Dynamic Media Business Trends Analysis[1]

No. 9, January, 2008


INDUSTRY OVERVIEW

The “do more with less” imperative continues, though “do more” seemed to be the key words last year. In a reversal of trends full time contractors are being converted to full time staff positions and there are also outright staff increases. For the most part, staff or contractors who retire or resign have been replaced. Certainly there have been hiring freezes as well, but the work goes on requiring contractors, freelancers and outside production companies to fill the gaps. Contractor staff managers at both Morgan Stanley and Verizon were hired as full-time employees during 2007. The rationale appears to be that increased demands for media, driven to a large extent by Webcasting, are not seen as temporary phenomenon, but a continuous stream of connected events that require full-time dedicated staff.

 

Looking ahead, however, we cannot ignore the spreading impact of the credit problem. Is it more perceived than real? We have to leave that to the economists and the future. So far, none of our primary contacts in the financial services industry have reported a significant change either in budgets or work volume other than the increased need for communications regarding those extraordinary losses. We can certainly expect a negative effect on business media production in 2008 if we find ourselves in another recession. The media “buzz” would have us believe that recession is inevitable and/or that we’re already in it.

 

One barometer literally “close to home” is Selective Casting/Internationally Speaking, my wife’s talent casting service specializing in business communications. She handled more training, marketing and communications projects in 2007 than ever before and that level of activity has continued on into 2008. The globalization trend is evident in the number of foreign speaking roles she was asked to cast.  

STAFFING TRENDS

Creative services professionals historically feel we are the designated target of any cost/staff reduction programs. One of my former bosses once accused a conference of media managers as being paranoid. It is true that organizations looking for budget cuts will look first to non-core service support functions, one of which is creative services. However, it may be some consolation to realize business units throughout the enterprise are going to take hits.

 

We were struck by news of a 1,500 person staff reduction (a third of their total workforce) announced by EMI which was bought by a private equity group last year. That reduction will also extend to terminating contracts of a number of their recording artists. Obviously the investment company needs to make its investment pay off even to the extent of cutting some of the very reason the company exists. This leads us to wonder whether investors from Asia or the Middle East will comprehend the value of communications. We suspect (and fear) not.

 

On this side of the pond, Genentech unexpectedly and quickly closed down their 10-person Digital Media Services group in the fall of 2007. The IT department, to which the group was attached, had to cut expenses. We assume the decision makers believed communications media was expendable. As in many similar cases, there was no advance plan for a way to handle the more than one thousand graphics, video and animation projects the group did each year for their many internal clients.

 

On a more positive note the small creative services group at the former AT&T corporate headquarters in Bedminster, New Jersey has so far survived the SBC merger. The manager of that group retired in September and has not yet been replaced. Could this be the exception of SBC closing down the media department of every company they absorb?

MEDIA PRODUCTION & DELIVERY

Streaming, Globalization, high definition, accessibility are the adjectives of the moment for business communications media. The pace is accelerating which means more high quality media is being delivered in many more ways and certainly in ways people want to receive it. We’re still not convinced that Blackberry’s and iPods are suitable for viewing video, but if the visual element is secondary, then it doesn’t matter much. After the novelty wears off we have be concerned with over-saturating the audience as has happened with e-mail.

 

Merck & Co., Inc. has built such a sophisticated, multi-lingual international Web casting network that they can’t find another company against which to benchmark. In general, however, delivery of streaming video is still an issue given hard-to-overcome limitations on bandwidth availability. We were amused to read that when Ziff Davis’ high technology publication eweek moved to a Boston suburb, the only high speed access into their new building was T-1: a severe limitation for a magazine that tests the latest distribution technology.

 

Verizon’s fiber optic network is slowly rolling out, but it will be a very, very long time before FIOS or the plethora of cable or other Telco services can build connectivity over the last mile to more than a fraction of the homes and home offices in the U.S. Right now IP over satellite still seems to be the best solution.

 

Nice Spots is an unlikely name for a media production collaboration and asset management service we saw demonstrated at the MCA-I, New York meeting on January 16th. For what seems to us a reasonable fee, this service allows uploading and storing media in a variety of formats from anywhere in the world which can then be viewed, commented on and/or downloaded by anyone authorized to do so by the media owner anywhere else in the world. Take a look at the on-line demo of this full-featured tool at www.nicespots.com.

 

TECHNOLOGY

Is the verdict in? When Warner Brothers announced they would distribute films exclusively on Blu Ray format disks, industry analysts declared a winner. We’re not absolutely sure, but when we get around to buying a new DVD player we’re more likely to select a Blu Ray. This is not a major issue for corporate media, but there will always be some companies that want to have the latest and greatest for their board rooms and trade show exhibits. If so, Blu Ray seems to be the way to go.

 

We see more corporate media departments biting the digital and high definition bullets. Some are saying if you need to upgrade to digital, you may as well go all the way and put in high definition. Sooner or later it will be a requirement either because the CEO wants it (as really has happened); the available bandwidth and compression come together so you can distribute in HD or because that’s all you can buy. Informal surveys suggest that about half the media managers are taking a wait-and-see attitude or are upgrading to high definition as they replace equipment. Very few are jumping in to replace everything all at once.

 

The hot new “must have” technology is called “Telepresence” (capital “P” if referring to the Cisco product). This is what videoconferencing was intended to be when it was first introduced. We recall touring a Bell Laboratories videoconferencing room in the 1980’s which was set up exactly the same way as today’s telepresence rooms. Another innovative installation at Lucent Technologies (successor to Bell Laboratories) in the 1990’s linked two breakout rooms in New Jersey on a full-time connection using wall sized projection screens which allowed engineers to meet informally with each other just as if they were all sitting in the same room. We have seen some demonstrations of high definition video conferencing which were not totally convincing hampered by the lack of universally available broad bandwidth.

 

Speaking of Cisco, in an eweek interview, CEO John Chambers called “Video the next killer app in the Internet.”[2] It took a while for the IT guys to figure out something we’ve known for a long time. Now it’s up to them to implement it and open the bandwidth gateways. Fortunately we are seeing more and more evidence of that essential Media/IT cooperation.

 

CONCLUSIONS

There is no doubt that the next six months will be traumatic for the country and for the media industry. We can only hope that if there is a recession, it will be short and shallow. What we do know from past experience is that recovery will be slow.

 

If anything, however, the experiences of the past two years have shown that business media communications to employees, clients, customers and the general public has true and proven added value. We used to think videotape distribution would be enough to prove the point. However, that was only a tentative step. Shipping a thousand copies of a videotape to field offices is nowhere near as effective as instantly Webcasting to a hundred thousand employees wherever they are located. The effect and impact is magnified if you can then subdivide that audience by language, job function, need to know, and so many other criteria down to an audience of one when appropriate.

 

But the technology won’t by itself carry the day. Media professionals must work to continually assure that the media being produced supports the business objectives of the enterprise and proves the return on investment. They must also do the research necessary to make sure the message is being delivered to and is understood by the appropriate audiences.

 

THE NEXT PHASE

This will be the final edition of Dynamic Media Business Trends Analysis, at least in the format we’ve used since the first issue appeared in November 2001. There are several reasons. One is this has become a bit boring to produce every six months and perhaps boring to the readers as well. Spam blockers are also making it more and more difficult to distribute publications like this.

 

Media Strategies began as Van Deusen Associates with the benchmarking study of Outsourcing in 1996. We followed that in 1997 and 1998 with a print newsletter, Media Management Trends.

 

Last October we asked a hundred or so media managers whether an update of our 1996 benchmark study of outsourcing would be of value. The response was significant and we thank all those who took time to reply. We heard that a new report on the industry was desperately needed, but that outsourcing was only part of the picture. What respondents said was needed is essentially an update of the book, Dynamic Media in Transition, that Austin Faccone and I researched and published in 2001.

 

So, that’s what we will be working on in between other projects over the couple of months. The working title is: “Best Practices in Media Management.” It will include current information on trends and some valuable case histories of how media managers have dealt with the challenges and opportunities of being in this business. During the past 11 years we have been pleased to work with, learn from and improve media management and production processes for over 50 corporate media departments. That knowledge will be a part of this new study.

 

After that, who knows? We hope the Communications Media Management Association might take up the challenge of publishing current news of the industry and the people who make it happen.

 

Richard E. Van Deusen, Managing Director

Dynamic Media Business Trends Analysis is a publication of:

Media Strategies, Inc.

Proving the Strategic Value of Business Communications

110 West 90th Street, Suite 1M, New York, NY, 10024-1208

E-Mail:  revand@media-strategies.com 


[1] This series of Trends Analysis whitepapers are intended to supplement the 2001 publication Dynamic Media in Transition, Best Practices in Business Communications, by Austin J. Faccone and Richard E. Van Deusen. This book is available from Media Strategies, Inc. www.media-strategies.com.

[2] “Cisco Charts a New Course,” Interview, John Chambers, eweek, January 7, 2008, p. 56