Why the Movie Industry Can't Innovate and the Result is SOPA
steveblank.com
steveblank.com
But the inertia of the studios is only part of the story. Large actor's unions, e.g. SAG, also oppose drastic changes, because they understand the current model and don't want it to be disrupted too much. This is similar to how teacher's unions are generally against efforts like the Khan Academy. Remember that many actors (e.g. Charlie Chaplin) in the 20s were against the introduction to sound to movies due to precisely the same kind of intellectual and business inertia.
One of my favorite quotes: "Institutions will try to preserve the problem to which they are the solution."
Not only preserve it, but increase it if they can.
Maybe large companies do this because they fear change because change is much harder for large companies.
The problem isn't the movie industry or piracy, it's the relentless fight for control that the pushers of a dying business model want over you.
Their sole job is to make money
And governments should be careful as they are walking a very thin line. A French revolution can always happen again.
Now I understand that rights protection organizations are useful and necessary in many cases, again all I'm saying is that if you feel that the MPAA is being abusive and of little value then you should speak up to free yourself from them.
This is why it kills me to see a different wing of the movie industry essentially pitting itself against high tech. I'm not going to dispute another key point here - much of the legislation being pushed by the studios could be very harmful to technical innovation. We're at the point where people on hn are starting to talk about boycotting not just those corporations but the people who work for them.
Sad to see this in an industry that does such wonderful, innovative tech work in many ways.
The problem is that they tend to place these folks -- or any of their people ostensibly charged with "innovation" -- in isolated silos. Typically they'll hire a handful of "innovation" people, most of them ex-McKinsey consultants, but a lot of them tech people, and put them in a sort of internal consulting group. This group will have no P&L of its own, and no real authority to change or mandate change. And it will be tasked with influencing the rest of the company to change. As you can imagine, it's a recipe for failure.
And even this is a symptom of a bigger problem: silos, silos, silos. Every department might as well be competing with the next -- because nobody talks to one another, people are constantly politicking against one another, and nobody wants to fund a win that shows up on somebody else's P&L. The whole thing is very reminiscent of "Game of Thrones," actually. Each studio is host to a bevy of competing fiefdoms, and the heads of the fiefdoms are constantly plotting each others' downfalls.
And even the studios are, themselves, fiefdoms within much larger media conglomerates. The head of the Disney movie studio, for instance, still answers to the head of The Walt Disney Corporation, and competes for his favor with the heads of ABC, ESPN, Theme Parks, Licensing, etc. And the head of The Walt Disney Corporation is beholden to Wall Street and quarterly reports. (Big risks and disruptive strategies are extremely hard to implement when you've got quarterlies to answer for).
If you ask me, these companies have grown too big and unwieldy to innovate properly. I'm not saying that in an antitrust-activist sense, but rather, in the sense that it's extremely hard to get everyone within a giant conglomerate on the same agenda when the goal, business, and job description of each P&L leader is so wildly different from the next.
None of this is meant to be an apology for the entertainment conglomerates, but rather, an observation. It's an observation born out of intense personal frustration, of course, at having seen the same patterns over and over again. At the end of the day, "innovation" is a very easy word to preach, but a much more difficult word to implement.
At the same time, I get the sense that a tipping point is very close at hand. Producers, writers, actors, directors, and other talent are themselves getting very tired of the same old studio game. And many of them are seeking out innovative deals with tech firms, brands, and other direct-to-consumer channels. All it takes is a handful of breakout hits -- shows, movies, or what have you -- that occur outside of the established Hollywood distribution system. The second you've got a legitimate hit series only on Netflix, or a direct-to-Amazon smash hit, or a Facebook series drawing in more viewers per week than a network show (very feasible), Hollywood will take notice, and it'll start getting serious about rethinking its approach. It may be too little and too late by then, but that's how these things go.
[Sorry for the tl;dr text wall!]
Or, more likely, they'll start lobbying for a new law ;)
In his biography of Jobs, Walter Isaacson writes that Sony had “all of the assets,” including a record company, to create its own iPod. “Why did it fail?” he writes. “Partly because it was a company … organized into divisions (that word itself was ominous) with their own bottom lines; the goal of achieving synergy in such companies by prodding the divisions to work together was usually elusive.”
What Is Sony Now?
http://www.businessweek.com/printer/magazine/what-is-sony-no...
This could have easily blown away the ITunes Store we know today and if i remember correctly Sony`s CEO was the only one opposed to the proposal of Steve Jobs. Did he had something like this in the pipeline he would never had agreed to it.
I don't think Studios will ever innovate from within. Its gonna take an outsider who can create unique content and make their own decisions about distribution. If I were a producer I'd be thinking about how to make low-budget episodic content that could be distributed over Netflix/Kindle/AppleTV/Youtube/Facebook.
I know there are plenty of people working on this, and it's going to be interesting to watch and see what emerges. Pass the popcorn.
Interestingly, there are a lot of big-time and smaller producers starting to think this way. And I know, at least anecdotally, that a lot of those would-be recipient companies (Netflix, Amazon, Facebook, Google) are trying to develop internal groups to service such deals. (Microsoft, too, is seeking to build out a big original content group as we speak; it is actively trying to poach Hollywood creative execs).
Which one of these companies will get the first hit? It's tough to say. All of them have top-notch distribution pipelines. Any of them could be very fertile ground. I suspect it'll come down to which, among them, get the most serious about the content business. Serious in the sense that they'll make original content a big corporate priority, will funnel adequate funding into said initiative, will not shake up that group or initiative every five months (as typically happens at companies dipping a toe into this industry), and will commit to growing it if it starts to bear fruit. And which, among them, has the least organizational inertia/politics/complexity working against such an initiative.
But there's another layer of Hollywood, the indie production companies, that has been a world of what are essentially startups, and that's existed for decades. The ability to innovate isn't just available, it's almost essential to those folks.
So Hollywood can innovate, and can do so quite well, actually. Independent producers are as good at what they do as anyone in silicon valley. One of them, or a group of them, will stumble on a model that is wildly successful and then the herds will follow. It'll happen.
Producers bring the material and content expertise directly to the tech companies, who can function as distributors (and need not get their hands too dirty on physical production or development).
The big Hollywood studios should have really died at the end of the '60s-early '70s. But then the likes of Lucas, Spielberg and Coppola came along and they won themselves another few decades. But unless something similar happens in the next couple of years they're going to go the way of the dodo, simply because, artistically speaking, their movies are shit (pardon my French).
There's no artistic innovation, there's no connection between what they produce and the audience (I want to see a poignant a movie as Rambo I was, damn it!), they're too scared to "indispose" the political administration, they've just turned themselves into a propaganda machine (and they're no Eisensteins, mind you). And for all those that think "Hollywood is too big to fail!", just think about what happened to Cinecittà or to the Japanese big studios like Toei or Nikkatsu.
Netflix is trying this on Feb. 6 with a new original series, "Lilyhammer."
The trailer: http://youtu.be/bfRgVbp9gSY
Steven Van Zandt of "The Sopranos" and Bruce Springsteen's E Street Band is back as a Gangster - this time in Norway...
http://www.prnewswire.com/news-releases/a-netflix-original-s...
I do think they're pretty close to the mark on music these days. The cry of "radio will destroy us" is rather silly in hindsight because radio is still a physical limited system. I can only tune in X stations, signal isn't always good, and I'm limited by the realtime aspect of station X only playing Y songs per day. Instant access to all music (or, a very large subset) all the time means ... a big shift in how people consume and think about music. Bigger than most big companies are ready to deal with.
What I'd like? $10-$20/month for instant streaming access to all movie content from X major studios. Another $10-$20/month for instant streaming access to all OTA/Cable channels. When I say all I mean all - every movie in an archive going back to the dawn of time. Every episode of every TV show that was aired (and maybe some that weren't). I'd even be content with not having access to current stuff. I don't particularly care about being "up to date" with whatever the latest shows are - I much prefer going through entire series after the fact.
Index everything - make it searchable. Let me search up actor FOO, find the shows he was in, and go watch those scenes. We're close on some aspects of this, but still so far away.
All of this content exists, somewhere. Yes, it'll take time to convert it to online. But that's a one time expense (big as it may be). And the 'long tail' effect I believe would justify people spending a nominal amount per month to get at all the old stuff whenever they want. There's no value in movie X sitting in a vault.
Once all the technical barriers are gone, there still remains limitation of one human's capacity and ability to cope with huge number of titles, artists etc.
Try as I might, it's not feasible for me to consume more than about 16h/day of music and movies, regardless of technological progress.
Moreover, it takes nontrivial amount of time and effort to just find music and movies matching your taste, limiting the theoretical 16h to way less. Back then all one had were his and his friends' LPs and a handful of radio stations. Now I /teoretically/ could access any music -- but I'll rather listen to something my friends, or (a business opportunity here!) an advisor recommends for me.
There is, and will be, a natural scarcity in multimedia in any foreseeable future, with our cognitive capacity being the ultimate limiter. And there will still be mad money to be made by picking the right track and show for the consumer.
Also, digital preservation is not a one time expense.
I like the idea of a subscription model for a complete catalogue of content too, but it's not really feasible. Imagine if someone said "I want to pay $20/month to be able to download and install all software ever written".
The only thing preventing it is the content owner's attachment their obsolete business models. I'm sure many people in the media industry realize this, but they earn their bonuses in the present, not in the shiny future. But make no mistake: in the near future, we will have ubiquituous access to most cultural artifacts of the human race, regardless of the business model.
However, delivery is only part of the puzzle. Divvying up the pie is orders of magnitude more complicated. One suggestion might be to take all the money brought in by a subscription system and distribute it based on what percentage of total views each piece of content got.
But... not all content is created equal. Think about it for my software by subscription example. If Angry Birds gets downloaded 100,000 times in a given month and AutoCAD gets downloaded 1,000 times, should Angry Birds get a 100x bigger piece of the subscription revenue? Also, the catalogue would never be truly exhaustive because the writers of ClarisWorks might be impossible to get in touch with, or might not agree to the terms of the marketplace.
When taken in its most general terms, Hollywood's business model is strikingly similar to that of venture capitalists: "spend a lot of up front money to make something now, and hope that it generates even more money down the road". There's nothing Hollywood would love more than to give up their bonuses in the present for a future where content created now will continue to bring in small amounts of money for the rest of their lives.
I probably come off as sounding too sympathetic to Hollywood. SOPA is pretty clearly the wrong answer to a question very few people were asking. But I think we do ourselves a disservice by downplaying the complexity of the problem.
It's a simple, mathematical fact that the current people paying for films and television are paying much, much more than your hypothetical $30/month.
New content is simply not available at the present quality level for the price you are offering.
To put this in perspective, it'd be similar to telling Apple/iOS developers that instead of buying apps a la carte, you want to spend $1/month and get instant access to every app, both paid and free -- the math doesn't even remotely add up to compensate the people writing the apps.
Hollywood, both for feature films and for cable is insanely competitive, with massive downward price pressure every single year. There simply isn't the amount of overhead to be removed from the system that people not in the industry seem to think there is.
"New content is simply not available at the present quality level for the price you are offering."
I'm not sure either of these statements hold up. People may be spending more than $30 a month on movie-related entertainment, but a large portion of those dollars don't end up in the pockets of the content creators. It's like saying that a $10 CD can't be less profitable for a musician than a $1 MP3.
A large percentage of the dollars that consumers currently spend on entertainment go to the channel rather than the creator. I'm sure if Louis CK had distributed his recent video via traditional channels, the total dollar volume of the purchases might have been 10x higher between pay cable, DVDs and downloads. But he, as the content creator, might have made less money (and certainly would have had less control.)
As for downwards price pressure, the average price of a movie ticket has been rising for years while studios watch ticket volumes decline. Where's the price pressure there?
Watching BBC programs, for example - or maybe 70s NBC dramas - there's huge vast collection of back catalog stuff that simply isn't doing anyone much good sitting in vaults. If I knew I had access to all of that stuff for a flat rate, it's be much less worth it to hit up pirate bay.
Yeah, we may not really be talking one flat rate, but I'd love to pay BBC $10/month to have access to all their back catalog. And NBC. And CBS. And ITV. And ABC. Wow - gosh, I might just be willing to pay $50/month for all that stuff. But yeah, that'd mean they'd have some work to do - one time work - to make continued ongoing revenue streams. Without even having to put up ads!
When it comes to innovation and changes to the way the world works we're faced with two competing sides:
1) Let innovation take over and increase all things good to the consumer
2) Protect jobs
Once the MPAA/RIAA or whatever finally realize that their role is no longer to play the middleman between the artists and the consumer there will be massive job loss. Its not my job to envision where these workers will migrate but its an unfortunate truth of life when processes become automated and require less people in the whole scheme.
And that's primarily how people maintain support for the associations instead of piracy or streamed content. Those ads in the theater of the key grip going "piracy is killing my job" is the pity response they're trying to drive from us. The Key Grip in reality shouldn't be hurting MPAA should be. They haven't realized yet that their role in the process isn't worth the same amount as it was 10 years ago and they're refusing to take a pay cut as a part of things.
WoW has made more money than any movie ever will. As the top shelf creative types realize the winds have changed, you will see a brain drain. The next Spielberg or Lucas will work for a game studio, and the movie industry will never get them back.
As far as I know, there's no such thing, only estimates based on e.g. the subscribers base. These estimates are generally in the $1bn to $1.5bn range (edit: per year), and usually on the lower end of that range, since ~2008.
Which definitely does not put any given WoW year at the top of grossing movies (but still in a healthy position, 10 movies so far have gone beyond a billion gross). Still I think a fairer comparison would be to movie franchises, if we put WoW's total revenue around 5~6bn it would rank #2 behind the Harry Potter franchise ($7.7bn) and before James Bond ($5.1bn).
However, I think it's fair to say WoW is an anomaly in terms of revenue. Even more so than billion-grossing movies.
Yes, and it may be WoW has to fade away for another MMO to succeed at that level, which limits upside growth for the industry. People who see movies will see multiple movies over the course of a year, but MMO players tend to play one at a time. It's a different model - service vs. product.
I'm not sure that's a very fair comparison, since WoW made it over nearly a decade now.
The top-grossing movie (Avatar) made $2,7 billion in theaters alone. 2011 alone has seen 3 different movies beyond a billion gross, and that's excluding home video, broadcast and merch.
And movies have the advantage of hollywood accounting.
Especially considering how well developed the internet has become, I can't imagine how these companies have continued to thrive.
Hollywood isn't opposed to the "internet" as a technology; they just want to control it.
That said, lack of innovation could be related to the historic divorce from distribution channels; their business is content, not medium, and that's why they don't put resources into medium development. I don't know enough about the industry to say for sure, though.