A shakeup of the traditional business models, culture shock, data taking on a whole new status: Emmanuel Durand, Senior Vice President, Marketing for Warner Bros France, explains the revolution now underway in the entertainment industry.
Emmanuel Durand, author of ‘La Menace fantôme – les industries culturelles face au numérique’ (‘The Phantom Menace – the entertainment industry faces up to digital’), has been working for a long time on the issue of disruption in the entertainment sector, which has taken on even greater importance for him in his current role as Senior Vice President, Marketing, Innovation and Data for Warner Bros France and Benelux.
In this interview with L’Atelier numérique (L’Atelier Digital), which was recorded for the BFM Business channel, he sheds light on the upheaval that digital technology is now bringing about in the creative industries without painting this as a catastrophic development. Upheaval yes, destruction no. And he believes moreover that collection and use of data could in fact be the saviour of entertainment companies.
L’Atelier: The Warner Bros Group is involved in both the production and distribution of films and other entertainment products and it’s natural that players in your sector should be following technological developments very closely. So…a very broad question: how has Warner Bros been changed by digital technology?
Emmanuel Durand: Well, digital has impacted Warner Bros in various ways. The first – very positive – change is that nowadays people are able to view our content on a much greater range of screens. The growing use of tablets – and also smartphones – has increased our ability to reach the general public with the various material that we produce.
However, new business models have appeared, which in one way or another tend to destroy value. We’ve moved away from a model which was essentially based on ownership of a tangible product to one based on having an experience – which is linked to rental or subscriptions.
“We have to support the development of new modes of digital consumption even though we know that they’re cannibalising our existing businesses. And it’s not easy learning to accept that we’re eroding our own business”
So how is Warner Bros coping with content dematerialisation and the trend towards bulk subscription – both happening at the same time?
When you’re an incumbent firm, and under attack from this kind of disruption, the greatest difficulty is managing the clash between the new business models and the existing ones. It’s perhaps harder for an existing company to reinvent itself than for a new firm to set up in business from scratch. For us it’s a matter of being able to juggle things and find the right balance between the two planks, one of which is our existing business.
For example, DVD sales are falling steadily. We’re in the process of managing, cushioning the impact and we’re well aware that there’s no way sales of these physical products will ever start to grow again.
We have to support the development of new modes of digital consumption even though we know that they’re cannibalising our existing businesses. And it’s not easy learning to accept that we’re eroding our own business.
“We’re all having to learn now. We all have to hone our curiosity, be able to experiment and accept mistakes without castigating the people who make them”
And what have you put in place, in concrete terms?
Well, in terms of organisation, the enemy of innovation in these situations is the silo. So at Warner we’ve set up what we call a ‘country management’ structure, in France and other countries, which brings the various Warner divisions together under a single umbrella in that country, so that we can adjudicate optimally between one model and another, without creating too much internal conflict. That’s the first point, and probably one of the most important things.
The second has to do with company culture. In this business there’s a strong sense of vocation. Expertise is highly regarded. However, that very expertise, which is ordinarily a great asset, can also create obstacles when you have to cope with disruption.
Having great expertise can prevent some people – and it often does prevent management personnel – from calling their own role into question, moving away from a ‘know-all’ stance and taking a ‘learner’ approach.
We’re all having to learn now. We all have to hone our curiosity, be able to experiment and accept mistakes without castigating the people who make them.
OK, so you always try to back your staff up. But what has changed for Warner Bros’ customers? How do you get close to them, how do you create customer loyalty? Can you do this through loyalty programmes such as My Warner?
Yes, absolutely. And in other ways too. We’ve seen that the multiplicity of devices and types of content is creating the notion of hyper-choice. Now this is a rather new phenomenon, and it tends to reduce the value of the content, which is after all our main asset. But at the same time as content value is falling, the value of personal recommendation is on the rise.
So we have to try and stop being media-driven, reduce our dependence on the mass media and become data-driven, so that instead of a splashy advertising drive we use data to make high-added-value recommendations to our end-customers. This is precisely what we’re now in the process of doing at Warner.
“Data is like housework - you only notice it when it’s done badly”
So you can use a loyalty programme like My Warner to recommend certain films, along the lines of Spotify and LastFM, which recommend tracks to given audience groups?
Well, that’s what we’re aiming for, yes. It can of course be done in various ways, such as adapting an advertising drive to focus on the consumer’s taste, using the information we’ve gathered – which is a less intrusive approach. The key factor there will be ensuring that what we’re saying to the consumer is fully relevant. Data is like housework - you only notice it when it’s done badly.