In an earlier question (Q2.5) we asked you to explain the various strengths and weaknesses of the competing products / ideas. We now want to gain an understanding of how they are performing in the market and what information you have on your key competitors? In your answer to this question you should provide us with the names of your key competitors, together with any information you may have on their market position and what their level of sales is in the segment of the market that you are targeting?
We would also like to understand how these competitors view the market you are proposing to enter, e.g.
How important is this product to their market position /reputation e.g. are they a leader in the market?
What do you expect your likely relationship to be with your competitors e.g. out and out competition or might there be a degree of strategic partnering involved?
How do you expect them to react to a new competitor in the market?
Are any of them potential licensees or buyers of the idea /product?
Could any of them be regarded as potential infringers of any IP that you own?
One of the advantages of my approach is that the DVD product has no direct competitors. Competition for the technology and overall idea comes from various industries where there are opportunities for strategic partnerships for production and distribution. The idea explores an approach to "the holy grail" of media content IP (how to make money from the Internet). As such, the profile (and subsequent experience) of this project can be beneficial to competitors. Unless explicitly stated, the competitors mentioned are not regarded as potential infringers of IP.
FILM RE-RELEASES
The DVD-Video distribution market is distinct from the console DVD (i.e. game) market, despite the physical medium being identical, as to not confuse consumers. DVD-Video distributors would view the re-mixable film market with suspicion until game console distribution was confirmed. Once that was achieved, they are potential buyers of the product for DVD-Video distribution.
The UK DVD of "The Lord of the Rings: The Two Towers" is distributed by the label Entertainment in Video who currently have 28 titles on release. Available for purchase is a 2-disc theatrical version (£16), the extended version 4-disc and video set (£24) and the extended "collector's box set" (£35). There is an unprecendented degree of coverage of the subject in these products and yet, despite the range of interactive technology available to the production, these products are purely passive. The gap between film fan and film fan who plays games is not supported by these products and arguably open for exploitation in the future.
SHORT FILM RETAIL
Warp Films released "My Wrongs #8245-8249 & 117" (directed by Chris Morris) for £10 retail to pioneer a short film distribution based on the success of their ecommerce model for music promos (like Aphex Twin's Windowlicker). "My Wrongs..." , adapted from a radio sketch, won the BAFTA Short Film award. It has not be possible to determine how commercially successful the film has been and critical feedback has been divided. The high production values (including over £80K spent on producing a photo-realistic talking dog) clearly contributed to its success in the awards when no other entry had a comparable budget.
Licensing of Warp Records artists for the film soundtrack as part of a partnership deal has been mooted. Warp Records is a potential licensee of the re-mixable technology for their own artist DVDs.
Warp Film is otherwise a competitor within the DVD-Video retail market.
OPEN SOURCE FILM
A direct competitor for the idea is the project Nothing So Strange by Brian Flemming and GMD Studios. It was touted in Wired magazine this year as a "open source we love" and claimed as the "first worldwide internet film debut" (although this is a subject of debate). It offers a 75-minute mock documentary for sale (US$5 to cover Internet bandwidth charges) on the assassination of Bill Gates.
The film is a competitor in terms of the short film circuit (it was released at the Slamdance Festival in Jan 2002) but it is not available for purchase on DVD.
Five video clips (less than a minute) of the assasination. All the video is legally re-usable under a Creative Commons (free for non-commercial use) license, identical to the approach proposed here.
The business proposition has a number of problems. The payment/delivery system (BitPass) does not offer a way to resume downloading in the event of errors. Also, when re-attempting to download the next day, an additional $5 was deducted from available credit (while not clearly stating that payment only
covers downloading for one day/or 5 "visits"). Despite being labelled "open source", there is no access to any actual source material.
The creative potential is also limited for several reasons. Low production values, although suited to the script and concept, limit any appeal to a mass audience. Since the film is only available for purchase as a download (heavily compressed) the original quality is degraded further.
The film has received extensive coverage and rave reviews in the US but not elsewhere. This is largely due to its parochial and non-cinematic nature. It is unclear how much of this publicity has been translated into online sales especially given the problems we experienced in testing the ecommerce purchase path.
The film-makers offer no suggestions or examples on how people could re-use the film or "use them in their own creative projects" as touted. There is no evidence that anyone is re-mixing the film as a form of entertainment. Indeed there is no online community component of the site so it is hard to determine how open people find it at all.
Like my own film, "Horses for Courses", "Nothing so Strange" works best as contemporary marketing. A collaboration with GMD Studios, who designed the phony web site ring for "The Blair Witch Project", means that the project has been exceptionally publicised. It has successfully introduced many industry people to the notion of a legally re-mixable film but it has done little to encourage such activity. In practice the user cannot re-mix the film far beyond what could be done with any released video and there is arguably less reason to bother in this case, given the low-budget approach.
GMD Studios, an expect in marketing films using the Internet, are viewed as a potential strategic partner. In general, early adoptors of the open source model tend to view competition as a healthy sign. Open source software businesses often point to their competitors as a sign that their market is viable.
HOLLYWOOD
This year Steven Spielberg and Dreamworks signed a five picture "film sampling" deal with Mike Myers. Myers will be inserted into old movies along with new story-lines. Labelled "cynical" by some, the process will only be available to copyright holders, namely the studios themselves.
Examples of previous film sampling efforts by studios include Steve Martin's "Dead Men Don't Wear Plaid" (1982). The film incorporates scenes from over 20 Hollywood films of the 1940's. It was produced by Universal Pictures and Aspen Film Society and grossed $17m in the US (IMDbPro.com), $18m worldwide (the-numbers.com) on an undisclosed budget.
Woody Allen's "What's Up Tiger Lily" (1966) was originally the Japanese spy film "Kagi No Kagi (Key of Keys)", whose audio track was removed and replaced. Produced by the Bendeict Pictures Corp. and Toho, the re-mix was produced on a budget of $75K. Box office figures for this film remain unavailable.
"Kung Pow: Enter the Fist", the 2002 Steve Oedekerk film, was edited from the 1977 martial arts film "Tiger and Crane Fist (aka Savage Killers)", into which the director inserted new scenes. Produced by O Entertainment, the film had a budget of $10m and grossed $16m in the US alone. Worldwide figures are not available. A sequel has been announced for 2004.
SANCTUARY may result in a resurgence of interest in the above films as prototype re-mixed films. There may be some strategic partnership potential as well, should the makers of the above recognise the potential ramifications of this project on theirs (i.e. real-time re-mixing of a previously static re-mixeable film).
At the same time, Hollywood studios continue to resort to legal action on fans whenever they tamper with film licenses. Only recently have certain fan films been tolerated by license holders but only if they re-create (not sample) film art purely for non-commercial use. Warner (e.g. Superman) and Viacom (e.g. Star Trek) have been known to shut down web sites with fan-sampled IP. The largest community is fanfilms.com (part of theforce.net Star Wars fan site). As of 20/11/2003, there are 36 Star Wars short films and 15 animations on fanfilms.com. There is also one Batman short (the highly acclaimed Batman: Dead End and 3 Matrix shorts).
Hollywood is ill-equipped to manage a more open relationship with film audiences. Hard-core fans are often viewed as a double-edged sword. Fans can not only make a movie a hit but ruin its chances quickly via word-of-mouth postings online. The film industry is unlikely to view the intended market favourably until the company is profitable. This is, in effect, the point of producing SANCTUARY as an independent short. Once successful, a re-mixable film template will be invaluable to Hollywood as a way to re-release (yet again) their catalogue. It will also usher in new ways in which advertisers and producers can work together.
It is not the intention of this project to compete with Hollywood. A partnership with the major studios, Warner, Sony, Universal, Dreamworks, Viacom (Paramount), Disney or Fox, to develop the idea into a feature, is a key part of the business plan. However any successfully developed IP is likely to be a target for infringement.
Warner Bros is in the best position to infringe upon the project IP for the upcoming "The Matrix Online" MMORPG. "The Matrix" franchise (world-wide gross to-date being US $1,281,754,000). The script, that this project is based on, was pitched to Joel Silver at Warner in 1998 as a Batman script by Brilliant Digital Entertainment. I doubt whether Australian moral rights legislation would have helped if Warner had chosen to cannibalise the script, plot or characters, to that end. In any case, one of my character names "Axel" appeared in Matrix Reloaded.
CONSOLE PRODUCTS
Games publishers are increasingly reluctant to release titles which are not already commercially successful game genres. There are a few exceptions such as Microsoft but even so, there are no equivalent console products.
The most similar product available has no film aspect at all. The recent Microsoft XBox title "Music Maker" (US$35, developed by Wild Tangent, UK release pending) is a lifestyle entertainment product aimed at non-gamers, musicians and VJs. The product is the first to allow desktop PC content (e.g. music) to be downloaded into a game console. Early reviews are mixed and the key feature seems to be karoake (something which could be added as a MOD to SANCTUARY).
http://www.xbox.com/en-us/musicmixer/firstencounter.htm
Microsoft is opening up the market I am aiming for; a market for interactive entertainment and appeal to a wider audience than traditional gamers. Microsoft's interest and investment in this space is a key validation of my idea. Microsoft intends to be the market leader in the interactive music space as in others. XBox sponsorships of music events are now common. Microsoft is trying to attract musicians and others to the platform.
Microsoft is both potential buyer of the product and potential infringer of technology IP given the company's capability to rapidly reverse-engineer innovation (e.g. Internet Explorer was released a few months after Netscape Navigator). Microsoft does not seem to have plans to develop film IP. There is a Microsoft Games Studios but no Microsoft film company or Microsoft Music label.
Research is continuing to determine the viability of a partnership with Microsoft (for an XBox release of SANCTUARY) but this is unlikely given the control Microsoft requires over the XBox Live (broadband) service. All Live servers (to which XBox console games connect for multi-player experiences) are managed by Microsoft and there will doubtless be hidden constraints (e.g. Microsoft server technology). This policy has been the subject of much contention within the games industry (e.g. Electronic Arts have yet to partner with Microsoft for online gameplay). Microsoft control over the experience at this stage of development may conflict with the need to encourage the widest community of SANCTUARY re-mixers.
Microsoft is viewed as a desirable partner/platform but probably subsequent to the success of SANCTUARY on the PS2. Microsoft was the first to release broadband-enabled product and XBox Live is considered by the industry to be ahead of Sony's online offering.
WildTangent is a direct competitor as an interactive content producer. thequality.com was in direct competition with Wild Tangent at SIGGRAPH 2001 when "Horses for Courses" won the Web3D art award. WildTangent are a potential technology/development partner given a dominance in the web3d game market and XBox development experience.
The Sony Playstation 2 (PS2) is likely to be the target platform for SANCTUARY, requiring Sony Computer Entertainment to give this project a development license. As the leading console vendor and a leading game publisher. Sony remains the market leader in the console product market despite strong advances by Microsoft. Sony are renowned for a more creative and experimental approach to new markets (e.g. Eyetoy webcam, Everquest MMORPG). The company has also released critically acclaimed titles that clearly have little mass market game appeal (e.g. Vib Ribbon, Rez, Ico) - a sign of its committment to interactive entertainment as an art form.
The PS2 does not currently ship with a harddrive (required for SANCTUARY FEEDER capability) but this peripheral will go on sale early next year. Sony clearly intends to release titles that allow Internet downloads. There is an opportunity to position SANCTUARY as a title that uses both the Eyetoy and PS2 harddrive title.
The PS2 game "Gitaroo Man" (by KOEI £39) is an influential rhythm game that incorporates a linear story and simple gameplay. It received critical acclaim but poor sales in the UK, arguably because games industry PR (obsessed with touting complexity and sophistication) did not know how to promote it. It is rare to see any significent PR for games which are not well established genres. In focus group testing, we found that Gitaroo Man had a wide appeal beyond gamers because of its catchy tunes, kitsch visuals and focus on rhythm. Similar results were found with the Sony-published Eye Toy (mini-games came with it, aimed at casual gamers) Both titles try hard to present a simple image of clean design and uncomplicated fun. KOEI does not appear to have any further rhythm games planned. Sony has already released a second Eye Toy-compatible game and there are plans for ongoing support including (online) webcam conferencing facilities.
The main games publisher of rhythm games is Konami (e.g. Dance Dance Revolution). The company also manufactures rhythm arcade game machines. Konami do not release sales data on rhythm games.
MODS
"Counter-Strike" (created by Minh Le and Jess Cliffe) is the world's most successful MOD created by fans. Based on "Half-Life", the hit game created by Valve Software, the MOD generates more than 4.5 billion player minutes per month (worldwide) and 88 percent of the online action game market. It cost Valve nothing to develop the MOD but they lost money on the online support system (support staff and bandwidth costs) because online community dynamics were not adequately planned for. Despite being available for free download, "Counter-Strike", the stand-alone game, has shifted over 1.5 million copies since its release as a stand-alone retail title this year.
SANCTUARY will introduce the non-gaming public to the concept of MODS through the idea of film MODs. In doing so it may attract more downloads/sales of "Counter-Strike" as the premiere example of MOD art. Discussions with Valve have begun to establish whether Steam (the online distribution system used by Half-Life and Counter-Strike) is viable for this project.
Both Microsoft (using XBox Live) and Valve (using Steam) want to control the online interactive experience available through their proprietary network products. Whether a strategic partnership will work or not will likely depend on how successful their respective strategies are in the early half of next year. Both companies probably consider my more open-ended idea (for connecting audiences to console product via P2P) to be financially risky. Then again, it was only a few years ago that Microsoft tried to develop competing technology to the World-Wide Web itself (Project Blackbird).
MMORPGS
"Star Wars Galaxies", by LucasArts and Sony Online Entertainment is the second largest and fastest growing MMORPG currently in existence, netting 275,000 subscribers in the US alone during the first 2 months of release. Following the staggered release across Europe on 31/10/2003 and 7/11/2003, those numbers are set to swell even further, although figures have yet to be published.
http://starwarsgalaxies.station.sony.com/
MMORPGs are competitors in terms of vying for audience attention online and in terms of attracting investment from film licence owners. Research and reviews suggests that MMORPGs are having problems sustaining interest from casual gamers and will need to offer alternative modes of interactivity within their persistent worlds to keep eyeballs. Sony Online Entertainment (as the dominant player in this space) is therefore someone to whom re-mixable technology and experiences could be sold.
VJ
Addictive TV is a UK media company who have brought VJing and re-mixed film to a wider audience through their television series "Mixmasters". Although it is interactive in terms of the production process, the end product (the TV show) is not interactive. Nonetheless, it serves to increase awareness and showcases the re-mixing of films. Addictive TV publish DVD compilations of the artists they work with. As a potential strategic partner, an approach has been made to Addictive TV for future collaboration. Addictive TV aims to be the dominant VJ brand in Europe with a presence in London and Paris.
http://www.addictive.com/
None of the VJ artists or brands looked at are considering the potential for giving the audience re-mix potential as yet. This is likely to change over time as it becomes more technically feasible to do so.
Pioneer have recently released the first DVD player to be targeted at VJs. The DVJ-X1 is aimed at people who want to re-mix video like vinyl, scratch, time-stretch, loop, and pitch shift. New consumer electronics products are a sign of a new market being heralded.
VIDEO ART
Bill Viola's current exhibition launch at the National Gallery in London (£7) was news. It was the first time that the general public woukd have seen video hung there. Serious video artists bear more resemblance to film-makers than VJs. They rarely sample other people's material and are not a target audience for SANCTUARY. Video artists would recognise re-mixable film as a generic form of packaging available for sale. They may decide to take advantage of it and the company can help them do that. Artists tend to work solo and respect for quality work is common.
FILM-MAKING SOFTWARE
Avid and Apple compete to dominate the professional film/video editing space by selling cut-down versions of software for non-professionals (e.g. Apple's Final Cut Pro at £799and Final Cut Express at £248).
http://www.apple.com/uk/finalcutpro/
The use of open standard technology (to minimise vendor lock-in) is standard amoungst the top post-production companies but the rest of the market is largely proprietary and business practices remain cut-throat. Apple recently introduced support for XML interchange formats in Final Cut Pro 4 but, in a less laudible move, also dropped Windows support for Logic Audio (professional audio software recently re-branded from eMagic, £449). Proprietary software vendors are tracking the open source movement in terms of how it affects their market share.
While many vendors have consumers locked-in to their formats and tools, this is likely to change in response to calls for more flexibility, an essential element of creative projects.
Film post production companies like Industry Light and Magic use open source technology in-house to avoid being tied down to particular vendors. ILM staff not only write plugins for their in-house compositor in python (an open source language) but the company released software tools for its own high definition imaging format (EXR) as open source this year.
http://www.openexr.net/
The time pressures of film post production mean that there is a market for software dealing with real-time manipulation of film assets. For example, nucoda sell a PC-based 10 bit full resolution conform and review solution tool for film.
http://www.nucoda.com/
While there may be opportunities for partnerships with this kind of company for technical solutions, it is unlikely that they will be direct competitors because the level of precision these tools provide is overkill for my idea aimed at video-quality.
ONLINE DISTRIBUTION
There are three high profile online distribution models being considered for this project. While it is possible to design the product with these in mind, the strategy for online distribution will depend ultimately on the nature of the final product. Online distribution (of the film, not film re-mixes) is a desirable component of this project but not essential. Online disitribution companies may consider the product to be offering a competing model given the open-endedness of the approach.
Steam
Steam is a distribution system developed by Valve Software specifically for game distribution. Steam has been designed retrospectively to enable Valve to manage the complexities of developing and supporting MODable games. As such, Steam is one of the only options for online distribution of the re-mixable film itself, as well as re-mixes. The popularity of Valve's game, Half-life, and its upcoming sequel, Half-life 2, means that Steam attracts phenomenal amounst of traffic, 500,000 user accounts at launch. Quality product distributed through Steam may be able to leverage the high profile of the vendor. Countering the appeal of Steam is a backlash from certain parts of the game community who do not want automatic clients (online software) that act on their behalf and require authentication (i.e. tracking) before anyone can play.
http://www.steampowered.com/
Kazaa
Kazaa is the most popular P2P network on which most file sharing occurs (largely illegally). Deploying legal content on Kazaa is a common form of online distribution. Kazaa's popularity is offset by its reputation for tacitly encouraging copyright enfringement. Highlighting Kazaa in the distribution strategy may be a risk to other partnerships, particularily with more traditional media companies seeking to have it closed down.
http://www.kazaa.com/
Altnet
Altnet sells a "Premium Content" DRM service which prepares and places content on Kazaa and other P2P (peer-to-peer) oneline distribution systems solely with the permission of the copyright holder. Altnet (and its parent company Brilliant Digital) were attached in the press in 2001 after CNN revealed that, contained within an Altnet shareholders report, that Kazaa users had by accepting the Terms and Conditions of Kazaa, explicitly allowed Altnet technology to on-sell local PC resources (like computing power). Both Altnet and Kazaa are ideally placed to enable wider access to re-mixes and existing relationships with BDE senior management may help secure favourable terms for this. However our experience on Horses for Courses (where playback relied on BDE technology and BDE discontinued support shortly after the film release) means that the distribution strategy will never rely solely on the availability of these businesses. Altnet nor Kazaa are suitable for downloading more than 200Mb files so distribution of the re-mixable film itself in this manner is not feasible.
http://www.altnet.com/
On Demand Distribution (OD2)
OD2 is arguably the most successful online distribution system for digital music. Used by major labels and retailers such as HMV, Universal, Virgin, and Ministry of Sound. THe system relies on the Microsoft DRM system which means that incorporation into an Xbox title will be easier than into a Sony title. Reliance on Microsoft DRM is a weakness given the relatively low take-up of this format and widespread suspicion of DRM in general. OD2 is best placed to provide the audience with a commercial channel through which to distribute MODs. It is in the interest of the project to encourage commercial re-use and distribution of re-mixable film assets via arbitrary distribution systems because this is an opportunity for royalty revenue.
http://www.ondemanddistribution.com
VJ
Blurb needed on Pioneer DVJ-X1 - try forums as no published figures.
Posted by: ken at November 28, 2003 05:34 PM