Cinedigm’s Chris McGurk says entertainment companies need to embrace change quickly – Media Play News

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Cinedigm CEO Chris McGurk (left) with moderator and Forbes contributor David Bloom at the 2022 OTT.X Fall Summit.

Stephanie Prange

Reviewing his long career, Cinedigm Chairman and CEO Chris McGurk said adapting quickly to new ideas and technologies is key to successfully navigating the entertainment market.

Speaking during an Aug. 31 presentation at the OTT.X Fall Summit in Los Angeles, he noted that over the years, “the one constant has been profound change.”

“In a business where the only certain thing is rapid technological change, you have to be prepared every year or two to review your business model,” he said.

He recounted several key experiences during his career that led him to embrace new ideas. At the Walt Disney Co. in the early 1990s, he was tasked with visiting tech giant Steve Jobs to discuss distribution toy story, with its innovative CGI animation. At the time, Disney was focused on showcasing its traditional animation business.

“That was going to be the engine that was going to propel the business,” McGurk recalls, adding, “The fact is, there was a huge, raging debate about whether we should distribute toy story or not.”

During a meeting with Jobs, he recalled telling the tech giant, “Some people at Disney don’t want to do this deal because they consider it blasphemy.”

“Some people at Disney are idiots,” Jobs replied, McGurk said.

McGurk noted, “We embraced the new technology and look what happened.”

In a later experience at MGM, he recalled the studio’s successful shift from trying to compete with major studios on theatrical releases to focusing instead on a cutting-edge product: DVD.

“We saw technology as the answer, and by then the DVD business was starting to take off,” he said. Thus, MGM made film a “side business” and “built an operation that could make more money from DVDs than anyone else”.

At Cinedigm, McGurk has also embraced new technologies. After going through a transformation into a streaming company a few years ago, executives began to see that competing in the subscription business could be a “losing proposition for us” with the big players in the market.

“We started looking at the growth of connected TVs and improving the relaxation experience,” he said. This shifted thinking to the free, ad-supported model the company now champions.

“I think we launched our first FAST channel in 2018,” he said.

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Now big players are moving into the ad-supported model, including Netflix, where executive Reed Hastings had always shunned ads as detrimental to the streaming experience.

“He eats crow now,” McGurk joked. “But in the long run, they’ll do just fine.”

Ad-supported streaming has a bright future, he said.

“The ad dollars flowing into the streaming business are definitely going to increase,” he noted.

Cinedigm plans to avoid the big players.

“Our strategy is to let the big guys kill each other, why we’re launching add-on channels,” he said, noting that the company has channels that are “very targeted at a very specific fanbase,” like the Bob Ross chain.

He sees consolidation coming among big streamers.

“Those who are in big debt and thumb their noses at the creative community…they won’t be there,” he said.

The days of simply mustering heaps of subscribers and pleasing Wall Street are over, he said. Profitability and cash flow have become essential.

“They see things differently than they did a year ago,” he said, noting “we were profitable last year.”

Engagement is also important for streamers to serve ads.

“We try to superserve those enthusiastic fanbases,” McGurk said.

For example, Cinedigm has teamed up with Bloody Disgusting to bolster its horror content, complete with an accompanying podcast.

The Bob Ross Channel, featuring the late painter, is the company’s most successful channel, he said, noting that Ross is “like Mister Rogers to Millennials and Gen Z.”

As part of Cinedigm’s exploration of AI, recommendation engines and other technologies, the company plans to create a “deep fake” Bob Ross.

“We’ll see where it leads,” he said.

In addition to ad-supported models, international expansion is also a big opportunity for streamers, as most countries outside of the United States are lagging behind. Cinedigm likes to partner with local operators to penetrate overseas markets, he said.

While the company has 46,000 independent titles in its library, on most titles Cinedigm only has North American rights, so the company is trying to increase the percentage of global rights in its library.

McGurk thinks the future is bright for independent content creators. Previously, “you had a system that was controlled by six or seven major studios,” he noted. Now there are “hundreds of opportunities to access eyeballs”.

In the next three to five years, he sees consolidation.

“You’ll probably lose two or three of the biggest streamers,” he said, adding that there will be “more channels and fewer companies.”

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