Andrew Pelekis

Crafting the Future of Entertainment with Claynosaurz

There is a whirlwind of activity around us at Claynosaurz: preparing for an upcoming conference, hiring team members across the board, and getting our ducks in a row for fundraising to name just a few. We’ve just moved into a new office. It smells like fresh paint when we open the door, half the desks are made, and we’re waiting for carpeting in our screening room. All of it coming together in due course.

It’s at times like these that its most necessary to sit down and organize one’s thoughts.

For months we’ve been building our original 3D character brand, made up of our cute clay dinosaurs. We’ve had success thus far, and now we are moving into the next phase of our growth.

Thinking about how we grow is the fundamental question. For months we’ve iterated around a variety of original strategies. Some have stuck, and others have led us down rabbit holes comprised of dozens of meetings and many hours of research. Going through this exercise is not time lost, but necessary planning.

Now, sitting here, smelling the paint and building desks, feels like the right time to put it all down. So, let’s start by framing where Claynosaurz lives and competes the entertainment sector.

Where does the industry stand today?

The entertainment industry has shifted dramatically in the last ten years with the advent of on-demand streaming, social media, and lower production costs. Consumers have more choice than ever before, and anyone can produce and post their own content with just their phone. This has led to a hyper-competitive environment in the industry.

This trend is accelerating. Here’s a chart of the share prices of Disney, Warner Brothers, Paramount, Lionsgate and AMC over the last five years:

Forget all the fancy lines and charting, let me zoom in for you!

There’s a real struggle. Streaming services have performed better over that period, but the quality of content is quickly falling apart. How many of us spend more time browsing than watching content? And how often is that content disappointing? We call this The Race to the Bottom.

Before we get to the solutions, we must ask ourselves, how can these studio giants be lost? It seems odd that such a vast pool of resources, both in terms of talent and capital, would be getting this so wrong.

Old Entertainment Oligopoly Paradigm

Motion pictures were a massive step forward for the entertainment sector. Before this time entertainment was limited to live shows: dancing and singing, comedic performance, and musicians. Motion pictures were to entertainment what the moon landing was to space exploration. A big step forward, but inaccessible to the average person.

In the 1920s, movie studios developed as large corporations to amass the resources needed to produce and distribute motion pictures. This was the only way to produce film, as costs were too high for individuals to pursue this format. Up until the 21st century, not much had changed. So much so that only a handful of large studios existed. We all remember the beginning of each film in the ’90s — Disney’s castle, 20th Century Fox’s big block letters and sky lights, Universal’s globe, Lionsgate’s roaring lion… Not much else.

Large studios were the only producers of movies due to the cost to develop and distribute this media. This led to an oligopoly. Without competition there is no meritocracy, and studios didn’t need to produce a stream of great content. Whatever was produced would have some level of marginal success.

In any sector, the closer you get to a monopoly, the further you get from innovation. There is no need to sink money and time into research and development, for there are no competitors chasing your tail.Andrew Pelekis, CEO

In any sector, the closer you get to a monopoly, the further you get from innovation. There is no need to sink money and time into research and development, for there are no competitors chasing your tail. This leads to complacency. If you don’t believe me, you don’t need to look back too far for an example. Netflix revolutionized distribution, the studios watched for years, so much so that not only did they choose not to compete, but they also licensed their own products to Netflix itself. They fed the very beast with whom they’d one day find themselves toe-to-toe.

What’s Changed?

We boil it down to three fundamental changes over the last 20-or-so years:

1. Lower costs: Production and distribution costs are now so low that any of us can film and post content with the phones we have in our pockets. This introduces a much more competitive environment, one where a short clip recorded at near-zero cost can accrue as much viewership as a movie with a $100m production budget.

2. Distribution diversity: There are numerous avenues by which the consumer can be entertained. Social media, streaming services, gaming, podcasts. Not so long ago, we were limited to linear television and cinema. The ability to choose what we wanted to watch on demand was limited to Blockbuster.

3. Gaming: The improvement in quality and accessibility to gaming has engaged users in a more dynamic matter, which results in a higher level of satisfaction. Younger generations spend more time on games than other entertainment. The quick feedback loop and instant gratification results in strong retention.

Source: Newzoo Consumer Research

We believe that these changes mean that there is a necessary shift in the approach to curating and building an entertainment brand. Let’s draw the entertainment landscape broadly, based on content type:

Gaming is at the top of the innovation curve. It has remained competitive since its inception, with more new entrants every year. This has resulted in innovation and development of games that truly attract and nurture their users.

Micro-Visual Entertainment is the name we give short burst clips that users scroll through infinitely. These live on social media and open-sharing platforms like TikTok. These platforms are designed to accrue value for themselves. They spit out distribution at lightning speed to the consumer, relying on volume for retention. This serves platform but does not cater to brand building.

There are success stories at the creator level, but these are few and far between. Most often, their strategy relies on competing by creating a voluminous body of low-quality content and hoping to go viral. This is a tough model to replicate, and even for those that do go viral, retention is very difficult.

Visual Storytelling has taken a back seat to these other categories. Within this category there is an oversaturation of reality TV, which we qualify as everything from contestant-based competition shows all the way to YouTube vlogs. Certainly, some of this content is entertaining, but it’s the product of unscripted, quick production with the intent of getting to market quickly and cheaply. We believe this is due to a higher level of competition; and it has led to a slew of lower quality content.

There are few high-quality entertainment brands being built out of these dynamics in the story telling category. Higher quality comes from planning; that is, scripts, storyboards, and intent. There are shows and movies being created, but average quality has dissipated, and successful content is born out of a wide-net approach that is too costly to remain sustainable.

While a high-quality approach requires more resources, there is space to move up the quality curve at a pace that is more reasonable, somewhere in between the unplanned iPhone vlog and studio production quality content.

We believe there is an opportunity to reinvigorate high-quality Visual Storytelling, through a community driven approach. This being an intermediary step that allows the brand to invest only the resources it needs to get to an earlier version of its product, testing the content early. Successful testing leads to an initial fanbase and early adoption. This is the Community Driven content approach.

We will get into a pointed discussion about early testing and community building, but before we do that, we want to succinctly describe the most important considerations for the new paradigm.

New Entertainment Paradigm

1. Shorter attention span: With far more options at their fingertips, consumers quickly click from one social media app to another, from one streaming service to another. Micro-Visual Entertainment has users scrolling for hours with algorithmically generated content. If attention is not captured quickly, the user moves on.

2. Interactive: Users are veering towards more time spent on video games at a younger age and onwards. The ability to interact, rather than sit and watch, means that users engage differently. There is more satisfaction for the user. Interactive elements give a sense of control through instant action-reaction loops.

3. Multi-platform: Options are no longer limited to one TV channel or another, or the pick of a movie at Blockbuster. There are multiple social media apps, streaming services, and video games. Entertainment brands should be considering their existence across all these platforms. Alternatively, they should consider existing on a platform that is capable of retention relative to other platforms.

4. Marketing pull (rather than push): The days of commercials in between shows, and trailers at the beginning of movies are long gone. We often search for what we’ll watch next by quickly glancing at vignettes across Netflix or Prime. Marketing cannot be pushed in front of consumers; it needs to call to them. Pulling consumers towards your brand is a matter of quality and word-of-mouth marketing.

Solving for these four things we believe the best approach is a content platform, one that captures attention quickly, offers the ability to be interactive and includes multiple interaction points. If this is done well and the content is shareable — that is, the quality is strong enough and speaks to a wide audience — then it will pull consumers in.

This is a platform that competes at the same level: as an icon on your home screen, rather than a vignette on an ever-changing carousel, that is dictated by an algorithm that you can, at best, “game”. Other platforms are generally distributing a vast array of different content. The platform is branded for itself. The content sitting inside of them has no advantage and is at the mercy of what the platform decides. This is where entertainment brands go to die, where one vignette cycles with another and only lasts on the front page for a few short days.

Entertainment brands should build platforms where the user is immersed in the brand itself for the benefit of the brand. Gaming does this well, but Visual Storytelling does not.

These platforms need to have a retention strategy that does not rely on volume alone. Distribution platforms compete through sheer volume because they are loyal to no entertainment brand. The user clicks on the platform’s icon, hoping to find something great due to the volume available. While big marquee shows do help with this, there are other ways to supplement retention strategies.

Gaming does a very good job of this, adding leveling structures, leaderboards, daily-expiry interactions, and a sense of ownership and pride over your account or character. There are ways of adding these tools into the experience, without developing a larger game, but by laying them on top of video content.

We’ve laid out our take on the entertainment industry, what adjustments should be made and where potential opportunities exist.

In Part 2 we will explore specifically where and how we intend to build a competitive entertainment brand platform for Visual Storytelling.

This will lead us into Part 3, where we will explain what we are building.

In Part 4 we will lay out what we believe the future looks like as we adjust for the new paradigm.

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Andrew Pelekis, CEO

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