Hollywood, We Have the Technology: Web Originals Take Over

Deal Making.jpg
Digital Hollywood - where entertainment meets tech

"Call it the New Hollywood," says Jonathan Small, General Manager of Break Media's Creative Lab.

"Going pro" is the trend, according to new media agent Brandon Martinez of Abrams Artist Agency.

A $1,600 home-grown video can be just as popular as a million-dollar Nike commercial, according to Blip.TV's Dina Kaplan, leaning into the microphone. "We have the metrics to prove it."

Disruptive. Convergent. Evolving. Whatever you want to call the rising tide of original digital entertainment content, there was no doubt at the spring Digital Hollywood, held May 3-6 at the Lowe's Hotel Santa Monica, that Web-native forms of entertainment are taking over.

The new breed of web entertainment companies have more in common, culturally, with tech companies than traditional media. Of the Spring Digital Hollywood's 47 sponsors, only one was a major film studio (Sony Pictures) and one was a traditional music association (BMI). The rest are big names in tech devices, software and services. The Consumer Electronics Association, Microsoft, and Adobe may not be what "Hollywood," brings to mind, but it is going the way of the geek.

Web entertainment creators are thinking more like scrappy tech start-ups than Hollywood players. "Users" is a term heard as often as "audience," a telling sign that consumers now expect active engagement with creators. For a traditional studio, interaction can be a gaming tie-in, says panelist Damon Berger, Fox's Director of Digital Marketing. Web-native art forms have a leg up - interactivity is built in.

"Disruption means opportunity," says entertainment attorney John M. Gatti of Stroock. The smart money is on those who can break out of traditional models and think creatively about the future.

French director Laurent Touil-Tartour described on his Digital Hollywood Content Summit panel how he took a Silicon Valley-type route to finance his critically acclaimed "Urban Wolf" web series. After his last big-budget film bombed at the box office, the studio pinned the blame on him, and he could not get feature film work in France as a director.

So Touil-Tartour reinvented himself as a startup. He went to VC investors from tech, a culture that accepts and values failure. Since his project was digital, he pitched it to "angel investors" at a dinner one night at his apartment in Paris, and he had his seed money by the next day. "Urban Wolf" debuted at Comic Con 2009 and has since been picked up for distribution through Sony Picture Entertainment's Crackle video website.

Content publishers treat website traffic as a valuable hard asset in considering acquisition. Break.com always operated that way. Distribution came first. Rather than trying to be all things to all people like a Youtube, Break decided early on to focus on its core demographic of 18-34 year old guys. Break Media's network, comprising 108 premium properties, including 8 branded sites, is collectively the 38th most-visited property on the Internet - ahead of ESPN.com and NBC.com. Break.com's flagship site is the number one humor site on the web.

Jonathan Small.jpg
Jonathan Small, SVP/Editorial Director of The Creative Lab for Break Media.

When Break decided it needed to be in gaming, it acquired well-respected PC gaming and file-uploading site File Front. "The reason we acquired it was it has unbelievable traffic," according to Jonathan Small, Break's SVP of Editorial and GM of the Creative Lab. "You know how hard it is to build a site from scratch. We've done that pretty successfully seven times. The eighth time, we decided, let's get a site that has a good reputation, and a lot of users, and grow it." Break's strategy is to redo the site completely as a console gaming site with editorial content. Content is still king, but the king can adapt. Break is getting ready to flip the switch, with its own videogame production studio in China.

Break also built its production studio through acquisition. When HBO was looking to divest its digital assets, Break bought the former HBO Lab to produce original content. Renamed the Creative Lab, Break's in-house studio creates original branded content, original web series and one-offs. Unlike any of the big studios, the Creative Lab is actually located in Beverly Hills, the traditional power center of the entertainment elite.

Break will be rolling out more original series such as the "Bro Show," which premieres this week. Most of the talent in Break's original web series is crowd-sourced locally in LA from places such as the Upright Citizen's Brigade.

Merideth.jpg
Meridith Kendall, the face behind Break Media's Twitter account

To be on top in Hollywood, you have to be ahead of the curve. Geolocation is so 2009. Real-time tools are the hottest thing on the web right now, according to Digital Hollywood panelist Brian Zisk, a co-founder of real-time search tool Collecta. And that is where original web content has a huge advantage.

The new generation of web media creators can make and publish content in a flash, keeping up with viral trends and abbreviated news cycles. The Tiger Woods sex scandal broke on a Saturday. By Monday, Break.com had a Tiger and Elle Woods parody video game - that users could actually play - up and running on its web site. The day the Cleveland Cavaliers were eliminated from the NBA playoffs, making LeBron James a free agent, Break strategically had an original one-off, "We Are LeBron," ready to go that evening.

Web video's lean, agile nature enables it to replicate big-budget production values at a fraction of the cost. And just as importantly they can do it on a tight turnaround. That agility is instrumental to maxing out assets and access. An example used by Small to debunk myths about production costs on one of the Digital Hollywood panels was Break's use of the Red Camera on a recent production. "That was making the point in response to someone who said, well it doesn’t look the same if you don’t spend a million dollars. You know what? Sometimes it actually does look the same.”

The Red Camera is an ultra high-end digital camera that everybody want to use, according to Small. It is little, but takes film-quality picture. To buy one is $30-40,000. To rent one is about $5000 a day. How to get one? "This is what you do. In Hollywood, people know people, and we wanted to do this really high-quality thing, and we figured, how are we going to do this?" So Break called in a favor. "Because we know how to do things quickly and cheaply we were able to get one very inexpensively,"says Small.

As any "Survivor" fan knows, alliances are everything. The potentially huge revenue stream of new media is the prize. Representatives from WGAW (Writers Guild of America, West) and SAG courted web video creators at a "Working with the Guilds" panel. There are huge advantages to producing web series under the auspices of the Guilds, according to Elisabeth Flack, WGAW Contracts Administrator, and her fellow panelists. For one, using SAG members adds that professional polish that can set a web production apart from the seas of mediocrity.

Guilds Panel.jpg
Representatives from SAG and WGAW discuss working with the guilds on Web videos

Less obviously, perhaps, working with the Guilds can also get an independent web writer and producer group health care and pension benefits at a price that is economically reasonable. Consider this: The WGAW pension and health care qualifying amount is based on an easily doable $33,682 over a 4 quarter period. And yes, technically, it can be self-produced work through a production company which pays the writer's salary.

That means a new media creator can start a legitimate production company (one that is actually in the business of making web video), and as a writer become a provisional WGAW member right away. If the production company pays 14.5% contributions to the WGAW and the writer earns an aggregate $33,682 every four quarters, the writer becomes eligible for health and pension benefits for an annual premium of $3,750. That breaks down to just over $312 a month. Once eligibility vests, the member can go on COBRA if they later fail to qualify. Not bad when you consider the price of health care and retirement planning.

All the pertinent information for new media creators is available on the SAG and WGAW websites, condensed into 3-page printable handouts. The Guilds say they are extremely flexible with compensation levels for new media productions, which means an actor or writer can begin accruing credits immediately upon embarking on new media video productions.

The Guilds have everything to gain in numbers. SAG and AFTRA are scheduled to renegotiate with the studios this September, and DGA will renegotiate with the studios immediately afterwards. Residual payments for new media exploitations of traditional media content can be complex, but as more and more entertainment is consumed on the web, payment for those exploitations will be increasingly important.

Strike-seasoned veterans who were forced to become tech-enabled curators of their own content in the writers' strike of 2007-08 are forging ahead with a startup-influenced approach. Strike.TV co-founder Brian Rodda teamed up with computer guru Matt Arevalo to to form NewMedialocity. It offers screenings and the New Media Academy, a seminar series that promises to teach the nuts and bolts of self-producing convergence content - from LLC formation to digital shooting to social media marketing. The seminars are held at Dogma Studios in Marina del Rey, a part of town known more for gaming companies and tech companies than movie studios.

The rise of digital-native entertainment has had a huge impact on advertising. Panelists noted a title shift at ad agencies, pointing out how new all this really is. TV, Digital, Web Video, and Social are all separate departments at various agencies.

Dina Kaplan.jpg
New media embraced by traditional media: Blip.tv's Dina Kaplan and Lionsgate's Alex Barkaloff

Moreover, web consumers want content that is authentic and speaks to them, according to a Digital Hollywood advertising panel. What works on cable or network will fatigue or alienate web audiences. Web agencies have to make 90% of their own assets, because there are just not enough dynamic assets to meet the current demand. As one panelist put it, entrepreneurs are the new executive agency.

The demand for high-quality, homegrown web video is exploding. "The DNA of original web content comes more from the tech business than from traditional Hollywood," says Jonathan Handel, entertainment attorney at TroyGould. "That's why original web content spreads virally, not top down."

And demand means opportunity in LA. "There's still not enough overlap between the tech and entertainment crowd in LA," says Mike Prasad, founder of GirlGamer.com and head of the M Consultancy.

The future is wide open. Ultimately, the winners will be the ones who can bridge this gap.


All photos of Digital Hollywood by Lisa Borodkin/LAist.