Cinram has long roots in physical media, but has carried out an extensive rebranding to reinforce itself as a player in the digital world. John Crosier, Senior Vice President of Digital Architecture and Delivery, talks digital to Elizabeth Toppin: the differences and similarities in relation to the physical and digital supply chains, how the company fits into both, and where the challenges are for digital delivery.
First of all, the name Cinram has historically been very firmly embedded in the physical media side. Is it a good fit? Is the move to digital offerings a necessity because of the way the industry is going, or is it a natural progression of the company’s overall strategy when it comes to content delivery?
It’s definitely a natural progression, and even some of the smaller companies that handle very specialized replication and distribution deals are now being tasked to get into the digital space. I think anybody who remains a physical-only service provider will really face challenges, and that provides a great opportunity for Cinram to offer our solutions. I don’t think many customers and content owners now are just looking to physical as the be-all and end-all of how their products will be distributed. Some are still testing the water a little bit more cautiously and slowly because physical is still important, but at least they are testing the waters.
Presumably there is still a place for physical – particularly Blu-ray – for a while? After all, many people see it as being not only a good platform for content delivery in itself, but also as a natural bridge to digital delivery with things like Triple Play, BD-Live, and the UltraViolet initiative. Do you see it as a natural progression or will the move to digital delivery be more revolutionary?
I definitely believe that Blu-ray will be one of the biggest transitioning platforms to get people involved in digital. In parallel with that is UltraViolet and manufacture-on- demand discs. MOD services and platforms, including our own, allow consumers to get a physical copy of the content that they want and also allows them a digital play of that content. Consumers can then watch the content digitally while they’re waiting for their physical disc, and when they receive their physical disc, they have two formats of the content.
On the UltraViolet front, consumers have an offer for a standard digital file format that plays on multiple devices; however, growth of UltraViolet is reliant on both consumer and retailer adoption so we'll see how the rollout continues. MOD, UltraViolet, and Blu-ray are definitely going to be ways that the consumer is going to be introduced to and educated on, what digital is, how it works, and how it can be of benefit to them. Digital has definitely taken off, but its rollout is a little bit slower than people thought: while there are always early adapters to technology, getting the rest of the population to convert or to try it is sometimes challenging. Often the consumer isn’t educated on how it works and what is the benefit to them, or they don’t have devices that enable them to actually partake in that digital distribution model.
I think, particularly towards this end of this year, consumers will be buying more consumer electronic devices that are connected to digital platforms and services and we have to make sure that from the studio, content owner, and vendor sides through to the end user, that the consumer is educated and they understand what they get. The last thing I think that anybody wants to see is consumers frustrated with a digital offering because they don’t understand it.
Education is a very important topic. At this year’s ESCA Europe event, I moderated a panel discussion on Blu-ray in Europe and the panellists were saying that even with Blu-ray there’s a need for education - as you say, there are the early adopters who may give a falsely good impression. However, things like tablets and Kindles, and social media, are being taken up by a lot of people who are older and not particularly tech-savvy – will there be a sudden hockey stick curve take-up of digital offerings as that generation gets more used to streaming and downloading content and realizes what digital has to offer?
I agree. The tablet is a much more friendly device, more so than a traditional mobile phone and your PC. It has portability and is easy to use. With touch-screen technology you can be up and running quickly and consuming TV, movies, music, e-books, etc, with a couple of really quick touches on an iPad, or other tablet device entering the market. It’s not as burdensome as having to be tied down whether to your desktop or even your laptop. As well with the growth of connected TVs in the market adaptation will come more quickly. It may not be hockey stick growth but it will definitely be significant and that will drive digital growth particularly in the fourth quarter and early 2012 because so many of those devices will be in the market.
It seems that, as well the consumption of content on mobile devices increasing, so is second- screening with people multi-tasking and using their tablets while they’re watching TV. Presumably then there is also a responsibility for the content owners, the technology providers, and the service providers – such as Cinram – to make sure it all works seamlessly and transparently?
Correct. That’s one of the greatest benefits for us of having acquired 1K and building out our digital side. We have the ability to not only speak to the creative content owner on the studio side, but we also have a very robust technology team working with those evolving digital technologies that allow consumers to interact and transact with content on their personal device as well as watching it on their television. It’s giving consumers more opportunity and it’s creating more brand awareness to the content owner and platforms that deploy those technology solutions.
Some of the applications that 1K and Cinram have developed and are developing are not just simple linear plays of content, they allow you to really transact with the content and to go in and see enhanced footage. For instance, the On The Road app that we did for Penguin is an excellent example of this type of product. Although it falls more on the e-publication side the experience with the content is a real in- depth experience that allows for not just only a straight hear, read, or play, but also for a lot of enhanced content to be built in to create a more intimate and deeper experience.
With On The Road you can really drill into additional facts and archival footage of content that otherwise you’d be hard pressed to find online. You can dive into the content to see the maps of travel throughout the US right at your fingertips, and you can then go back to reading your book. Or because of the story of Jack Kerouac and the bands that he was part of, if you want to hear the music you hit on an icon and you can continue to read the book while you listen to the music.
The experience is not only true with ePub and books online but also with magazine subscription apps that continue to roll out. The magazine subscription business is very actively figuring out ways to add video content to enhance even traditional magazines and subscription apps that might be on mobile devices.
The technology is super beneficial for the content owners who have huge archives of footage that it has either never been possible to put on a disc, or has had to be put on multiple discs. The question in the disc model has been: will people continue to swap between discs to get the content they want? Now it’s very simple to pull archival footage out, get it into a digital format and allow the consumer to really interact with it.
So, to get back to Cinram specifically, you started off right away by saying, as I understand it, that your digital and physical supply chains are pretty much one and the same, just depending on what people want. Is that more or less correct?
Yes, that’s absolutely correct and also in many cases the client is also one and the same. There are studio content owners that we may not be doing physical replication and distribution for, but we’re doing their digital content development including extras or LPs, enhanced menu development and programming, and application development, and then delivering those assets back to them or deploying solutions to platforms on their behalf. While of course the goal would be to support them in both the physical and digital worlds, some clients have established paths and we definitely don’t shy away from supporting anybody and any content owner that wants to explore the digital space or has multiple inputs into the digital space.
Again I think one of the greatest assets in Cinram acquiring 1K is their ability to not only work in the digital creative space but also the technology space. Adding the digital supply chain piece that we’ve built at Cinram serves to enhance those services and delivery mechanisms and also allows for a standalone piece (digital supply chain services) for those existing or potential customers that have the need. In reality the additional digital supply chain that has been built very much parallels the physical supply chain in terms of the use of shared assets to get out into the physical or the digital world.
Did Cinram have any disadvantages being a relative late-comer to the digital space, because it was very much traditionally in physical media, or has your own entry into the company and the acquisition of 1K pretty much brought you up to speed to be a major competitor with anybody else?
We were a bit behind entering the digital realm but with the acquisition of 1K and with my joining, along with the experience and background I’ve had of building up the Warner Bros digital supply chain when I was there, I would say that we are at least on a par with, if not ahead of many of our competitors, based on the breadth of digital opportunities that we can bring to the table. Some of our competitors have a digital supply chain in place but they might not have the ability to actually enhance content that they’re working on, deploy advanced technology or programming, or to add creative elements to it. At Cinram we have the ability to satisfy any client’s needs as our offering is not just a straight digital supply chain solution, it’s all the bells and whistles along with the creativity and technology aspects that go around that. Our goal is to truly partner with our clients and to deploy solutions that meet all of their needs, whether in the physical or digital pieces or a combination of the two, along with delivering advanced technology solutions.
I know that Cinram’s CEO Steve Brown has very strong views on the need to eliminate waste in the physical supply chain. Is there an equivalent in the digital supply chain, if not in a physical product, but in steps that could be cut out, or wasted effort that could be reduced or eliminated?
For the digital supply chain in general there is some waste because there are so many different formats and so many different types of digital files. Even though UltraViolet has provided a standard, each platform is still unique in the way that it wants to display/deploy content to its consumers.
I think it’s very similar to the way that a physical retailer wants to see that they have the competitive advantage on a Blu-ray Disc or on a traditional DVD because they have content that was made for them only via retailer exclusives eg, Target only or made for Wal-Mart only. There are different formats that the digital platforms want to deploy in terms of use of mezzanine files or transcoded files or what each platform is able to offer, Apple seeming to be the leader currently in terms of being able to add enhanced or additional content via Apple extras and LPs.
A different type of waste versus physical is introduced due to the different files needing to be delivered over and over again: you have an Apple spec, Microsoft spec, Amazon spec, Netflix spec, etc, and they’re not all the same.
The good news is that it’s not physical element waste due to proliferation of SKUs that requires the need to make all those different types, it’s just one mezzanine file delivered in a myriad of different ways, in many cases over and over, depending on the digital platform need. However I don’t think quite honestly that at any time in the near future every single retailer is going to want to use the same spec as everyone else because that’s where the competitive advantage is.
To eliminate some of the waste in both the physical and digital supply chains we’ve streamlined the need for multiple delivery of raw material assets by allowing our customers and clients the ability to send one set of core assets to us at Cinram which we can process and deliver both to a physical retailer or a digital retailer. By not requiring different assets for us to supply the physical side versus the digital side, that’s definitely eliminating waste. While on the digital side it is not creating physical waste to put out a new SKU, there is some waste created as streamlining is not fully evolved. However, we strive to get there soon via standards and new technology deployments.
