In our latest Screen Wars Executive Interview, Sparrow Advisers Principal and Co-Founder Ana Milicevic joins Cross Screen Media CEO Michael Beach to share her expertise and recommendations for innovation in digital entertainment, including opportunities for matching distribution models to consumer demand. Read the full transcript below.

Michael Beach: Hello, and welcome to another edition of Screen Wars. Today, it’s my pleasure to welcome Ana Milicevic to the show. Ana is the Principal and Co-founder of Sparrow Advisers. Ana has deep, extraordinary background in the advertising and MarTech space. In addition, she puts out an excellent weekly newsletter where they take a deep dive on one or more topics every week and it’s definitely a must read for our team. Ana, welcome.

Ana Milicevic: Thank you.

MB: First question: what was your first job and what lessons did you take away to prepare for your career?

AM: This is a very US-centric question. I grew up in Europe where first jobs can be hit or miss or really come much later in life.  I feel incredibly fortunate that I lucked into my first job that ended up being almost perfect. When I was still in high school, I worked as a translator for the National Television Service. And it’s about as glamorous as it sounds. You would type up translations on your computer if you had one, which I did. Many of my colleagues were still using typewriters at the time.  You would go to the studio and queue them up on this machine that imprints the actual subtitle on the live broadcast or the recorded broadcast and hit enter a lot, making sure you’re queuing up the right translation to whatever is actually happening on the screen.

It just gave me a really detailed appreciation of all the work that happens behind the scenes to have a TV show go live or be broadcast and really all the things that need to come together for a video program to hit the air.  I got to spend a ton of time in control rooms and play with equipment that normally you wouldn’t really have access to. That was a really, really cool experience and one I really cherish to this day.

MB: That’s excellent. That’s actually one of the rare ones that ties directly to the space today.

AM: Yes, it wasn’t that obvious back then that this was going to be how it all turned out.  Now looking back, it all makes sense.

MB: How did you get your start in the marketing and Convergent TV space?

AM: I started on the digital side. I’m an engineer by training and fairly early on in my career, I figured out that I was really good at translating different things to different people, so going back to that translation job, number one, right? Whether that was technical requirements to business folks or business requirements back to technical folks, that propelled me into a slew of high profile product management roles back in the day when product management wasn’t really established as well as a discipline as it is now. Jury’s still out if it’s actually very established today, but at least when you say you are in product management today, there’s some recognition of what that might entail versus when I was starting out, there really wasn’t that awareness.

I was always fascinated by both the broadcast ability to reach a huge number of people with the same message at the same time, and then the narrow cast ability and what that looks like in a digital scenario. I got to do a lot of cool things very early on, in the early aughts and the mid aughts, just as digital video was starting to take off.

Later on in my career, as I was in more senior roles, on the adtech, martech analytics and technology side, I really got the glimpse of linear video as well. Mainly through trying to interpret what viewership means in digital or linear channels and again, how to translate one for the other’s audience and vice versa. It was one of those things that doesn’t feel very intentional. I didn’t really set out to be a media exec. It kind of happened because that’s where my interests and all of this other stuff that I was working on happened to converge.

MB: You’ve got an incredible background; do you mind giving more background on Sparrow Advisers and where they sit in the space today?

AM: Sure, we just turned five this summer.  Which for a fairly young company sounds simultaneously surreal and also too short. We alternate between those two modes on any given day. My partner and co-founder is my sister Maja, so we’re a family media business.  We both saw a really big gap in the market as we were progressing through our own individual operating roles, which has really proven our thesis over the last five years.  In this media space, we’ve become very siloed in what we focus on, so there were very few companies out there, if any, that could really help you piece together the entire picture. Whether you were a brand, where should you be placing your advertising dollars? Where should your attention be going? If you’re a buyer, which platforms should you be surfacing and working with? If you’re a seller, how to position yourself.

There really wasn’t someone you could turn to help you with all of that. So very selfishly, because we wanted to have that kind of service in earlier roles, we built it. And that was five years ago. We brand ourselves as a management consultancy and we work with everybody in the space on solving big, gnarly, strategic problems that then also require some type of operational excellence to execute.

MB:  I’ve gotten to catch several of your talks, especially here in the recent months about the high level understanding of if you’re a marketer, this is what the networks are thinking, or if you’re a network, this is how the consumer is moving. I think how all that plays together is obviously a strength.

AM: I like the puzzle metaphor really.  I think it’s incredibly apt here where a lot of senior execs, if they’ve grown up in a linear background or coming from a completely digital background, they see their part of the puzzle and have a very, very clear understanding of what’s happening there.   Just a few pieces over, they don’t really have anywhere near that level of understanding.  So it’s very easy to focus on the wrong things when you’re looking at building your product roadmap, hiring a new team or approaching market and that’s really where we shine.  Don’t waste your time and energy on efforts that are not going to be commercially successful.

MB: Absolutely. And recent news, as we’re recording this, Regal Cinemas announced yesterday that they’re going to close down more than 500 theaters across the country, and not a shock, but you’ve seen different studios and individual releases take a different tact. And you’ve got one blockbuster goes direct to home rental. You’ve got another that goes into the theater with disappointing results, at least domestically. What are your top line thoughts in this and what impact do you think this is going to have on video and then entertainment as a whole?

AM: Yeah, that was probably the most shocking, but also completely anticipated news that we’ve gotten in the media ecosystem. I think it’s a really tough time for theater operators. It’s a tough time for studios, but then none of this should come as a surprise to them. I think the pandemic is just accelerating some of the trends in reduced viewership, at least here in the US and in western markets that have been in play for quite a while. And the focal point of the global box office has been shifting slowly towards China.

I think I’ve always liked to look at it from a perspective of opportunity. I think this is a great time for premium VOD because not only are we actually stuck at home, there’s literally nothing else to do but sit and consume media, watch exciting films, play e-sports, games or whatever.  You’re definitely on your couch in your home.  So if we’re not experimenting with pay-per-view levels of pricing for premium VOD right now, when do we get the chance to do that again?

I think it also exposes really the lack of agility in a lot of media and entertainment. When you look at the amount of time that studios have to put in place, a much more agile way of promoting movies and not having a very high level budget attached to every title and then going and reacquiring users for every single one of the subsequent releases. Not having an audience that they could reach out to for movies that they know worked in the past, “Here’s a new one,” or, “Here’s a sequel,” or similar, but just continuously relying on reacquisition seems like a really outdated way to look at things.  There are very few studios and production houses that have really approached audience level data as an asset, not just for audience acquisition purposes, but also for production decisions.

When you look at the companies that are currently successful, the Netflixes of the world, but also studios like Blumhouse, the one thing that they’ve led with is leveraging data and insights and information for optimizing their entire production and release budget.  I think when you look at some of the more traditional studios, it’s pretty glaring that that’s an entirely missing bucket of activities that they can’t deploy overnight, but if they started working on it right now, they could see some results within a still important time period, like six to 12 months maybe.

It does seem like it’s a bit of a reckoning. I do think that the shift in consumer behavior is going to stick around even after we’re out of the woods here.  We’re not all going to run back to theaters.  Part of it is just the sheer economics of it. I mean, in a major market, you’re looking at easily $100 to take a small family out to the movies. And that’s just between tickets and a couple of popcorns.  At the same time we are talking about, a $30 PVOD release that you can watch, even pause for two days, but that seems like it’s too much of an investment because we have this perception that digital content really isn’t as valid as a real experience.

I think as we are seeing this careening into a ravine on the theater side and the studio side, we also need to watch very closely how consumers perceive the value of PVOD. We know that there are certain events that command a high ticket item, like pay-per-view sports events. So why wouldn’t Christopher Nolan’s Tenet, a really hotly anticipated film or the new James Bond, why can’t they have a similar level of monetization releases is the question that I want to leave in the virtual room.

MB: It’s interesting. When you even look at the revenue splits, the difference between what a theater chain would take versus what Disney earns from Mulan if you purchase it directly through them, there’s an opportunity to actually make more money with a much lower top line, as long as it doesn’t all go to Apple or Roku, I guess.

AM: Exactly, and I think in the short-term, it’s really going to benefit companies like Blumhouse. I’m going to try not to mention them in every sentence. I love everything that they’ve done, they are really a great case study for this where they’re very smartly optimizing commercially and still delivering the types of movies that audiences go absolutely wild over. They have so many cult hits that it’s just wonderful to see somebody be so methodical about what will work in entertainment.

MB: Let’s stick with media companies. From their perspective, what are they missing when they look at AVOD or SVOD or even just more connected TV in general?

AM: That’s a very gnarly question. I think a lot of media companies are caught with, “Oh, we must do something about this right now,” and are not really taking that step back to understand what does AVOD or SVOD or PVOD look like with their particular content and assets. Rather, they’re all kind of trying to mimic one another.

We see now in consumption patterns that consumers aren’t just going to keep subscribing to SVOD endlessly. There’s room for maybe three, four max in every household, maybe even less over time we’ll see. Those are going to be occupied by Netflix, Prime, Hulu, Disney, and that’s about it. If you’re not one of those four … Maybe HBO makes the cut … one of those four or five leading platforms that have a lot of awareness already, they have a lot of pull in terms of cultural relevancy, and have a lot of marketing dollars to continue investing in customer acquisition.  You have to figure out a different path.

For example, do the economics work if you have a small, but super engaged niche community, like some international offerings, like for example, for French speakers, all French content or similar, or a particular vertical of interest? What we’re not really seeing enough of is that kind of, not me too thinking, but, “Hey, here’s where my uniqueness is in the space and this is why I need to launch this type of service in particular.” I think the biggest offender here is probably Quibi with their rather interesting launch and go to market coupled with a very, very generous marketing budget that seems to have fallen flat. I think that’s a really good cautionary tale for newer entrants in the space who are basically going with a me too strategy.

My advice would be take a step back, really evaluate the assets that you have. Maybe you don’t have a data strategy. Maybe you don’t have a partnership strategy. Maybe you don’t really have the tech capabilities to do this on your own. Start from there and then adjust how you’re going. You don’t have to do something just because CBS Viacom has done it or somebody else has.

MB: One constant theme from our community, especially if you look at the more traditional media, whether it be the media companies or the advertisers or the networks is in there’s this disconnect between how these companies want to make money and how the consumer wants to consume content. Is this something you agree with and why?

AM: Yeah, I think that disconnect is particularly huge and there are a couple of contributing factors to it. I think a lot of the large media companies with roots in linear television never really had to think through what the future looked like until recently. I mean, they could always rely on a really strong ad-supported line of revenue up until 2016 when digital became the bigger spending category. There’s always this juggernaut and it’s always going to be there if you have linear assets.

I think that part of the challenge here goes back to that initial silofication between the linear TV people and the digital TV people. Which we’ve reduced now in the industry, but it still persists in some media companies.  It really is as if one group is speaking French, the other group is speaking Turkish, and they’re not quite understanding each other very well.  It’s very hard to have a cogent strategy moving forward if everyone still maintains their own P&Ls and has their own separate technologies, separate teams and it just seems like they’re yelling over one another.

The good news I suppose is that it’s not just limited to media companies. This dichotomy exists on the buy-side as well. It exists within agencies. It exists within brands and their awareness of where they should be advertising. I joke that that’s a good thing, but maybe it’s not, because that just means that there are more silos that potentially need to be broken down for us to really have a functioning industry.

MB: What are your thoughts; if the silos came down on the buy side, would you would see the media companies and networks shift, or is that something that you think a media company could deliver, a product that knocks those silos down?

AM: This is where I think this is very generational and that it’s not necessarily going to be a media company at this stage. I think traditional media companies got us to this phase and pushed things like TV Everywhere, which was a big move in the right direction, but was executed in a really strange way from a consumer perspective. We track this as entertainment going D2C and really going direct to consumer now so that you don’t necessarily need a distribution network of some kind. We can just get that from Netflix or from Prime or similar. I think it’s going to be a generational shift where the leaders of the media industry are now stepping up or have already.

What I would like to see the most is on the buy side, really.  There needs to be a change in awareness of where you can find the audience that you need, and I think that as we’ve seen now, there are a few companies that are saying, “We’re no longer doing upfronts. That stuff doesn’t make sense for us anymore.” These are large companies with significant budgets.  Usually when they make that first move, then a lot of smaller companies follow, and it seems that change happens very quickly.  There’s a certain layer of intermediaries that needs to collapse rather than silos.  Individual media owners or buyers collapsing on their own also needs to happen for this to work better.

MB: Much of our focus normally is on the US market, but I’m sure our community would love to hear your thoughts on how our market differs from other countries and regions. Politics aside, are we unique or are these same challenges global?

AM: Some of it is a global challenge, but really the bulk is the US.  The US media market’s very different than most other markets. For example, the cord cutting here might not be such a big issue in other markets where the proverbial cable TV providers are actually much more attuned to what customers in their respective regions want. The interesting thing is that a lot of the technology is actually predominantly being developed for the US market.  It’s having an effect abroad because you’re getting product features and functionality that might not necessarily make sense for your native market because of the outsized influence of the US market.

I’d say you always have to introduce that in conversation with international folks, is that here in our market, these are the challenges that we’re seeing right now with things like a lot of opportunity to shift from upfronts to scatter market or to shift your buys in different ways to lesser known but still pretty sizeable networks, which in countries with a smaller population or differently developed media ecosystem might not be an option.

There’s always that to reconcile. At least the technological solutions originating out of the US tend to have a very US first and US-centric view. It’s a little bit of a reckoning when you go and expand into another territory and they’re like, “Well, this doesn’t make sense for us. No thanks.”

MB: That’s an interesting point in on the cord cutting. Do you think the reason it is less of an issue in other places is a price thing where our bundles prices are going up so fast, or is it the offering is more in tune with the changing  consumer?

AM: It’s a mix of both, but I think there are some markets that have a very comparable price point to ours, the UK being one of them. The offering seems to be much more well-attuned to consumers’ perception of whether or not they need to have a cable cord. In the Middle East, in particular, there have been these experiments to have a full digital VOD service earlier on, and so these have been quite successful compared to our own efforts here, which I mentioned TV everywhere. I think that was one of the really poorly implemented great ideas of our media age. It really varies. I think that in a lot of places, cord cutting has always been positioned as primarily a price issue in the US and I think that’s somewhat deceptive because to the entertainment going D2C part of the trend I was referencing earlier, it’s not so much the price. It’s that the offering is no longer a fit for what consumers need. And by that, I really mean linear offering without sports or a live component that’s super necessary for you to have and to access.  The whole shift from, “Hey, here’s a bunch of pre-programmed content that you can just passively consume,” to, “I want to watch this on Thursday evening. This is exactly what I want to see and then that’s it.” It’s easy to miss if you’re operating with the mind of a media programmer, but it’s easy to see if you’re looking at it from a consumer shift perspective.  I think that’s what a lot of media companies missed, because if they hadn’t missed that consumer shift, maybe they could have adapted with a more direct offering sooner.

MB: Definitely. And looking back, more high level, what’s the biggest change you’ve seen in the video ad marketplace?

AM: That’s a great question. Over the last five years since we’ve been Sparrow, there’ve been a lot of smaller, pretty impactful changes. We talked a little bit about that shift in ad spend. That’s obviously a momentous change and a lot of newer things vying for people’s attention, but also for wallets and media landscape change there.

I think the biggest shift is really one of perception. Even as recently as five years ago, whenever you talked about digital video and in particular AVOD and SVOD, you’d get the, “Oh, that’s cute, but it’s not television,” kind of feedback. In 2016 when the ad side of the equation shifted in favor of digital, it became kind of like, “Maybe this digital video is actually for real.”

When you talk to peers who’ve been at this for a longer period of time, you can pick up on the frustration immediately like, “Well, but this is what we’ve been saying since the early aughts.”  Some people even earlier than that. It’s just now becoming an acceptable thing in the industry to say that the future is digital video or video, not television. I think that’s what’s going to accelerate some of these conversations pretty drastically.

I did mention it’s also a generational shift. I think a lot of the executive tier folks are retiring or close to retirement. Some new leadership is coming in that can really drive a lot of change reasonably quickly. I’m excited about that part. I’m very excited to no longer have to deal with the folks who would very openly say things like, “Well, I’m a few years away from retirement, so why rock the boat now?”  Things like that that I still can’t believe I’ve heard with my own ears, but have several times.

MB: I’ve heard, “My youngest kid’s already in college.”

AM: That’s a popular one.

MB: Yeah. It’s hard to believe for me. I can think back to big moments like, you got Adobe Experience, like TubeMogul being acquired by Adobe and I thought the market was so mature at that point. And to hear you say 2016 was a watershed moment just shows how early that really was.

AM: Just to take you back, I was at a premium video company in the early aughts, the mid-aughts. It was maybe 2004, I want to say, 2005. We were figuring out how to put video on devices then. This is when broadband was not still everywhere, pre-smartphones.  We were having those conversations then and going into distributors and saying, “Hey, there’s all this ancillary content that you’re now leaving on your editing room floor that can be really compelling as digital shorts and these behind the scenes things and all this cool stuff.”  They were literally looking at us like aliens, like, “What are you talking about? Why would anybody want to watch that?” That was not that long ago.

MB: No, it’s not. You might’ve already answered this, but what’s one development that you’re most excited about looking forward?

AM: I don’t know that there’s really one. I think I’m finally seeing the glimpses of this media ecosystem that I hoped would already be here, but in the spirit of picking one, I think it has to be PVOD. I feel like we’re so close to nailing that as an experience for premium. And I see so much opportunity for content owners to reimagine how releasing content could look like now.

You look at what successful e-commerce companies are doing with time drops and even Nike selling out a really expensive shoe in a matter of minutes because they know how to talk to their audience and how to prime it. I envision a similar kind of release schedule for a really high budget films. If you’re a super fan of Christopher Nolan’s, for example, how much is it worth to you to be among the first 10,000 or 100,000 people in the world to see his next film?

There’s so much that we could do here that’s now actually technically possible that wasn’t possible just a few years ago.  Imagine if we had no constraints, legacy constraints, no movie theaters, none of that, what would be the most impactful way of releasing content today? This is an exercise I like to take my product teams through. Works with a lot of our clients as well is, if you were building your business from scratch today, how different would it look? What would your tech stack look like? How would you take it to market?

If you look at things like that with fresh eyes, you come up with a very, very different scenario than, “Well, we’re going to have movie theaters in malls. There’s going to be a lot of popcorn on the chairs, on the pathways and whatnot and this is going to be a really great experience for everyone.” No, it’s not. It’s not a good experience anymore, so yeah, PVOD. Let’s do it.

MB: Last question; given the current environment, if you could get your entire team to read one book, what would that book be and why?

AM: Well, we’re talking about video, so let’s pivot that away from books for a second and to video. There is actually one show that I cannot stop talking about because it is just perfect on so many levels and it’s Cobra Kai. If you haven’t seen it, it’s 20 out of 10 on scores. Cobra Kai was a show that YouTube, their premium channel … I think it was YouTube Red, or maybe it was called something else. They initially developed it. And it’s based on Karate Kid, the characters from Karate Kid. Original cast is still here, but completely reimagined. It does so many things so well for this media landscape right now.

It works with mobilizing nostalgia. It is a really good story. You get attached very quickly, it’s bingeable, and it’s really gone from an okay success when it was in YouTube land. Now that Netflix has taken it over, it’s turned into a global phenomenon, so it also speaks to that need to have the right content on the right platform for it to be really, really impactful. That’s my recommendation. There’s two seasons. The third season is coming in January and a fourth one has been greenlit already. It’s really, really good fun.

If you don’t want to watch something and want to read something, because this space evolves at the pace it evolves, it’s very easy to forget what came before and it’s also very easy to forget some of the very impactful decisions, whether legislative or otherwise that have really driven the consolidation of the media space and led to where we are today.

I actually have two book recommendations by the same author. It’s Tim Wu, and he’s written The Master Switch and Attention Merchants.  That’s the order that I would read the books in. The Master Switch is about the early telco boom days that led that to the current media landscape, the cable media landscape, let’s say, and then Attention Merchants picks up there and really looks at what we’ve done with attention since in the digital realm. But Cobra Kai is more fun.

MB: I have to ask a follow-up on that. I had a debate with someone the other day. Do you think Netflix makes hits because of its homepage and the power, or are these shows hits because they’re great shows?

AM: I think it’s because they’re great shows, but also because they really know which audience they’re going to appeal to. With something like Cobra Kai, that’s a more mass market show. They also have really niche shows that are very, very successful and they require cult followings and the messaging there is quite different. I think you would use the power of the Netflix homepage and it’s more applicable to something that has more mainstream potential versus something that’s more niche, you would market it differently.

I think that’s going to be another interesting realm for content creators to try to figure out is how can they promote their content through ancillary ways. Whether it’s by mobilizing communities, by paying for advertising themselves on Facebook or similar so that they can build towards… gaming’s the wrong word, but utilizing the Netflix recommendation algorithm in their favor, too. This isn’t limited just to Netflix. It’s every platform that has some type of surfacing algorithm, but I see this as an emerging area for audience acquisition experts that reside with studios or distributors. I’m assuming there are such people.

MB: Ana, it’s been a pleasure talking to you, and I know our community is going to love the conversation. Thank you very much for your time.

AM: Wonderful. Thank you. This was so fun.

See the rest of the Screen Wars Thought Leader Interview series here!

Ana Milicevic is an entrepreneur, media executive and digital data innovator. As principal and co-founder of Sparrow Advisers she and her team of strategic consultants work with companies across adtech, martech, ecommerce, and media on strategy, scaling challenges, product, go-to-market positioning, new market launches, innovation, services, and global field enablement. Earlier in her career Ms. Milicevic has held key leadership roles across product, strategy, technology, and services in early stage startups, high growth scale-ups, and established global companies like Adobe and SAS. She is a frequent speaker on topics of data management, cross-channel marketing analytics, customer experience, innovation, and emerging markets. She can usually be found in New York City, on a plane, or on Twitter as @aexm

Cross Screen Media is a marketing analytics and software company empowering marketers to plan, activate, and measure Connected TV and audience-driven Linear TV advertising at the local level. Our closed-loop solutions help brands, agencies, and networks succeed in the Convergent TV space. For more information, visit CrossScreenMedia.com.