There is so much to write about nowadays. Today. There is so much to write about today.
But the key issue is that, in looking back over the history of the movie business, at each crunch juncture there was also significant opportunity knocking on the door. At each of these points of crunch or change, those who reached out for the future caught a wave and transformed the business. All of the primary junctures in the business of filmed entertainment have been driven by technological advancement, some in production, but more in delivery. We are moving further and further from the appointment with entertainment and more toward the finding and accessing of entertainment. Appointments will always hold their mystique and audience, but the bulk of entertainment as we go forward will not be by appointment but “On-demand.”
New Technology Create Consumer Choice
These waves have come faster over the last thirty years. A new technology does not any longer have two decades of free elbow-room. Based on DVD, with a ten year growth curve, new technologies may have a decade in which to run free, and then things will swing in a new direction. Contemplating this cycle speeding up can spin the head, but it will most likely speed up and proliferate. But key is the fact that new technologies offer new choices and freedom for consumers, certainly shown by the embrace of VHS and then DVD, and now we are on the cusp of VOD (Video On Demand) in all its myriad forms. On Demand describes the relationship filmed entertainment (filmed information) will have with consumers. They will have more choice, more ways to access that choice, and they will enjoy their choices.
Now, most large organizations are focused on building fences around their operations and fighting down competition, holding tight to their assets and charging as much for admission as the market will bear.
Rump organizations, start-ups, new producers are just looking for an outlet, any outlet. They are part of the competition. They want access to consumers, and they often see the large organizations as their path to those consumers. But new technology blurs those relationships, and producers can be distributors now. Even Rupert Murdoch looked at production and distribution gear and technology and predicted that there could easily come a day that the studios would be obsolete, producers would not need them for consumer access.
Double-Whammy Time
Is this missive a recipe or a specific plan for going through the double-whammy times we find ourselves in? What do I mean by “double-whammy?” We have truckloads of new technology choices, from mobile delivery capabilities to set-top boxes about to deliver ultimate choice straight from the Internet to the TV. This is opportunity. And it is disruption for standard business. This is one of the whammies, the disruption. Disruption causes job loss and changes in business. Look at the music business over the last ten years for a lesson in disruption. The other whammy is the financial contraction we find ourselves in; a loss of trust in the system. And the last eight years have been nothing, if not a steady chipping away at the foundations of trust. Now, finally, the financial system has stopped to look at its own foundations and found them less than solid. What in this house of mirrors do we now truly trust, and what do we jettison as distrustful. This is a contraction. And this stopping to examine and probe further has brought us all closer and closer to a halt, fearful we cannot expand because our previous expansion was not based completely on reality. The jig is up, in other words, and now we are left with a mess to clean up, like after a frat-house party held in a crumbling old mansion.
Who Has A Plan?
So, again, is this missive a recipe or a specific plan for going through the double-whammy times we find ourselves in? Well, no, but there are a couple of ideas that I have been working on as I watch the theatrical business wobble and falter, not only for good independent films but for bigger films by highly experienced and big-ticket filmmakers. It derives from my belief that every film is, ultimately, a marketing problem. The theatrical exhibition business is, largely, a marketing platform for a film’s follow-on delivery systems. With DVD being worth near 3 times theatrical exhibition, this is not hard to figure out. DVD is not growing, but it is still big. With 239 million DVD players sold in the US in the last ten years, if they were all still working, would provide two for every household among the 112 million US households. We have, in reality, greater than 90 percent DVD-player penetration. Over the last eleven years, since inception, 9.52 billion DVDs have been sold. 1.6 billion of those were sold in 2007, and in the first half of 2008, another 660 million were sold (about 10 million more than in the first half of 2007). We definitely are in a contraction, though, and so is DVD, with sell-through and rental both down in the upper single digits last year.
Technology Can Turn The Tables
But there are still a lot of DVDs to be sold. Rump players are less focused on the giant plays, and more on finding their own niche of customers. And new technology offers us ways to break through and market niche filmed entertainment to consumers without the fantastic expense of a theatrical release that can weigh down the Return on Investment. This is true for horror films as much as it is for art house dramas. Overcoming the marketing gap for these films is an issue I have been working on for a good deal in the last six months. I think there are very interesting ways to overcome it, but each film needs its own individual strategy.
In this time of double-whammy, can we find our way to embrace innovation and technology and deliver? Can we find opportunity. I think the effective business plans of these next several years will focus more on self-reliance, on being thoughtful about the path from concept to audience, and I think the next several years will embrace change and they will embrace the increasing interconnectedness of the world.
Within this I see nothing but opportunity. Opportunity for those who can innovate in their content, innovate in their approach to delivery, and innovate in their marketing, to build and grow businesses and careers.
And Don’t Forget The Power of Honesty and Trust-Building In All Endeavors
This missive is, actually, a call to embrace the opportunity within these momentous changes, and to embrace the opportunity to build a system of trust in all of our endeavors. We can all contribute to an atmosphere of trust in our business and in our lives, and if we do it in ours, we encourage others and demand that others do it in theirs.
I think there are many more Miramaxes to be born, though they may start looking more like Social Networking, or something else we might not even know yet. I think there are more delivery technologies to be innovated, more marketing approaches to be tried, and more businesses to be built, they just may not look like all of the other old businesses…
Onward and Upward
Jeffrey Hardy