DISRUPTION IN HOLLYWOOD-AGAIN

Disruption in any business can cause anxiety and other stress related ailments, real or perceived, if you are in a business or market segment affected by disruption.

Of course, the exact opposite is true if you are involved in the business that is creating the disruption, feeling the highs of the success curve. In some cases, especially in Hollywood, some companies/businesses are on both ends of the cycle, in effect, caught in the middle.

It is not always possible to know when and where and under what circumstances the disruption will occur until the technology or other service offering begins to take hold in the marketplace. Often that recognition is past the tipping point and the disruption is well underway with no turning back.

Such is the case now in the traction that over the top content distribution has gained. The tipping point was actually a couple of years ago.

In Hollywood, for example, many content producers for feature films and TV have benefitted greatly from the vast sums that NetFlix and other streaming services have spent on acquiring content. In time, they began creating their own original content, as there is a voracious appetite for a steady supply of new productions.

The increase in the amount of content available on such services has helped to push people away from the networks and cable channels that comprise the linear TV universe, with on demand programming and time shifting through DVR usage a significant and growing factor.

Revenue for various subscription VOD services increased by 25% in the first half of this year according to a recent study.

Cord cutting and cord shaving are having an impact on the way companies all along the value chain have responded as has been seen with the plethora of offerings available from a wide range of distributors.

Hollywood has dealt with the disruption from TV several times in the past. It is not new to them.

For example, in the late 40s/early 50s as the early days of TV were taking hold, albeit with just a few channels, movie attendance dropped precipitously from its post war high of 1946. TV came to the forefront concurrent with the greatest generation, the returning veterans marrying and starting families which often precluded them from going to the cinema.

The studios responded in due time with creating content made for TV, starting with broadcasting radio and Broadway shows over the air before learning to develop original shows from comedies and dramas to what was the near ubiquitous made for TV movie, AKA, the movie of the week.

Audiences responded and TV grew significantly, spawning the innovative community antennas also known as cable TV, with newly created channels offering recycled Hollywood content before getting involved in creating original content, repeating the cycle.

Movies have also been disrupted by the changes in technology and in the way that competitive and innovative companies have approached cinema technology, all with the goal of bringing the consumer back into the cinema and away from their large screen home theater systems.

3D attempted to be one of the disruptors and succeeded for a time from a theatrical point of view while 3D TV was a bust.

While still a factor, the percentage of box office in North America from 3D has leveled off. 3D is still a factor with many new releases, but the focus appears to be on gaining market share in developing countries with an emphasis on China, now the #2 market in the world.

IMAX and other premium large format venues are gaining market share release after new release as a driver of attracting people back to the theater on a global basis. For tentpole releases in particular, consideration of a large format release is imperative and becoming increasingly so.

The advent of virtual reality and the potential to watch content, movies or episodic/TV/specialty content on a headset, may have an impact and it may be partially disruptive as well. Until such time that the various headset manufacturers, led by Oculus/Facebook, Samsung, Sony, Microsoft, HTC Vive and others that are in the wings actually bring their products to market, presumably in early 2016, we will not know what the consumer adoption rate will be and in turn its disruptive impact, if any.

Looking ahead, the innovation and disruption will continue as release windows continue to shrink for feature films and TV content producers and distributors all chasing the new normal in what may be a futile effort as there may not ever be a new normal.

The great democratization of the tools to create and distribute, and, in turn, to consume content is just at the very early stage of what will most likely be an extended cycle of change and disruption in Hollywood, with the impact being felt on a global level, more so now than ever before.

In fact the level of change is going to be more dramatic as the universe is significantly larger and more sophisticated than it was during prior disruption cycles. And as occurred in the past, the technology infrastructure is growing to accommodate the need to deliver to our devices anywhere, anytime.

Of course, this is going to repeat itself time and again as new and innovative ideas for content evolve and come to market and the disruption of Hollywood occurs yet again. You may not know it till it is in the rear view mirror, but it will be there. You can count on it.

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Written by Marty Shindler, CEO at iShindler, a unique husband and wife consulting team with Big 4 professional service firm and top 5 business school credentials. Follow on Twitter @MartyShindler

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