.
But the IT industry is playing a bigger role, because we've heard from you that there are two critical things you need in the media and entertainment industry:
Speed and efficiency
First, you need speed. You need the ability to move quickly and accelerate time to market.
Second, you need efficiency. You need to lower your cost structures to compete. That's especially true in these new business models.
When you look at these two imperatives — speed and efficiency — this is stuff we know about in the IT industry. We know how to build economies of scale and how to automate manual processes.
HP has a long track record of doing that for other industries — such as financial services: We helped them transform the world's stock exchanges and the world's financial networks, using next-generation IT services and infrastructure.
And today we're working alongside media and entertainment companies to drive that same kind of advance in speed and efficiency in your industry.
Working together, we're on a path to connect those islands of automation. In other words, we're going connect all the dots — using industry standard technologies and powerful software, delivered through services.
Big shifts
Let's take a closer look at some of the big shifts that are happening right now in media and entertainment. These are all happening in parallel:
The move from physical media to digital master files fundamentally changes the rules of the game for content owners.
Once you've captured an asset as an electronic file, you can quickly monetize that content.
Then: physical, manual processes; Now: automated, digital workflows: We're also seeing a shift from labor intensive, manual processes to automated workflows.
We've documented cost savings of about 75 percent when content owners switch to automated workflows and file-based media repositories.
Then: predictable set of competitors; Now: volatile competive landscape: Historically it's been easy to
pinpoint precisely who your competitors are. You could monitor their moves in the market — and act and react accordingly.
From now on, it's going to be harder to predict exactly where that next threat comes from. The playing field is opening up. All the more reason to get positioned so you have the flexibility to move quickly when surprises come at you.
Then: predictable set of viable business models; Now: disruptive business model innovation: For a long time a lack of flexibility limited business model innovation in the entertainment industry. This goes back to the islands of automation that I talked about earlier.
But when every step in the content value chain is digital and automated, that frees up everybody to innovate and create new business models.
Then: professional vs. user-generated content; Now: convergence of professional and user-generated content: The boundary between professional and user-generated content used to be very clearly defined. That's no longer the case. We're witnessing a blurring of the lines here, that's only going to accelerate. YouTube is the most obvious example. In a moment, you'll hear more on this from a fast-growing player in next-generation TV programming.
Then: handful of distribution channels; Now: explosion in distribution channels: Right now we have about five big distribution channels that everyone feeds their content to. They include:
- DVDs,
- HD,
- iTunes,
- Zune,
- and PSP.
In the next year, those five formats are going to explode into 15 to 20 or more. The question is: Who will be in a position to move quickly and capitalize on that explosion in downstream channels?
Clearly we have a lot of big shifts happening at once. But what's ultimately driving all of this? The answer is very simple:
Ultimate driver: the consumer
It's consumers and their desire to enjoy entertainment their way.
As consumers, we value entertainment in our lives. We want to have fun. And the truth is: Fun is a precious commodity when you're leading busy, hectic lives, like most of us.
People are willing to spend money to have fun their way, on their terms, and they're willing to pay a premium for personalization. When your flight is delayed and you find yourself stuck at the airport for two hours, why not watch a movie you haven't seen yet?
Just a few short years ago no one expected to be able to do this kind of thing. But the genie is out of the bottle. Technology has put the end user in control.
Subhead; The consumer is in control
This is the reality that everyone in the media and entertainment industry has to embrace.
People now expect to enjoy their entertainment on their terms. And they want to be entertained in those spontaneous moments that you can't plan for in advance.
So nirvana from a consumer point of view is pretty simple: Maximum choice and personalized fun whenever they can squeeze it in, whether it's on the big screen at home or on another device on the go.
If you can deliver that experience, if you can give the consumer the control they want and the choices they've come to expect, then you're going to be the winner.
For the rest of our time today, we want to explore the progress we've made in enabling this fully connected digital supply chain for the media and entertainment industry.
So here's how we at HP look at it.
Create, distribute, enjoy
First, there are the creative professionals who work upstream creating content. Then there is the critical job of managing and distributing content in order to monetize it. And last but definitely not least there's the consumer experience.
HP is in an exciting position because we play across this whole spectrum. We have customers and partners who are industry leaders in each of these areas. We've invited a few of them to join us today so you can hear directly from them.
All of these companies are pushing the envelope at the leading edge of media and entertainment. They're helping to redefine how content is either created, managed or enjoyed.
Let's start with the create piece of the equation.
Industrial Light & Magic
Industrial Light & Magic is a company that's synonymous with leading-edge content creation and special effects. ILM just won the Academy Award for best visual effects for their pioneering work on Pirates of the Carribean 2.
We're very happy to have James Tooley of ILM with us here today. James led a team of simulation artists that created the visual effects for 14 major characters in Pirates 2.
James and his team specialize in dynamic simulations. It's great having customers like James and ILM, because they push HP technology to the absolute limit.
With that, let me hand it over to James Tooley of ILM…
[James Tooley presentation]
Thanks James, that is truly leading-edge stuff.
Let's shift our focus now from the world of blockbuster movies to a new model for broadcast television.
Current TV
Current TV is redefining our basic notions of TV programming.
Current TV's business model combines four elements that have never been combined before. They're a traditional broadcast TV network - so you find them via your cable or satellite service. They also make heavy use of the interactivity of the Internet. They leverage user-generated content with a focus on quality. And they blend that with professionally generated content from their in-house team of journalists.
In everything they do, Current TV focuses on short-form content, which is in huge demand today. That's especially true for younger viewers in the 18- to 34-year-old demographic. Focusing on short-form content is a smart strategy as content goes mobile on a global basis.
Now let's hear from Current TV CEO Joel Hyatt. Joel, thanks for joining us.
[Joel Hyatt presentation]
Thanks Joel.
As you can see, Current TV is innovating in content creation. They're also pushing the limits in the area of content management and distribution.
Managing and distributing content
That's what we want to explore now: New technologies and business models for managing and distributing content.
Through our work with the leading Hollywood studios, we've gained a deep understanding of the challenges in building a digital production pipeline for managing entertainment assets.
As you're about to hear, the major industry players are very focused on moving to a standards-based digital media platform.
We have a short video which is a snapshot of where we are in delivering HP's digital media platform.
Let's roll that video.
[DMP video plays]
There are a couple of key points that come through in that video. First, the importance of an open, standards-based platform to achieve the economies of scale that the studios really need. There's no longer any room, or any tolerance, for a proprietary approach.
The second point I heard loud and clear is the sheer momentum behind this move to digital workflows and file-based media. Nobody's kicking the tires anymore. With the digital media platform, they're going full throttle with implementation.
We've heard some interesting perspectives on where the film industry is headed. Earlier we got some great insights into the future of television. There's another segment of the entertainment industry that's exploding today - and that's interactive gaming.
Focus on gaming
Here's an amazing statistic: At least once a week, 58 percent of Americans play some kind of computer or video game.
At HP, we're now focused on gaming in a big way. We lead this industry on a number of fronts:
- We supply high-end workstations for game developers.
- We supply high-end infrastructure for big online gaming companies like Trion, NC Soft and others.
- And, we're also the number one PC platform for casual gaming.
We really put ourselves on the map in the gaming space when we acquired Voodoo PC at the end of last year. Voodoo is the number one lifestyle brand in gaming, and they make the most powerful PCs you can buy anywhere in the world.
This is a Voodo Envy laptop right here — the same machine that Jay-Z bought recently for Beyoncé. I figure if it's good enough for her, I might as well use one. This is what I have in my office as my desktop.
When you look at the gaming space, you see a steady blurring of the line between the gaming experience and other high-def experiences like movies and television. This opens up huge opportunities, both for gaming companies and for traditional content owners.
Here to tell us more about the future of gaming is Rahul Sood. Rahul was the founder and CEO of VoodooPC and he now serves as the CTO of HP's worldwide gaming business unit.
[Rahul Sood presentation]
Thanks. Very cool stuff.
Digital content: The race is on
Today we heard a variety of perspectives from across the industry, leaders who are innovating from content creation to content management and distribution, all the way to the consumer.
There's a common thread across everything we heard. The common thread is that leading-edge players are not waiting around for a digital transformation to happen. They're not kicking the tires and wondering when to make an investment or when to make a move.
We're well on our way to building an end-to-end digital supply chain for the media and entertainment industry. As we continue to automate workflows and digitize assets, we will continue to see an explosion in the number and variety of business models.
End users now have a firm grip on the steering wheel. And they've got pretty big expectations when it comes to their entertainment.
The good news is that if you can give consumers what they want, when they want it, where they want it, it's a proven fact that they're willing to pay for a very personalized, fun experience.
So thanks for listening. And thanks for coming. And I hope you enjoy the rest of the conference.
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