
Why the Movie Industry Can't Innovate and the Result is SOPA - grellas
http://steveblank.com/2012/01/04/why-the-movie-industry-cant-innovate-and-the-result-is-sopa/
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Jun8
I don't know about "can't" but the reason why the studios _won't_ innovate
alternate business models is simple and is another example of the classic
Innovator's Dilemma. The studios are huge companies embedded in other, even
bigger companies, so there's a large amount of inertia. The MPAA is just the
symptom of this. Go through the list Blank mentions: none, I repeat , none of
those advances came from the industry itself, it was always some outside
influence that the movie business resisted and then had to eventually deal
with.

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."

~~~
tintin
This is why I think Apple is more or less behaving the same as the movie
institutions. I think it's strange because Apple can be innovative. But lately
they try to sue everyone to preserve there dominant position.

Maybe large companies do this because they fear change because change is much
harder for large companies.

------
gerggerg
The movie industry _does_ innovate. They've been innovating like crazy. Tons
of new tech and innovations come out of the movie industry. It's the MPAA that
doesn't care to innovate. The MPAA doesn't produce anything. They just
want/need control. Their sole job is to make money and any time you have an
organization whose sole purpose is to make money, they're just going to want
control.

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.

~~~
bad_user
MPAA's actions can be attributed to its members. MPAA cannot exist and act
without its members' approval. Witness how BSA initially supported SOPA, but
then backtracked, probably because some of its members weren't too happy about
it.

    
    
        Their sole job is to make money
    

When freedoms are attacked because some fatso feels those pesky pirates are
affecting his bottom line, then "making money" is not an excuse.

And governments should be careful as they are walking a very thin line. A
French revolution can always happen again.

~~~
gerggerg
I agree. All I'm trying to say as that blaming it on the 'Movie Industry' is
not being able to see the real problem. Many independent and main stream movie
industry workers don't support SOPA and don't feel the MPAA acts in their
favor. We need to vote with our dollars and not support organizations that
support the MPAA. And we need to vote with our mouthes and make it clear that
as culture consuming citizens we feel an organization like the MPAA is more
harmful to culture and business than it is beneficial.

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.

------
jonnathanson
I've worked at studios and networks for a large part of my career. They have
hired plenty of people over the years with "skill at managing disruption."
They've poached talent from the Microsofts, Googles, Facebooks, hot startups,
etc., of the world plenty of times over.

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!]

~~~
waterlesscloud
Studios are hopeless, for the reasons you detail. They're just big companies
in the end, and they move slowly if at all.

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.

~~~
jonnathanson
I tend to agree with you here. The challenge I've run up against is this: big
studios can't really position themselves for innovation, but tech companies
don't always understand the complexities and idiosyncracies of putting AAA
content together.

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).

------
mgkimsal
I will point out that while the cries of "it'll ruin us" (meaning, our
business model) have been going on for some time, each time it seems to get
closer to the truth. When the original business model was "people going to
theaters", new technology options meant that fewer people _might_ go to
movies. And that does happen from year to year, and may be on a downward trend
for a variety of reasons. Other markets open up but it can take time to adjust
(and rather than adjust, big studios seem to just fight).

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.

~~~
erichocean
> 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.

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.

~~~
tomkarlo
"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."

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?

~~~
mgkimsal
Furthermore, while many people are paying high cable/satellite bills, many
other people aren't - they're already priced out of that market. And many
other people are dropping out of that too, whether for 'pirated material' or
just other media/entertainment. A smaller monthly fee with greater access to
more content on demand - even if there is _some_ DRM attached to it - would
bring people back.

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!

------
TheCapn
I think government and the populous as a whole play a large part in this
natural progression of things as well.

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.

~~~
pfraze
Somebody on HN once described the state of the music industry as a transfer of
wealth from the record labels to the internet companies. That made a lot of
sense to me.

------
johngalt
Gaming killed them.

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.

~~~
ScottWhigham
Do you have a link that shows WoWs revenues? That's the first I've heard that
WoW has outsold all movies in history.

~~~
masklinn
> Do you have a link that shows WoWs revenues?

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.

~~~
tsotha
>However, I think it's fair to say WoW is an anomaly in terms of revenue.

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.

~~~
masklinn
And MMORPGs seem to be moving towards "freemium"/"free to play" models: Guild
Wars has been from the start, EQ2 recently switched to freemium following what
was apparently a successful "Everquest II Extended" experience, Clone Wars
Adventures is a freemium, City of Heroes added a freemium mode (City of
Heroes: Freedom) this year, ...), and both of Turbine's recent MMOs — D&D
Online and LOTR Online — are now freemium, which makes a new WoW (in terms of
revenue) unlikely, apart from WoW2 (or Starcraft Online) maybe.

------
enobrev
While I'm not a fan of the industry tactics, which seem to essentially amount
to throwing a tantrum anytime the world decides to do things a little
different, this article seems to show an amazing resilience. It baffles me how
these slow anti-tech companies continue to remain well planted as the "owners"
of our content.

Especially considering how well developed the internet has become, I can't
imagine how these companies have continued to thrive.

------
PaulHoule
I think Hollywood is very interested in the internet as a distribution medium.
Already it's clear that advertising CPMs are several times higher online than
on conventional television -- and online advertising isn't even fully mature!

Hollywood isn't opposed to the "internet" as a technology; they just want to
control it.

~~~
pfraze
I agree, and it frustrates me more, because -- as the article points out --
they don't innovate.

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.

