Boosting entertainment through innovation
As is the case across the entire economy, the Entertainment sector has been transformed by the digital revolution. A brilliant opportunity or a disaster? Laurence Le Ny, Director of the new start-up program ‘Ecosystème Contenus’ within the content department at Orange, and Benjamin Costantini, founder and CEO of Startup Sesame, a new start-up support program in Europe, exchanged their viewpoints. Interview with two trendspotters.
How is Entertainment responding to the sudden upsurge in digital technology?
Laurence Le Ny: Music was the first industry to be affected by the digital transformation, starting in 1995 with the illegal platform Napster. There was a change from using a physical object to having dematerialized access to an abundance of music. 20 years on, the record industry is finally starting to grow again thanks to streaming, which has become the new model of music consumption. Today, the audiovisual sector faces the same challenges; it is influenced in particular by the new consumer practices of millennials (emergence of new formats and acceleration of non-linear uses where the brand of the content or a program is becoming even more important than the channel that broadcasts it).
New players such as Blackpills and Studio+ are recent entrants to the market, offering new formats that are designed to be used on mobiles by millennials.
Benjamin Costantini: The digital movement has clearly benefited the video game industry. Today, games are broadcast directly to millions of online viewers! This type of distribution service offered by the Twitch platform, for example, also means gamers can monetize their activity. Beyond distribution channels, crowdfunding has also changed the game in terms of financing. Now, professionals and amateurs alike can launch their own channels without a middleman.
L.LN.: In fact, production costs have decreased considerably. For artists, digital media also opens up access to a public without limitation, and social networks have profoundly changed how they communicate with their fans and vice versa.
Who are the pioneers and players driving innovation in entertainment?
L.LN.: The arrival of platforms like Napster created the medium. With iTunes, Apple offered the first business model for rights holders by linking software and hardware, then YouTube arrived and is dominating the video market. Subscription payment models for streaming, like Deezer, were able to grow in France thanks to its distribution partnership with Orange. This meant it was possible to accelerate usage and makes these platforms more accessible, thanks to Orange’s strong subscription base.
Today, there is no escape from Netflix and Amazon, which have 50% of the global SVoD [subscription video on demand] market. We are also seeing an acceleration of OTT deployment and increasing aggregation for certain GAFAN (Google, Apple, Facebook, Amazon and Netflix) and BATX (Baidu, Alibaba, Tencent and Xiaomi) companies.
The new players in distribution, the telecom operators, have facilitated the emergence of new innovative services such as OCS(Orange Cinema Series), a package of linear and on demand channels dedicated to exclusive films and series (through an agreement with HBO).
B.C.: Today, content creators have become major players in innovation. Imogen Heap, a British musician, makes her music available online via a blockchain system. It allows users to monitor all transactions associated with their music and automatically pay the various rights holders. Blokur is the start-up to watch out for in this area. Innovation is also impacting production tools. With a silicone keypad fitted with sensors, the start-up Roli is making learning to play the piano more accessible, and allows anyone to embrace the instrument. More generally, the proliferation of innovation is linked with the richness of the entrepreneurial networks and start-ups that develop new uses and new services.
Virtual and augmented reality are essential for innovation in Entertainment. The technology is there, and now there is a need to develop the writing and production of content.Laurence Le Ny, Director of the new start-up program ‘Ecosystème Contenus’ within the content department at Orange
Are start-ups succeeding in this sector?
L.LN.: In France, some start-ups who are unfamiliar with the relevant codes and regulations become unstuck in this regulated and often conservative field. And when our start-ups do reach their critical size, they should move out of the French market to develop further. Those that were designed for a French-speaking audience should quickly turn to Canada, Belgium and French-speaking Africa. We are seeing the emergence of incredibly innovative start-ups in Africa and the Middle East because the ecosystem is in the process of developing a structure – it’s extremely fertile with a very young population which fosters the rapid emergence of talent. Start-up models in Entertainment are often fragile. Those that have to obtain rights from the major players (cinema, music etc.) with boards based in the US must be robust in terms of their financial resources and have a strong leadership team. Few are chosen, but we recently heard the great news that Niland has been acquired by Spotify.
B.C.: With the arrival of VR/AR/MR, we are entering a period with new rules that will prompt the emergence of new players who base their offers on business models that were completely unimaginable just a few years ago. The infrastructures were not yet ready. This new market, worth hundreds of billions, bodes well for the emergence of new French champions.
Which start-ups are the most promising?
B.C.: Pure play companies like Spotify, Netflix, and so on dominate all categories. For newcomers, hyper-specialization is the key. Furthermore, the new generation of millennials are forming groups based on the sharing of common interests. Start-ups like WARM and Soundsgood are taking on the music market with ambitious proposals that have already enjoyed great success. In the video games industry, ANDi Games is developing a recommendation service for mobile games based on artificial intelligence. And if you want virtual reality, the firm favorite is TIMESCOPE, which offers virtual reality experiences that are accessible to everyone via self-service.
L.LN.: Companies that are establishing themselves quickly, like Snapchat, target a very young audience. This is the case with Keakr, a French start-up created by the rapper Axiom, which has developed an application that enables you to record songs by suggesting music (hip hop) and background videos: a high-quality recording studio on your smartphone. Virtual and augmented reality are essential for innovation in Entertainment. The technology is there, and now there is a need to develop the writing and production of content. This year, a virtual reality film was shown at the Cannes Festival for the first time; “Carne y arena” by the director Inarritu. Production and distribution are key to start-ups developing successfully in this sector. Orange Digital Ventures has invested in the WeVr start-up that addresses these two challenges. ADVIR, a start-up with which the management has formed a partnership to develop VR advertising. And lastly, programmatic advertising start-ups are set to grow.
The future for these sectors will be creative, entrepreneurial, or they won’t survive!Benjamin Costantini, founder and CEO of Startup Sesame
Players in entertainment are working at full throttle with start-ups. What is the significance of this trend?
L.LN.: In the United States, Viacom has launched a laboratory for experimenting with new content and new formats that will allow entrepreneurs and creators to collaborate. In France, M6 and TF1 are developing their own ‘incubator’, or accelerator. This should be an experimental “accelerator” for the start-ups taken on. At Orange, in association with the Fabs and our partners, we want to start out with the content strategy and the needs of our business units, to source start-ups and have these carry out the POC (Proof of Concept). This is a matter of “learning by doing”. We are offering start-ups a place to experiment with potential customers. This method should enable start-ups to validate their business model, which is often a critical point in the area of content. Reminiz, a facial recognition app accelerated by the France Fab was able to develop its Orange VoD service in this way, through a commercial partnership.
B.C.: Established players are now addressing the challenges of Open Innovation with ambitious strategies that go beyond conventional acceleration. It is also a matter of being in a position to attract digital talent, to recruit talented people through acquisitions or to keep them on board via intrapreneurship programs. Models like those used by the Orange content department are not in keeping with conventional methods, in that they position themselves as a ‘customer venture’ which signs deals with relevant start-ups. And that is even better. :)
What developments – or even revolutions – will we see next?
B.C.: The future for these sectors will be creative, entrepreneurial, or they won’t survive! We will discover new experiences, new content, new formats. Beyond audiovisual, sound – which is becoming immersive – will change massively and revolutionize the sensations we feel.
L.LN.: 5G, artificial intelligence, augmented reality and spatial audio will affect both the distribution of content and its production. At the same time, this generation is bringing with it diversity, a more urban culture with access to places for experimentation. Tomorrow’s world will also emerge as a result of the tech world moving ever closer to the creators who decipher innovation. This alliance will generate emotions and provide meaning. And emotion will be indispensable in the business world of the future.