There’s a social networking site and community for every group imaginable these days. But there’s a shortage of altruistic measures in this race to embrace a digital community; media companies have taken notice. There’s big money and opportunity in connecting people with their favorite star.
Some skeptics wonder if Hollywood can right the wrongs it experienced after coming up a day late and many dollars short when the first Internet bubble burst, but media companies say they’re pursuing this second cycle much more rationally and very few are opting to buy social networking sites on pure speculation.
“It’s very clear that media companies this time around are looking at the Internet in a very strategic way,” Facebook executive Dan Rose said.
Media companies recognize social networking sites are a function of brand extension and view it as a marketing cost that can generate new profits rather than a bottomless money pit, said Michael Tenzer, an executive at International Creative Management Inc.
“I think that the buyers are much more cautious,” said Josh Felser, president of Grouper Networks.
Media drivers
Many argue that the true power of social media for media companies lies in driving people to their content.
“I think there is a sort of trend . that the studios can’t ignore,” Sony Pictures Entertainment executive Donald Wong said. “There is this trend towards people wanting to watch content where they are.”
As companies like his look to push further into digital media platforms, including mobile, they see social networking sites as one such medium that crosses multiple platforms. Entertainment companies relish the potential to drive consumers to their content at home, on their cellphone and wherever else their highly mobile lives take them.
“Hollywood has a global perspective,” Friendster executive Aaron Barnes said. “We have this interesting moment in time” with unique vehicles, and business models emerging that can expand the reach of Hollywood’s content.
Finding profitable models
Tenzer said it’s important for any broadcaster to have Web properties, but again the struggle will be in realizing profits.
That sat high on the minds of many panelists and attendees at the Digital Media Summit in Hollywood, Calif., earlier this month. Throughout the discussion, executives reiterated the need to find profitable business models in this push toward community-based marketing and promotion. It was a recurring trend throughout the show, with plenty of finger-pointing and far too many solutions.
Most studios believe that responsibility lies with the mobile and online aggregators of their content.
Companies like Facebook, Friendster and Grouper, however, say they’re providing a valuable resource to entertainment companies that further promotes their talent in a method that is more convenient than any devised before. How to turn a profit on those opportunities falls squarely on Hollywood’s shoulders, they say.
