Over the past few years the film production industry has been hurled into digital revolution. A multitude of new viewing platforms have emerged, from online services and mobile viewing to a growing number of successful Subscription Video On Demand (SVOD) services. This revolution has catalysed non-linear viewing models and greatly inflated the demand for both entertainment and advertising content, driving huge changes in the production value chain.

So what does this mean for content production? This report will delve into the changes in viewer behaviour and what this means for both commercial and non-commercial film and print. Through discussing these trends, we seek to highlight the many opportunities these changes could offer to both film-makers and photographers and how production services will support that.

The Programming Arms Race

Estimated Annual Video Content Budgets

SOURCES: 2013 & 15, IHS Market, 2017, Netflix & JPMorgan (for Amazon)
NOTE: Includes original and licensed content

IHS Markit World TV Production Report 2016 shows that online platforms Netflix and Amazon have ramped up their investment in programming, spending $7.5 billion last year – more than CBS, HBO, Turner and most countries, including South Korea and Australia.

The IHS Market Report also reveals that between 2013 and 2015, Netflix and Amazon more than doubled their annual expenditure on programming. In 2013, Amazon spent $1.22 billion; that jumped to $2.67 billion in 2015. In the same timeframe, Netflix spending rose from $2.38 billion to $4.91 billion.

Whilst these figures include both original content and licencing, Forbes recently reported that Netflix has a long-term goal of ensuring that nearly 50% of the content streamed on its platform is original.

The rise of SVOD services in 2016 has been significant, most recently seeing Facebook and Apple set to join the ranks of Netflix and Amazon in providing original longform content.

Whilst the market for SVOD grows, with consumers continuing to seek out ad-less viewing and highquality production, so have the budgets. Netflix and Amazon are set to more than double their annual spend on video content from 2013 in 2017, whilst Apple have set a budget of $1 billion to find the next Game of Thrones.

This has opened up many opportunities in production as traditional broadcasters also raise programming budgets to compete with their subscription on demand competitors.

What is clear is that consumers want more and they want it to be high quality. With the ability to curate their own entertainment, the consumer is king and the production world is joining the race to give them what they want.

As a content production house it is our place to understand what that looks like, aware not only of commissioning demand but also consumer behaviour.

Video Consumption on the Rise

Most of the content 10 years ago was text, and then photos, and now it´s quickly becoming videos. I just think that we´re going to be in a world a few years from now where the vast majority of the content that people consume online will be video. — Mark Zuckerberg, Mobile World Congress, Barcelona 2016

Cisco predict video will account for 80% of all internet traffic by 2019
By 2018, 90% of content on Facebook will be video-based

Wherever the programming arms race is driving the longform production industry, it has driven commercial content production in a different direction. With increasing numbers of consumers actively seeking viewing without adverts, brands and advertisers are looking for new and innovative ways to reach their consumers.

A large percentage of our work at Palma Pictures comes from the commercial world so it is important that we understand the unique production demands of brands and advertisers.

In 2016, trends identify that online video consumption is steeply on the rise and that advertisers are adapting their marketing briefs in order to take advantage of this.

Non-linear supply chain

With video consumption on the rise, marketers have reacted. Recent research shows that from 2015 -2016 global online video marketing spend increased from $13 – $23 billion and is predicted to grow year on year.

However, although global spend is increasing, campaign budgets are having to cover more content than ever before which is driving big changes in the production supply chain.

Not only is this due to changing consumer viewing behaviours which are forcing brands to innovate what they are making but also down to the fact that brands are expected to be ´always on.´

Brands are having to communicate with their consumers more frequently and more personally. Therefore more brands are commissioning short social videos and shareable online content to complement their traditional campaign efforts.

In order to achieve a balance of speed, quality and cost for all of this content, advertisers have been seeking new ways to work with suppliers.

2016 has seen a plethora of new production models emerge to try and address these demands. At Palma Pictures we are experiencing working with a number of new clients in the commercial world.

These can be anyone from the brands themselves, agency production outfits, post production companies with production facilities, production companies with creative offerings and editorially-led branded entertainment companies.

Other trends in content production

Artificial Intelligence

AI has been a huge topic across both the worlds of advertising and the consumer in 2016. Not only has there been a resurgence of sci-fi films about the technology, such as Ex Machina, Passengers and Ghost in the Shell, but we are finally seeing real uses of the technology filtering into our everyday lives through, smart phones, apps, computers and voice assistants.

Whilst many feel that the AI will never replace human creativity and filmmaking, there are many ways in which it is contributing to creativity in the industry.

An increasing number of companies are developing AI systems to aid in the workflow process but this year we have also seen some interesting developments in the creative uses of AI.

This year, IBM´s Watson created the first movie trailer for AI horror flick, ´Morgan´. Adobe also announced Sensei. In addition to machine learning and data insight the AI also has several design and image based capabilities, including working with editing software.

So whilst AI is most definitely going to infiltrate our workflow in the coming years, it may soon be part of our creative.

Definitely a trend to keep a key eye on in the coming year.

Editorial Branded Entertainment

Although branded entertainment is not a new concept for 2016, there have been changes in the way people are approaching the production.

Brands have realised that they must be creating content that their audiences actively want to watch in order for it to be effective.

Brands are beginning to act more like commissioners, in many cases creating whole roles for this within the marketing department. This has seen a rise in editorial publications opening content production agencies from Condé Nast´s 23Stories to Vice´s VIRTUE.

Interestingly, one of the most anticipated, critically acclaimed and covered films at this year´s Sundance film festival was Werner Herzog´s Lo and Behold, Reveries of the Connected World, which began life like any other marketing campaign, as a conversation between cybersecurity brand Netscout and its agency Pereira O´Dell New York.

With content like this being commissioned by advertisers there are huge opportunities burgeoning in production and editorial is providing an intriguing starting place.