Music, Newspapers . . . “Hollywood, these days, seems remarkably poised for a similar disruption”
Hollywood, these days, seems remarkably poised for a similar disruption. Its audiences increasingly prefer on-demand content, its labor is costly, and margins are shrinking. Yet when I ask people in Hollywood if they fear such a fate, their response is generally one of defiance. Film executives are smart and nimble, but many also assert that what they do is so specialized that it can’t be compared to the sea changes in other disrupted media. “We’re different,” one producer recently told me. “No one can do what we do.”
That response, it’s worth recalling, is what many editors and record producers once said. And the numbers reinforce the logic. Movie-theater attendance is down to a 19-year low, with revenues hovering slightly above $10 billion—or about what Amazon’s, Facebook’s, or Apple’s stock might move in a single day. DreamWorks Animation was sold to Comcast for a relatively meager $3.8 billion. Paramount was recently valued at about $10 billion, approximately the same price as when Sumner Redstone acquired it, more than 20 years ago, in a bidding war against Barry Diller. Between 2007 and 2011, overall profits for the big-five movie studios—Twentieth Century Fox, Warner Bros., Paramount Pictures, Universal Pictures, and Disney—fell by 40 percent. Studios now account for less than 10 percent of their parent companies’ profits. By 2020, according to some forecasts, that share will fall to around 5 percent. (Disney, partly owing to Star Wars and its other successful franchises, is likely to be a notable outlier.)
Source: Why Hollywood as We Know It Is Already Over | Vanity Fair
Content is King — so much so that we have an entire investment theme created around the concept. The players in that theme seem to be evolving each and every month as the mix of content creators seems to be changing. Who would have thought just 3 years ago that Amazon would be vying for Emmy Awards? Or that YouTube wouldn’t just be repository of pirated video clips and homemade movies, but actually a news source more popular than the 3 major networks combined.
Now it appears that the very core of the content creation industry of the country, if not the world, is under an innovation attack. This in-depth article from Vanity Fair breaks it all down and exposes the realities of a broken system and the fact that most of the participants in that system don’t even know it is broken.
Yes, folks, the seeds of destructive innovation have already been sown. And thanks to the components of our Connected Society investment theme those seeds are being constantly watered and are sprouting up everywhere. Soon tourists could be going to Hollywood to see how TV shows and movies used to be made!
