Steven Pearlstein has a great column in today’s Washington Post on the effect that technologies such as TiVo are having on the relationship between big media and consumers.
For years, the entertainment industry tried to fool us — and itself — into thinking that it only prospered by giving consumers what they wanted. Thanks to video on demand, we are now discovering what a big lie that was.
The real strategy of the entertainment industry has been to force customers to pay inflated prices to watch the movies and television most profitable for the industry to produce, at times that allowed the industry to rake in the most money, and distributed through channels designed to keep out upstart competition.
Think about it. Until the VCR came along, if you wanted to watch MASH, or All In The Family, or even The Cosby Show, your life was controlled by the network that ran the show. Miss their “scheduled day and time” and you were out of luck. You were also a capitive audience for their advertisers. Not anymore.
Thanks to TiVo and other Internet-based technologies, people not only can watch what they want when they want to watch it, but they can also do so without having to watch commercials. Suddenly, the whole concept of a prime-time lineup has been tossed out the window, along with an economic model that’s been around since Geritol decided to sponsor the Ted Mack amateur hour
Now, you can watch 24 at three in the morning on a Tuesday, or Desperate Housewives in “prime-time” on Tuesday. And you can skip the stupid commercials. What this means is that the entire model that television has operated under for 60 years will have to change.
While nobody knows exactly how all this will shake out, several things are already clear. Much less of what we think of as television will be paid for by advertisers, and more by viewers. Television networks will need to hammer out new financial arrangements with local affiliates, which will lose the monopoly they have over distribution of network programming in their area. And the big networks will continue to lose market share, not just to niche cable channels, but to interactive gamers and anyone with a good idea, a studio and access to the Internet.
And its not just television that is being impacted:
It’s much the same challenge facing Hollywood. Over the years, the major studios have been getting less of their revenue from movies shown in theaters — the estimate for this year is 15 percent — and more from home viewing. At first came television’s Saturday Night at the Movies, and then Blockbuster, then HBO.
But things really took off with the arrival of DVDs, Netflix and affordable flat-panel TVs. Now cable operators, phone companies and satellite services are rushing to expand their ability to offer customers any movie they want, any time they want it.
This will change the economic model that governs how Hollywood operate and, as Pearstein points out, it will also, hopefully, have an impact on the quality of the movies that we see:
More significantly, the way studios compete will fundamentally change. No longer will they be focused on churning out formulaic blockbusters featuring overpaid superstars, marketed extravagantly and pushed through a captive distribution system. Instead, the studios that do best will be those that make, or buy, a wider range of well-done movies for a variety of niche audiences reached through targeted marketing and distribution channels.
Sounds good to me.
