Wednesday, February 23, 2005

Can Americans learn something from the Japanese about entertaining kids?

It amazes me how entertainment businesses are constantly bemoaning how tough it is to get American kids interested in their products and as a result disappoint investors looking for growth. A major complaint is that kids are getting older, younger--known in the trade as "kagoy," meaning kids are moving up the age scale in their consumption of entertainment. Moreover, new ideas have a tougher time of breaking through because of the recalcitrance of companies to take risks in the face of competition from big box retailers and the internet. What products that are made can be categorized as either licensed collaborations or retro goods dusted off for a new generation. Is it no wonder that kids find what is being sold as boring and mediocre? The NY Times illustrates how toy manufacturers have fallen into this trap.

Now take a look at the strategies of Japanese companies. Despite being in a depressed economy for over a decade, Japan successfully exports its entertainment goods into the hands of American consumers, especially kids and young adults. Whether the products are manga, anime, video games, toys, or trading cards Americans have sought out Japanese companies for new and interesting products over American companies despite vast cultural differences between the two nations. To be fair, the amount of revenue Japanese companies and US importers earn is still a small share of overall entertainment expenditures, but it is growing at a faster clip than most American firms in the industry.

Why are consumers buying Japaneses goods over American goods? Two possibilities come to mind.

First, for the most part Japanese companies are constantly putting out new products and retiring old products, while refining along the way. What I mean by this is that creators often decide to retire older products despite being still viable in the marketplace because they feel it has run its course and to make room for new products. Particularly this is evident in manga and anime which often the authors and directors have a specific story to tell and after that just ends. American companies in contrast often push the product until it completely exhaust consumers. How many different iterations of Barbie does there need to be? However, companies like Pixar do invest in new ideas and has been well received by consumers. Even those Japanese companies that do reuse their older properties like Bandai with Gundam put in an effort introducing new angles and concepts into the basic formula.

Second, Japanese companies use a multi-prong strategy in marketing their products. They develop a brand that can be sold as comic books, animation, video games, and toys that complement each channel. However, the ideas of the creator is always the selling point, not a team of marketers. Typically a company teams up with a popular manga artist to roll out new products from that property: an animation series, a toy line, and a video game. But a hot property in the form of an anime series or video game can be the originating point for outgrowth. While some large companies, notably Disney, have been able to leverage their brands into many entertainment venues, others like Mattel and Time-Warner have been at most been able to penetrate only one or two venues and often at great marketing expense.

Just like American auto executives had to visit Japanese companies to learn just-in-time manufacturing, American executives might want to visit Japanese entertainment firms to find out how they make and market products that attract and retain young customers.

Sunday, February 20, 2005

Do news sites need a little fiction to boost readership?

While newspaper executives wring their hands about declining circulation of their paper product, their companion web sites hardly attract enough visitors to make up the difference in revenue losses. The average reader interacts with newspaper web sites only two to four times per month, logging less than 35 minutes per month there. Most efforts have gone into making the website splashier and more apace with breaking news. Also, the addition of online video and audio are thought to make the sites more competitive with TV sites like MTV.com and CNN.com. While these features are useful additions I do not think they alone will keep readers, especially casual visitors, coming back to the website.

It is my opinion that newspaper should carve out a section of their websites devoted to fiction and graphic novels. Short stories, novellas, and serials along with graphic novels would be syndicated to newspaper websites which would mutually benefit both parties. The syndicated authors and artists would get wide distribution and exposure of their works and the newspapers would have products that would have readers coming back regularly. Whereas before this deal was not possible because of the cost of print, the marginal expense of hosting longer and more graphically intensive works online is minimal. Moreover, with the greater use of flat screen monitors, people become more accustomed to read online.

This proposition recognizes that consumers want of their leisure time to be entertained rather than just informed. Just as the viewership of TV news programs has been declined while viewership of entertainment programs have risen, I think that if newspaper sites incorporate more non-traditional content there is a good chance of increasing retention rates among readers. Younger readers would gravitate to this form of content especially if newspapers syndicate authors and artists who appeal to their interests. To be relevant in an increasingly fragmented media world, newspaper publishers must deliver non-traditional content to readers who may look elsewhere to be informed and entertained.

Sunday, February 13, 2005

MPAA + RIAA = the anti-cool industry?

The defect in the movie and music company associations attempts to stamp out online file-sharing--aka digital piracy--through lawsuits is they set themselves against a group of consumers that marketers in other circumstances covet. The Shawn Fannings and Brad Cohens of this world are not just rebel technologists, but influence millions of young consumers to use (abuse?) their creations (Napster and bittorrent, respectively). While the MPAA and RIAA may see them as outlaws, kids who have grown up on the Internet do not. These users of p2p software are the early adopters of what is new and cool and if you antagonize these trendsetters by suing them and fostering DRM technologies on them unbidden they will tell their friends to stay far away from the entertainment bullies.

Kids are known to hold grudges, especially when they think they have done no harm, a common response to questions asked about if they think filesharing is wrong. So, if an entertainment conglomerate thinks it can hoodwink consumers into embracing its products after they were sued or had their favorite website shut down, think again. Why do you think that MPAA-backed sites like Movielink are afterthoughts while bittorrent has taken the broadband world by storm?

What about Apple's iTunes? Although it is an undeniable hit, it is due more to the popularity of the iPod and the player's compatibility with the MP3 file format (along with its DRM'd AAC files), than the service itself. Sony's attempt at challenging iTunes with its Connect service that allowed for only Sony's proprietary file format was a spectacular failure. A Sony executive recently acknowledged that fact, a rarity for a company who product, the Walkman, created the portable music industry.

How can the entertainment business compete against free? Now, if only there was a business plan that revolved around giving away free content, then consumers would have no incentive to frequent illegitimate sites. Hmm...

Well are not two pillars that built the content industry in broadcast TV and radio "free" for consumers? Are not they multibillion dollar businesses that made record companies and studios the cultural force they are today? If they are so "free" how can executives afford to hand out million dollar contracts to musicians and actors as well has enrich company shareholders and themselves? If executives would stop their whining by instructing their lawyers to sue another batch of 12-year olds and acting like brats who go to their mommies every time they shoved into the mud puddle, then perhaps they would have the time to come up with a business model that gives consumers what they want and not the other way around.

UPDATE: the news publishing industry would love to give away its product (see the flap over fraudulent circulation numbers at Newsday, the Sun-Times, and Forbes) if only they could convince their advertisers to go along.

We're just getting started

Seth Godin, author of "Purple Cow" and a first class new media/marketing guru, says here and here that the internet is just getting started as a business, technological and cultural phenomena. Meaning we haven't seen anything yet. More to the point because of the expansion of broadband and falling storage costs plus access to standardized programming tools allows someone who has an idea to build it cheap and fast.

However, Godin cautions that precisely because of these trends more people than ever are doing it. For you, that means fierce competition. To become a Purple Cow the criteria must include relentless execution, knowing what not to do, being three steps ahead, and ignoring the pundits, including himself!!