There's no business like show business? Oh, you better believe there is. If there were ever a parallel to be drawn between the banking industry of late and any other business, it is undoubtedly the world of entertainment, which has undergone a remarkably similar sweeping transformation brought about by the advent of new technology, collision of distribution mediums, and rise of nimble, visionary powerhouses who vanquished the complacency of the Old Guard.

The entertainment business-much like banking today-has had to survive radical change, much of which hinged on industry consolidation, globalization and product commoditization. Sound familiar?

Seeing a golden opportunity in the lethargy of traditional players, shrewd strategists-Time Warner's Gerry Levin, News Corp.'s Rupert Murdoch, Disney's Michael Eisner, and Viacom's Sumner Redstone, to name a few- literally took the industry by storm, dealing particularly forceful blows to the once seemingly invulnerable broadcast networks of ABC, NBC and CBS. The tycoons placed greater emphasis on development of rich content and multiple distribution capabilities-

both of which have curried favor with the consumer market. Consider Time Warner's track record: The company is responsible for one out of every three movies ever made in the United States; it produces 30 percent of the music business worldwide; it produces 40 percent of all television; 70 percent of all paid television revenue is generated by it; and 30 percent of all cable systems in North America belongs to it, says Christopher Dixon, managing director of media and entertainment for PaineWebber.

Further, News Corp. broadcasts 24-hours-a-day via satellite link to New York, London, Sydney and Taiwan-and that's just for internal management purposes. The communications giant has 257 separate operating divisions that run under three currencies-U.S. and Australian dollars and British pounds-on every continent in the world, such that it can effectively reach 70 percent of the planet instantaneously, Dixon says.

So it should come as no surprise that the broadcast industry-once dominated by three networks and the limited content they selected for the American viewing audience-now operates within a commoditized cable field of approximately 70 channels per urban market and an international satellite broadcast landscape that averages 200 channels per provider.

Content is King

Who wins and who loses in the entertainment world is quite simple: It comes down to content development and distribution to capture consumer mindshare. The same can be said for banking. So the real question is, what do the entertainment elite know that you don't?

In answering this question, banks must face three truths: One, content is king. Do viewers watch Seinfeld because its on NBC or do they watch NBC because Seinfeld is on that network? Two, great content is nothing without an effective distribution strategy. The best products in the world can't sell if they're not delivered to consumers how, where and when they want. And three, brand recognition is paramount. Consumers are not going to surf through 200 channels to find what they want to watch; they will, however, go to channels that they know and like.

The "war for eyeballs," as Intel CEO Andy Grove puts it, is an ever- escalating battle as television, video, and PC channels continue to multiply, pumping more and more content into increasing electronic pipelines that feed into America's homes. "We have a tremendous amount of entertainment options today," says Michael Wolf, partner and head of New York-based Booz Allen & Hamilton's media group. "Everything from motion pictures to video-we have some cities with as many as 100 channels of cable programming. There is just a huge, huge glut of product." And though the actual number of content providers is shrinking, the dominant players are exponentially building their product offerings to cater to individual viewers. Similar to the banking industry's influx of nonbank players, the advent of cable programming forced the three broadcast networks, who had dominated the airwaves with programming for mass audiences, into a niche programming paradigm, where the likes of CNN pulled in news junky viewers and MTV landed teenage music "vidiots," eroding key network market share. And the erosion has continued; today, there is a totally splintered home entertainment audience.

Filling a Niche

The broadcast networks, once defiant and resistant to niche marketing, now have their own segmented programming, like ABC's ESPN sports stations and Lifetime channel for women. NBC has proven even more innovative, launching CNBC, the country's preeminent business channel, and MSNBC, a slick joint venture with Microsoft designed to grab the Internet surfer's mindshare and position NBC comfortably in the midst of a new medium. "One of the things we keep telling our clients, who are trying to defend their positions, is you are better off niching yourself than letting someone else niche you," says Wolf. NBC's CFO Warren Jenson agrees, "From a strategic point of view, you're going to want to go to market with a number of different services so that, as you come up against a Time Warner or a TCI on the cable side, or ultimately it could be Echostar or DBS (Direct Broadcast Satellite) on the direct to home satellite business, you're going to have to be in a position where you're really offering more than one service to them." The key to content becomes target marketing to defined audiences, a strategy banks are now embracing, but the entertainment community is raising to an art form.

Niche marketing is just the beginning; the real work comes in trying to differentiate content from the breadth of rival companies' products. "Wait until you have video-on-demand," says Michael Bloomberg, chairman and CEO of Bloomberg News, who defines video-on-demand as consumer-driven, high-speed Internet broadcasting. "If you want to own your own television network, all you need is a PC. There will be an enormous increase in offerings because the cost of goods sold goes down dramatically, and the cost of distribution is negligible. At that point in time, the question is what differentiates. And there are two things: quality and brand awareness." These two factors are absolutely essential to how banks must distinguish themselves as well. "What's the difference between one bank and another? Fundamentally, the product is still the same," says Bloomberg. And while the entertainment industry has always catered to consumer market demand, "(Banks) have got to learn a lot about how to market to consumers."

The key to quality content lies in answering two questions: What do viewers want, and what's the best way to give it to them. Bloomberg, NBC and News Corp. have determined that viewers now want information, not raw open-ended data, but knowledge that helps them reach a conclusion or end. And that's how these companies have packaged their content offerings. "Information is becoming a very important part of people's lives and how they make decisions," says Booz Allen's Wolf. Seizing this trend, the entertainment industry is rushing to market, along with a few other players like Microsoft, to deliver the latest in news and advisory services so that viewers come to rely on content providers as "tools" to make life decisions, thus the success of Bloomberg News, CNBC, MSNBC, Martha Stewart's Living, and The Learning Channel, among others.

By the same token, banks must become financial services "integrators," such that consumers come to banks to get information so that they can make the best financial decisions, and further, access the best deals on product. Thus, banks must be willing to refrain from only pushing their proprietary products and services and actually suggest mortgages, loans and investments that are best for the consumer. This will be a tough transition for banks, says Walter Jewett, svp of the financial services group of Booz Allen & Hamilton. "The (integrator) role (means) providing alternatives which cannibalize the basic banking products. But the issue is, can you be an effective distributor if you distribute primarily your own products? It's hard to imagine."

The Art of Presentation

It's clear that banks have to play the role of integrator. If they don't, someone else will. Intuit is intent on building an on-line financial services "channel" (in an interactive, entertainment network sense of the word). H&R Block, Charles Schwab, Microsoft-they all have on-line financial services "information" channels in various stages of development.

So how should banks compete? Not only by becoming integrators, but also by presenting and marketing content in an impressive manner so that consumers will turn to them first. Banks must optimize each delivery channel and present content according to the abilities and limitations of that channel. "You have to write for the medium, says Bill Savoy, president of Paul Allen's Bellview, WA-based venture capital firm, Vulcan Ventures, and a member of the DreamWorks SKG board of directors. "Years ago, when the movie camera was first invented, people would film stage productions and play them. It wasn't a very compelling experience. (Once film makers) started to use the technology as an intricate part of the story, (movies) became successful. So when we made our investment in DreamWorks, we made it largely because we knew that Steven Spielberg and Jeffrey Katzenberg understood how to tell a story. And they understood how to use technology as an element of telling a story."

One of the few banks to demonstrate comprehension of this entertainment-driven strategy is Citicorp. CEO John Reed hired Edward Horowitz away from Viacom earlier this year to head up the banks Advanced Development division. Reed hired a man who knows that content development is not just about good product; it's about good product that the bank can sell effectively. So as Horowitz builds his group, he is looking for persons who understand alternative distribution media-particularly the Internet-and how to tell a story in a variety of ways such that Citi can effectively get its message out over every distribution technology. But Horowitz doesn't see such talent in the banking industry. "There are a whole bunch of story tellers in the TV world that are becoming proficient at telling a story in the on-line environment. And these are the people that I want."

Beyond quality of product and presentation, the real goal of story telling is to attain consumer brand loyalty so that when consumers think about financial services, they think of your bank. And though several institutions like Citi, First Union and KeyCorp have launched advertising campaigns to raise brand recognition, "fundamentally, we see limited branding in financial services," says Booz Allen's Jewett. Not so in the entertainment industry, which has been battling for viewer attention in a glutted channel market for years. And nowhere is the brand story better told than in the recent NBC-Microsoft launch of MSNBC, which enabled the television network to push its name into the emerging Internet market and, arguably of greater consequence, enabled Microsoft to carry its name further into the mainstream as well as enter the television content development and distribution markets. And here's a thought to give bankers pause: Should Microsoft choose to develop a financial services offering for this dual platform station, banks without a well-branded "network" will have to work within Gates' channel.

Broad Vision

What makes Microsoft and the entertainment industry giants so successful is that their CEOs have a broad view of their corporate missions, says PaineWebber's Dixon. Their vision is not limited to the industries they currently inhabit. Broadly stated, Rupert Murdoch's overall mission, for example, is to deliver news and entertainment to consumers. To that end, News Corp. owns 20th Century Fox, the Fox cable network and the direct satellite company Sky, for starters. But if Murdoch limited his perception of content distribution to, say, cable, he would never have the vision to profit from the emergence of direct satellite television. Similarly, banks must think of themselves more broadly as financial services providers and embrace emerging business paradigms. If they don't, banks could go the way of, well, dare we say, dinosaurs.

-bers tfn.com

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