Optical/IP Networks

King Content

LOS ANGELES -- Content is King, but why is that?

Content is the glue that can draw people to networks and make them stick. Content can also be a business lubricant that can generate massive frenzies of consumption. Think Star Wars, Spider-Man, or Shrek. That is why I'm spending this week at Digital Hollywood, where I hope to find out how content and networks are working together in new ways.

It's also why Light Reading has launched a new Website called Contentinople, which will be covering Digital Hollywood all week long.

So, "Content is King," is the kind of trite soundbite that fancy MBA types like to toss around, from Hollywood to New York to Silicon Valley. It's a widely distributed soundbite, but I believe it's widely misunderstood.

Viacom Inc. (NYSE: VIA) media mogul Sumner Redstone is widely cited as saying it, which as far as I know is correct. So let's take a look at what he did with content for a minute.

Redstone is an interesting guy – a visionary. He inherited a movie theater chain, National Amusements Inc., from his father and turned it into a global media empire. In 1987, National Amusements bought Viacom. Redstone — working from the "content is king" framework, knew that owning a network of distribution was powerful, but he knew it would be even more powerful to combine the network – the means of distribution – with exclusive content itself.

This scene had played out before, in the early days of movie theaters, with the emergence of the Big Five, a set of powerful Hollywood studios that heavily leveraged exclusive distribution deals with movies theaters – which they often owned as well. The federal government eventually used the Sherman Anti-Trust Act to crack down on this vertical, resulting in a historical decision on the relationship between the network and the content. It wouldn't surprise me in the least to see this case become important once again. Viacom was originally a content syndication vehicle, but Redstone led the charge full steam into production, acquiring properties such as Columbia Pictures. Viacom became a place where massive franchises were churned out and parlayed into broad consumer plays. Think about Star Wars and MTV, and that was the power that was Viacom. The key here is franchise, and that's what content is all about.

Franchise is why ESPN can demand that cable companies actually pay them for content, rather than be charged for network access, as are some weaker brands.

Franchise is how Shrek 3 can gross $120 million in one weekend. Or how a Spider-Man movie franchise can single-handedly revive the fortunes of a comic-book entity.

So how do we translate these franchise concepts to the next network, where the digital pipes that are proliferating and expanding across the globe, making access to content nearly ubiquitous and no longer time-sensitive? How does content stay king in our time-and-place shifted world?

In short: It's still the glue. In fact, content, I would argue, hasn't changed much at all. Technology has made it more sophisticated – and even higher quality – but in the end it's still about the creative franchise.

In fact, the technology may be making the franchise even more powerful. Not only do you have a book, movie, and DVD platform — you can add a Website, e-commerce, wireless downloads, and cross-promotion over all these platforms. Think of how American Idol has penetrated the psyche on so many different levels – to the extent that the audience determines its outcome. Now that's synergy.

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