Monday, March 5, 2012

Digital Distribution

The primary revenue stream for the film industry today is based on how much money they can get off movie theaters, DVD, cable TV, and other ancillaries sales.  This means that most of the money made is after the movie has been released.  However, because of some recent hiccups in the film industry, such as online piracy, social networking, and movies on demand, Hollywood has slowly been losing its audiences to the computer, the iPhone, or the iPad.  With the rise of home cinema, high quality video streaming, and faster connection speeds, the future of the Film Industry all comes down to the economics behind it.  What this means for Hollywood is a change in distribution.

Where we used to go to the movies and sit in the theater, we now have a new and different way to experience a movie.  This is what we call Digital Distribution.  Digital distribution has been difficult for filmmakers because they now must deal with the "free versus pay" issue, which often is more complicated by online piracy.   There are some digital distributors out there who believe that economics of the film industry has been completely threatened, and may never come back from it.  Netflix, for example, has recently said that they are going to be focusing more on having a vast amount of TV shows.  They believe that the real money lies in the television shows because it enables audiences to watch one show after another.  Through subscriptions and things like Netflix, the movie industry may be on a slow decline.

However, sometimes the new way of distribution has helped certain people within the Film Industry.  For example, Passion Films was shocked when they saw how many times their movie "Inside Iraq: Untold Stories" had been illegally uploaded.  However, they gained a very high audience through digital media as well.  By being free online, the buzz around the film increased its DVD revenues when people could no longer see it online.

Because of the rise in digital technology, most movie studios are moving to replace film and move toward smaller projects.  This would mean lower costs, and the change in content would be seen in the rise of more sequels and franchises.  Most film industries are changing into companies that try to reach its audiences in different ways in order to drive revenue, and the content change is their way to do that.

If I were an executive in the Film Industry, it would definitely be extremely difficult to adapt to the new economic shifts within the industry.  While online piracy is a shame, it is impossible to avoid.  With the increasing advancements in technology, the way we watch movies is going to continue to change.  The fact of the matter is people don't want to go to the movies as much as they used to, and instead they would rather be in the comfort of their homes than paying $10 to see a movie they are unsure of.  I would suggest doing MORE online subscriptions, and creating a Netflix-type place for each studio.  If Universal had an online subscription, once the movie is released, people would be able to pay a certain amount to be able to see that movie for free.  It is hard to say if this would work, but I think that the studios could make money off of advertising in this way, while proving lower costs for the movie theaters.

Youtube Video:
The Future of the Film Industry

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