“How Will the Movies (As We Know Them) Survive the Next 10 Years?” asked Kyle Buchanan in a New York times article this weekend. The question comes at a time where most studios are struggling, driving evermore consolidation in the industry, Netflix has changed the way people consume media (from theatre to home), and new services from Apple, Disney and others continue to pop up. Consumer behaviour is also changing in Television. In the UK for example,”There are now more UK subscriptions to Netflix, Amazon and NOW TV than to ‘traditional’ pay TV services”, according Ofcom’s Media Nation Report.
In Michael Lewis’ Moneyball, (I highly recommend the book or the movie starring Brad Pitt), Billy Bean, the General Manager of Oakland A’s, realises it will be impossible for him to compete with the New York Yankees with a $44 million budget versus their $125 million. He adopts a data driven approach to assess the value of players according to statistics (as a predictor of future performance), as opposed to the ‘experts’ (including players, managers, coaches, scouts) who used more subjective methods to pick players/trades.
The Moneyball thesis is simple: Using statistical analysis, small-market teams can compete by buying assets that are undervalued by other teams and selling ones that are overvalued by other teams.
Th Economics of Moneyball
While “Content is still King” and spend on original content continues to break new records (Netflix alone is expected to spend $15 billion in 2019, nearly double than last year), there’s a big problem at the heart of the original content industry: over 75% of the content fails to deliver returns* (based on multiple market research reports). Could movie studios and TV production companies leverage machine learning and data to make better decisions? Could AI help them identify winning scripts? Some do, but not much is known about the companies operating in this space.
Enter Vault, an AI powered predictive marketing and analytics platform that simulates the global content market to predict consumer demands. I sat with David Stiff, co-founder and CEO of Vault (Israel/ Los Angeles) to discuss AI in entertainment and the team’s Moneyball approach to content.
Remagine: Apple, Amazon, Netflix and others moved in to original content swiftly. Is content still King? How is the market looking?
David: Not to mention all the consolidation and new platforms from Disney and Warner. We are going to see a lot of volatility over the next few years. Everyone is making big bets and the desire to out-do each competitor’s platform is going to lead to an increased spending war. We will begin seeing theatrical blockbusters shift to the digital platforms to help anchor new customers and create new differentiators in products. Bundles and new partnerships will be redefined. It’s not a winner takes all scenario, it’s a battle for the 2020 consumer and all are willing to carve up the pie, spending huge cash in order to make sure they will be at the table in a few years. Certainly, if your not in the game today, it’s going to be difficult in a few years.
Remagine:Vault’s value proposition has developed over time. What are Vault’s main products?
David: Vault’s value proposition has developed as the market has developed; our main mantra is “flexibility, flexibility, flexibility”. The need to be flexible in this rapidly changing environment determines our future. Only a few years ago, everyone cared about ratings, but the ratings are not disruption-proof, and the huge paradigm shift to OTT and streamers are rendering ratings obsolete. We’ve adapted to our customers needs. We now predict across movies and TV, from development, early IP stages, through to marketing and release. For Vault, box office and how long a series will run are our grand truths and are transferable and disruption proof. Our two main products are predictive market intelligence and campaign strategy reporting. Our market intel gives executives a sense of what will be happening in the market 6 months in advance, to both identify trends, but also understand how their content will be received by the market based on their content/campaign… On the market strategy side, our reports help marketing kick off their strategy and identify exactly what are the core concepts driving how content will be received so they can be assured their campaigns are efficient as they can possibly be.
Central to the success of these key products is our new WHAT IF generator and the ability for executives to continually ask the platform what would happen to their content based on their specific ideas. For example, What IF we marketed the female empowerment angle vs. mom as a superhero. What IF we changed the main character to a male, would this increase our TV series by an extra season? This flexibility is now infused in all our products.
Remagine: How is data & AI shaping content decisions?
David: It’s at the central core of most content companies strategic objectives and short-mid term vision. All companies want to leverage their different business units via data and AI. We’re seeing more and more companies talk about the need to be data driven and embrace machine learning. It’s still in its early stages, but we are seeing executives becoming familiar with how AI works and its impact on their decision making, whereas 2 years ago AI was completely taboo. Presently, data is mostly used on the digital side where social can provide immediate insight on how a trailer is received online, or get a good visualization on campaign cadence. It’s more “data” for now than AI, but that is rapidly changing with the new tech players.
Remagine: Prediction: what will Vault be able to do in 5 years?
David: Movies, TV, Gaming, Music, Books, Branded Advertising. What we are trying to build is a self-service platform that can pull from all media and allow executives to interact with predictive data to increase their performance. A true end-to-end solution that connects all the dots.
We are already seeing today, and certainly will 2-3 years from now, an unrecognizable blurring of what content is and what vertical it falls in.
Can podcasts provide good insight into what will be popular at the box office in 4 years? Can music provide an insight into what TV series will be produced in 2 years? The content executive of the future needs to know these things and act against it. By approaching the problem from a story perspective, and embracing all forms of content we will see an incredible future of predictive capabilities.
Disclosure
Remagine Ventures led the seed round in Vault AI and I sit on the company’s board.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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