Metro-Goldwyn-Mayer (MGM) Studios has produced some of the best known movies and content in the world. However, like other content providers, MGM has to adjust to a changing media environment, and the studio is trying to stay ahead of the curve in terms of generating revenues from its movies and content. Douglas Lee, executive vice president, digital media division, and Gary Marenzi, co-president of worldwide television operation at MGM Studios, discuss the challenges facing the organization as it looks to monetize its array of content.
VIA SATELLITE: What are the main growth drivers for the business through the economic slowdown and beyond?
Marenzi: It is always quality product. There is an economic downturn across the linear and on-demand world. People have to compete. If you spend the money to invest in a channel, in your brand, infrastructure and distribution platform, you need the best quality product, because if not, your competition is going to go out and get it. So what stimulates the market is product that is on brand and desirable by buyers out there. As major distributors and producers, it is our role to acquire or produce that type of product. Fortunately, we have had pretty good luck over the years with things like the James Bond series, Stargate, etc. We always seem to have some good movies and TV shows that draw audiences and keep us in the mix with all the buyers, no matter what the economy goes through
Lee: One of the things that I oversee at MGM is MGM HD, which is our HD movie service. We are in around 75 percent to 80 percent of the United States with that channel with operators like DirecTV, Dish, Comcast, Time Warner and the like. One thing we have noticed this year is that advertising is down compared to the past year. The good thing about MGM HD and cable channels in the United States is that they are dual-revenue stream. We have a revenue stream from the operators paying a licence fee. Our business plan is still very robust from that point of view, but advertising has really lagged. That has been the story for everybody, but we have been able to make our numbers.
VIA SATELLITE: What are the challenges for a major studio to stay relevant in this new media environment?
Marenzi: There are a lot of models out there to produce programming and make it relevant. So, instead of hitting 30 percent to 40 percent of households watching TV at any one time, you have got to be content with 5 percent or less in this fragmented world, but that is still enough to drive a model that makes sense and makes money for the company and get into the public consciousness. You have to work harder to get into the public consciousness, not just through advertising but through viral marketing, publicity and more. Even with fragmentation, the models are still doable, but you have to work very hard and perhaps cycle through a few more windows than you did before on the distribution side to make things work.
Lee: I think on the digital side, watching anywhere, anytime, some of that has a business model that has yet to be proved, and technology has also yet to be proven. You also have issues of authentication. It is still something that a lot of the operators are working on. From a broader point of view, from the perspective of a studio or a content owner like MGM, access to more viewers is what it is all about. So if we get our product to more people, that is a good thing for us.
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