Dynamic Media Business Trends Analysis

Volume Five, No. 1
October, 2006

It’s been a long time since we issued one of these reports – 2 ½ years in fact. A lot of water under the bridge, as they say, but let’s see what kinds of changes took place in the interim. During the last two years, I did a stint as Executive Director of the Communications Media Management Association. I continue to get a lot of information through my long-term affiliation with that venerable organization. However, the management torch has now been passed to a professional Executive Director. That’s better for CMMA and it allows me to get back to doing what I love best which is getting up to my elbows in the whys, hows and wherefores of in house creative communications media departments. I will continue as CMMA’s Industry and Public Relations Consultant.

Over the last year or so, we have noted a significant and sustained upswing in all media production. Video is alive and very well, though the driver here is Web content. Surprisingly there has been a notable emphasis on HDTV in the corporate, educational, government and non-profit sectors. This may be driven by the steadily and rapidly decreasing cost of HD production gear.

New television studios are still being built. We know of three just this past year. Granted, the need to drive content to the Web is the primary motivator, but these studios still require the same creative and technical skill sets even for Web programming. DVD is now the primary hard distribution media, with many Webcasts being distributed on DVD as well.

As we write this, the Dow Jones Industrial average has hit a string of new market highs. Corporate profits are rising and business is once again investing in new technologies and communications. All the media industry sectors, in-house production, production companies, independent producers, equipment manufacturers and integrators report increased business both in quantity and quality. Some, particularly integrators, report not being able to find enough skilled workers.

Successful Meetings (September 2006) reported that spending on meetings was keeping pace with the upswing in the economy. Hotel sales executives say meeting budgets have increased in all areas, including audio visual. An association management firm executive noted that "rear-screen projection has become a standard element at most meetings." (Who would have guessed?) And, a meeting planner concurred that companies are spending more on venues, food, beverage, entertainment and, yes, audiovisual production and elaborate printed materials.

In spite of that optimistic picture, the pressure on media and creative services continues to be to keep costs down. Media departments have traditionally been viewed as non-critical functions that do not generate revenue but only overhead. Corporations continue to be faced with the need to increase shareowner value – sometimes at risk to the underlying reason why the company even exists. We don’t see that pressure abating.

Some in-house media managers are still wondering why they are not getting seats at the strategic communications planning table. A recent survey of CMMA members showed proving value to the enterprise and gaining credibility to be the most critical issues they face.

Another key concern of media managers is that workloads are increasing, while resources, staff and budgets are being reduced or are remaining flat at best. If budgets don’t allow hiring staff, free lancers or contractors to get the work done, what are the alternatives? Some media departments have begun to vet project requests and reject them if they fail to align with enterprise objectives. Others have found charging back for services to be an effective control. However, we know of several cases where managers have increased full time or contract staff. Those same managers have been successful in getting their seats at the planning table. They have done so by providing measurable value for their clients and have proven the necessity of maintaining a responsive, agile in-house capability. One manager boiled it down to: "Maintaining the core capability to serve as a resource for the enterprise." We’ll have more on this in an upcoming white paper.

Outsourcing has always been important in the media industry. Outsourcing supports a rich cottage industry of independent writers, directors, editors, and production crews. That has been the case at least since we started in this business over 40 years ago. Yes, there are isolated cases where entire operations are outsourced to a staffing company, but very few cases where an existing in house media department has been turned over to a contract staffing company lock stock and barrel. More often than not, a contractor is brought in to provide staff for a start up department or to provide commodity services, such as meeting room support. Managed outsourcing is, in fact, the mechanism that makes media production possible.

The move to HD video is now well underway. Two years ago HD was only a glimmer on the horizon, now everyone seems to have or want it. The keys here are the low cost of new equipment and continuing improvements in display and distribution technology.

On the video editing front, a poll of media managers attending the CMMA National Conference in Louisville found that Final Cut Pro was the preferred editing platform of more than ¾ of the companies represented.

While the move to deliver rich media content over the Internet continues to grow, most companies still have bandwidth limitations when it comes to streaming video. It’s simply impractical to allow streaming video to preempt the data channels needed for business data transmission. So, guess what? Satellites to the rescue. The cost of satellite time continues to come down, as does the cost of the infrastructure necessary to upgrade existing networks and install new ones. Enliten Management Group reports that new networks continue to be installed at a steady pace.

The demand for digital asset management systems is growing as more and more companies realize the value of their media archives. The Holy Grail is the need for an enterprise-wide application that will store documents, photos, graphics and videos in one seamless package. So far, with the exception of some costly homegrown solutions developed by large corporate IT departments, no such solution is yet available. Those that handle video and digital images don’t do well with documents and visa versa. The only viable solution seems to be to use multiple applications, making them all available through a single portal. However, these applications continue to be very expensive to license and very time-consuming to install.

AV Consultants, vendors and integrators tell us that business is very good indeed. The purse strings across all sectors, corporate, educational and government seemed to have loosened a bit, so we have new facilities being built old facilities upgraded and new technologies being adopted. And the pressure is on IT departments to open the gateway to Webcasting.

J. Nicholas Hoover and Larry Greenmeier, writing in Information Week (Oct. 2, 2006) suggest that corporations would find value in the YouTube method of distributing video. They report that Cisco Systems "is going after a growing segment of the business market in which production quality isn’t up to TV standards, but the video is much easier to produce." We suggest that lousy video neither communicates, convinces nor trains, and if it can’t do any of those, it has no value at all. A Cisco executive is quoted as saying that: "Three years ago, you had to prove video’s value to the enterprises." We hate to enlighten him, but that value was proven 30 years ago, as evidenced by the several thousand companies that have been using it in one form or other ever since the late 1970s.

We also disagree with Hoover and Greenmeier’s conclusion that users will accept lower "good enough" Web video quality and that, as an executive from VBrick stated, people "don’t care as much about production values anymore." The $130,000 Cisco Digital Media Systems is built around the concept that that anyone can broadcast over their networks just by plugging a camera into the encoder. It may work for monitoring assembly lines, or broadcasting annual report meetings, but it is simplistic to believe that this is the way to create effective video programming that enhances enterprise objectives. The French philosopher and mathematician, Blaise Pascal said, back in pre-Internet 1657, "I have made this letter longer than usual because I lack the time to make it short." We can imagine long, rambling discourses that no one will watch. If the IT people are having trouble with content, we suggest they contact their in house media professionals for guidance. Better yet, leave that part of it to the professionals to do it right.

The most visible new technology is HD TV. The CEO has it at home, why not in the workplace? It hardly matters that what he or she has at home or in the office may be capable of showing HD, but they are not receiving HD broadcasts. The still open issue is the appropriate High Def delivery media – Blue Ray or HTDV – only time will tell on that one so users are still reluctant to invest.

We are rather surprised by the trend to high definition videoconferencing systems. Again, because of transmission bandwidth limitations, videoconferencing is now limited resolution at best. The rationale seems to be that the videoconferencing equipment manufacturers are hearing executives say: "I have an HD television at home, how come I don’t have one in my videoconferencing room?" I expect more than a little disappointment when they find no improvement in the picture quality. 10 Gigabit Ethernet is coming, but it’s a long way from a full rollout.

An old friend in the business remarked that he thought maybe media communications professionals had become dinosaurs. And, yes, there is the ongoing concern that IT departments will gradually take over media communications. As the representative of one control systems manufacturer put it, "IT is AV." IT departments have and should have responsibility for the delivery technology.

However, even the best IT professionals are not trained, or mentally suited, to develop the creative communications concepts that transmit ideas and facilitate action. That is, and will continue to be, the responsibility of the communications professional. In fact, there is significant evidence that IT departments are only too happy to cede content to the communications professionals. That’s an appropriate action. It must be a cooperative effort rather than a turf war in order to provide the greatest benefit to the enterprise.

So, after a brief hiatus, media production is back stronger than ever. Video is far from dead – in fact, it is the basic underlying tool that continues to add value as well as interest to what would be otherwise quite mundane communications. We see this trend continuing for some time and will be happy to update you in six months.

Dynamic Media Business Trends Analysis is (once again) a semi-annual publication of:

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These reports supplement our state of the industry report Dynamic Media In Transition. Comments and suggestions are welcome. This document may be quoted with appropriate attribution.

Copyright © 2006, Media Strategies, Inc. All rights reserved. May be reprinted or quoted only with attribution.