Breaking Barriers and Broken Windows
March 2012
Breaking Barriers and Broken Windows
Since the dawn of the filmed entertainment industry, there have been periodic changes to the ways that content has been distributed. At various junctures in the modern industry, barriers were broken, the concept of release windows changed and new business models evolved. More often than not, the changes were incremental and relatively subtle.
Today, barriers are still being broken as traditional and often revered release windows are breaking once more. We are seeing a more dramatic shift than ever before. A new world order of the content creation and distribution hierarchy is in the offing.
In the beginning, the studios developed a large volume of movies, shown mostly in the theaters that bore their name. The consent decree in the 40s required that they divest themselves of the theaters and soon new owners controlled exhibition.
In the 50s, TV came on the scene in a big way and the number of people attending the cinema declined. Concurrently, the baby boomer generation came along and families stayed at home watching whatever was on the tube. It was a whole new world.
Once the studios got over their fear of the new medium, they, too, began to develop programming, which in many ways was more sophisticated than what had been broadcast to that point. The barrier had been broken and the studios became a force in TV that persists to this day.
The three networks began movies and sports programming in addition to the sitcoms and variety shows.
Ted Turner broke another barrier when he overcame hurdles and successfully put his Atlanta based Channel 17 on a satellite for pick up by the growing cable business. Early content was primarily older movies and sports.
Before too long Turner introduced some original programming and in time, additional cable channels from Turner and from others were developed. In almost every case, they all started with acquired, previously released programming, with the exception of sports and the news that Turner brought 24 hours a day, a novel concept at the time, that has become the standard today.
Through the years, the TV eco-system grew to be a dominant force in our entertainment. Traditional broadcast, cable and satellite enabled people “everywhere” to watch TV, to a point that there were more households with a TV than with a telephone.
Different business models evolved, beginning with subscription to cable, and later satellite, for access to shows that still included advertising as their base business model.
Soon subscription services for premium channels such as HBO and Showtime emerged, offering Hollywood movies free of advertising for a fee. As those and other services evolved, they, too, began to develop original programming to supplement acquired product.
In the late 70s, home video arrived. The recording capability broke barriers resulting in a paradigm shift as consumers gained more say in what they watched and when. Suppliers of beta and VHS tapes gave rise to the video store. Different business models were used, from rental to sell through. A six month window from theatrical release was established, then replaced by shorter and shorter windows, with day and date, a barrier that eventually will break, for a price.
Movies dominated content availability. It was not until the DVD was introduced in 1997 that TV on DVD started to become a viable business, although it took many years to reach a tipping point.
We are now at the dawn of another era. The shifts that are taking place are going to be seismic.
There is already an installed base of hardware that is being used for viewing content. Homes with PCs and broadband have become almost ubiquitous. Flat screen TVs are present in nearly 70% of US TV households now, with over 35% of households having more than one HDTV. The growth and the replacement cycle will continue to increase penetration as the technology improves and prices decline.
In recent years, new players have come to the market, such as Netflix and HULU, starting with acquired content and moving to original programming. Each has become a formidable force in the eco-system with a variety of business models and delivery methods. You Tube, with arguably one of the most robust and sophisticated digital delivery platforms, is also delving into original programming, some of which will likely be sold on a subscription basis, while other content will take the traditional advertising route.
As we look at the ways that content will be produced in the coming years and how it will be distributed across a wide variety of platforms, it is safe to say that yet again another series of barriers will be broken and the lines are forever blurred between who is a producer and who is a distributor/exhibitor.
It is just a matter of time before some show from one of the new power players emerges as a bona fide hit, generating the kind of viewership that others dream about and creating a new world order in its wake. And it will not matter if the show is in 2D or 3D, watched on a 37, 42 or 60 inch flat screen or a 4.3 inch smart phone or larger tablet.
The barriers will have been broken and release windows changed once again, only to have the process repeat itself in a year, 3 years or 5 years. What remains to be seen is who the new power players will be, how they will reign and the extent to which they disrupt the eco-system.
Observations from CES 2012
Searching for the Grail — Since our most recent newsletter, the pre-CES Searching for the Grail, we have received numerous responses as to products and services that fit the description of Searching for the Grail. Several related to lack of adequate bandwidth to make the projects feasible at the intended launch date and another involving mobile technology. Keep sending your ideas as to which products meet the Grail criteria.
TV Sophistication – At the recent Consumer Electronics Show the degree of sophistication of the TVs shown from the likes of Samsung, LG, Sony, Panasonic and others was phenomenal. Voice recognition, gesture controlled and internet connected TVs and a wide range of apps enable us to do all sorts of things from the comfort of our couches as the quality and capabilities make significant strides each year in a bitterly competitive environment.
The buzz continues as to what the long rumored and inevitable Apple TV will offer. Just as the iPhone brought a significantly more sophisticated product to market than the mobile phone market had at that time, the first iPad also brought a leap in sophistication over other tablets. I can attest first hand to that as I had been an owner of the HP TX1000 tablet bought several years before the iPad introduction.
That said, though, one wonders how much better and innovative the Apple TV will be than the existing models from long time TV manufacturers all of whom are on a constant trajectory for upgrading their products. Will Apple solve the auto stereo challenge that is still very a much a work in progress with the other TV manufacturers?
Consumers will inevitably buy an Apple offering, whether it is purchased by the 30% of TV households that do not currently have a flat screen HDTV or the approximately 65% that do not yet have a second one.
Eye contact — One of the coolest technologies that we saw was from Tobii. The booth demo was an arcade game that uses the eye-tracking technology instead of a traditional controller.
As for The Shindler Perspective
The discussion of the broken barriers and the shift in content will be the subject of Predictions from the Street: The Power Players behind the Great Content Shift, a Super Session panel that I am going to moderate on Wednesday, April 18, 2012 at the forthcoming NAB Conference in Las Vegas. The panel line up will be posted on our web site at Speaking Engagements, Twitter, LinkedIN and Facebook soon. Keep the date open for what promises to be an informative and entertaining session.
Once again, I moderating two panel discussions at Digital Hollywood, a conference with a wide array of programming that always attracts an eclectic and far ranging audience. My two panels are Cross-Platform Content – Analysts and Investment: A View from the Street – From Tablets and SmartPhones to 3D TV and The 3D Industry: The Explosion of 3D in Feature Films and Television. Both are on May 1, 2012 and will be at 7:45 AM and 12:30 PM, respectively, at The Ritz Carlton, Marina del Rey, California. Details are still in process as to the panelists, but will be posted on our site at Speaking Engagements and on Twitter, Facebook and LinkedIn as and when available.
Comics often reflect reality while making us chuckle. If you did not catch the Bliss comic about cord cutting recently, check it out.
For those that missed the CES panel, Spotlight on 3D Content, it is available streaming and the audio alone is available in MP3.
Roberta and I wish our friends, clients and prospective clients well.
For The Shindler Perspective, Inc.
Sincerely,
Marty Shindler
Chief Executive Officer