I work with many leading international producers developing IP-based strategies, and in a past life ran creative development for the BBC department charged with inventing storytelling in a post-linear digital age. Both BBC staff and the producers I now work with are immensely talented, creative and well-informed – they deliver excellence time and time again. However, these producers have varying opinions about their place in the digital ecosystem, both present and future. Some have bosses so terrified of new media they have to pretend to be certain about their digital plans to placate their superiors. Others exist in a state of what can only be deemed as enlightened confusion and are hesitant to wade into the fray.

After carrying out the process of strategic creative development on content meant to travel between traditional and non-traditional platforms for the past 12 years, it’s since occurred to me that it might be useful to list some of the reasons I’ve identified for embracing the interactive realm and diving into digital for those still on the fence, or perhaps marked by trepidation.

A digital home’s where the heart is

The other day I came downstairs to find my five-year-old trying to move the pictures around on the TV screen with her hands. She saw me and asked, ‘Dad, why is the TV broken?’ With increasingly younger audiences being exposed to highly interactive screens everyday, children will come to automatically expect the engagement and interactivity that non-TV screens supply.

Moreover, a recent survey conducted by UK kid-focused market researcher Childwise examined the devices children own, the amount of time they spend using them and how much they care about them.

Not only did the number of hours spent interacting with mobile and PC screens combined outstrip those that children ages five to 10 spent with television, Childwise also found that only 18% of boys in that age group said they could not live without TV. Meanwhile, a full 57% of the boys declared computers/games consoles as their do-or-die devices. Notably, the numbers only get more decisive the older the children get.

Function and form

When the Wright brothers invented the airplane, they asked railroad companies to help fund the development of this new form of transport. The companies in question rejected the brothers’ pitch. To their detriment, they mistook their core business – moving things and people – for the technology they employed.

This moment in media evolution is akin to the transition from rail to air. Some producers will see that they have all the skills, experiences and contacts to make the jump, but others will mistake the platform they currently use for their core business-making screen-based entertainment.

Smart producers will use every opportunity they can to develop an understanding of the ways in which character development and storytelling skills can be applied to creating new formats to make the most of these emerging platforms and technologies.

From pages to places

Virtual worlds often evoke images of chatty, fuzzy avatars or shopping malls populated by surgically enhanced digital denizens, but as the online space evolves, it’s transforming from ‘pages to places.’ In other words, online is recreating experiences previously only provided by real-world places and the communities they house.

The number of global registered virtual world members attests to the fact that audiences/users are very attracted to these spaces. A recent report from international virtual world specialist KZero, in fact, shows kids are also the fastest-growing group of registrants. KZero estimated the number of accounts belonging to kids ages five to 10 increased from 100 million to 114 million in the first nine months of 2009, while tween/teen (ages 10 to 15) memberships shot up by 100 million to a total of 334 million globally.

Follow the money

Crudely there are two ways to pay for content production – either a commercial organization funds it via advertising or some other brand visibility, or users pay for it up front.

In relation to ad-supported content, more money was spent by advertisers online than on television for the first time in the UK in 2009. Put simply, the money which used to fund TV production is moving into digital spaces, lowering the license fees paid by linear broadcasters. However, the reason the content got made in the first place – i.e. that products are inherently uninteresting and audiences need to be entertained to endure ads – hasn’t changed. So it’s reasonable to expect that brands will increasingly fund digital content production.

In relation to user-funded content, resistance to paying for things online is diminished every time someone buys a product from Amazon or uses PayPal. Even purely virtual goods are proving themselves to be increasingly valuable. Facebook regulars are happily kitting out their Farmville abodes and sending their friends virtual gifts, and KZero predicts the revenue derived from virtual worlds will rise from US$2 billion to US$9 billion by 2013.

Users = money

The only people I ever hear telling me it’s not possible to make money online are TV people trying to generate revenue from television content in digital spaces. ‘You can’t make money out of TV online,’ seems to be a more accurate statement. Surprisingly, you also can’t make money from putting radio on TV.

The truth is that it’s possible to generate revenue from content designed for online consumption. Average Revenue Per User (ARPU) now sits at about US$1.40 for every active virtual world member-not just premium subscribers, but everyone visiting those sites.

With well-known worlds like Habbo reporting a global membership of more than 145 million, and niche brands such as WeeWorld or Moshi Monsters attracting 30 million and seven million members, respectively, the economic argument speaks for itself.

The numbers also scale quickly. If, for example, you were able to create a site that handled micro-transactions and attracted 200,000 visitors a month, the revenue on an ARPU of US$1.42 would be around US$3.5 million in the first year.

Subsidize production and stay creative

Ad-funded television production is being transformed by the emergence of the digital space. A fragmented TV market puts downward pressure on licensing fees. So there could come a point in the not-too-distant future when TV series will only get made to promote another facet of the brand that already generates enough cash to subsidize production and distribution. This is currently common with merchandising-led properties. However TV networks remain nervous about kids TV shows made explicitly to sell toys. The digital space offers opportunities to keep the focus on the content, but still sell both digital and real-world experiences and objects direct to consumers at the peak point of engagement.

From average to special

The next generation of televisions will be internet-enabled, and quickly the differentiator on broadcast’s stronghold platform will become convenience. Digital content will be available on-demand, while broadcast content will be available only when a network wants you to see it.

Traditionally television has created value by launching hits in local markets with limited choice. This has become harder and harder to do as the market splinters. As a result, in fear of alienating a fraction of the increasingly fragmented audience, commissioners (and I was one) are under subtle and not-so-subtle pressure to pick up ‘average’ content that offends no one.

But consider this – in an on-demand universe, why would a viewer ‘demand’ a show that was in any way average? Globally available on-demand content derives value from super-serving niche global audiences with unique content that feels tailored to the end-user’s tastes and preferences. This is great news for inventive producers as the ability to create unique content with the power to seduce global niche audiences is about to become the premium attribute.

Owning the audience

One of my client’s series recently drew a record audience to the channel airing it in their territory. Ratings spiked just before the show in question aired and fell right off when it was over. The license fee paid to my client covered a fraction of production costs, leaving dwindling international fees and DVD sales to make up the shortfall while the broadcaster’s ratings and audience share benefited from a brand my client created!

If my client sold this content directly for the price of an iTunes single to 25% of the viewers regularly watching it on the aforementioned terrestrial channel, they would have returned a significant profit, with the revenue from the rest of the world registering as pure gravy.

The good news is that digital media creates the opportunity for creators to reap the rewards of their creativity by reclaiming the customer and forming a direct and monetizeable relationship with fans.

Moreover, owning detailed customer data is of huge value when offering additional products and experiences based around a brand, as well as when developing and launching new properties and products.

Finally…

Someone told me the other day that a colleague had been fired for calling out a web address prefaced by ‘www’ because ‘it’s just understood that all URLs carry that prefix.’ And another friend related that halfway through a meeting with a network, one of its executives exclaimed in a fit of pique, ‘I wish I could just turn the internet off!’

Whether your organization is desperate to be perceived as so tech-savvy that it will fire people for a precarious lapse in digital etiquette or it’s so frustrated by digital uncertainty its executives suffer touretic outbursts, there is no doubt that most media organizations find the current speed of evolution a bit dizzying – at best it’s occasionally bewildering, at worst it’s a source of constant terror. Perhaps this list will help you meet either scenario with a little more calm confidence as we move forward together.

Jesse Cleverly runs London-based Connective Media (www.connectivemedia.tv), which specializes in crafting transitional digital strategies and implementing them via customized IP-based solutions.