Hollywood's movie industry: "Oh no! Not the new money!"

I got a tease of this article from one of my blogs (h/t escapes me); apparently the blogger pulled out the best of it.

The basic idea is that Hollywood is suffering because of the loss of DVD sales.  That DVD sales have dropped tremendously is believable.  However, the DVD era couldn’t have stretched out past a decade.  Twister was the first major film to be released on DVD, so we’re talking eleven or twelve years before the “bad” years mentioned in the article.  That’s a bubble, not an established revenue source.

Before DVD came along, studios were only just beginning to explore selling video tapes directly to the consumer, divided between modern classics that people would want to watch again and again and underperformers that needed a little extra return squeezed out.

In my mind, this is the same issue as immigration reform.  Hollywood’s reliance on a brand-new source of income is like relying on cheap labor that can only come from across the border:  a fake picture of the industry.  If prices are cheap because of illegal workers, then prices are artificially cheap.  If a new revenue source has added 40% to your income in a couple of years, you’d better take a good look at it.  It seems too good to be true.

What’s most pathetic about this sob story is that the movie industry had many years before consumers could transfer audio-visual media across the net.  The Napster revolution was in 1999; I didn’t download my first film until late 2004.  Films are encoded on DVDs just like music is encoded on CDs, only larger.  Fair warning to figure out what their business is before the physical market disappeared.

Hollywood is in the business of developing and promoting content.  Their money doesn’t come from DVD sales or ticket sales, exactly; it comes from selling content to warmed customers.  It’s time for them to scale down their expectations; after all, a 10%--or even 6%--overall profit is really good.  Supermarkets make about 1% and they’re patronized by everyone.

It was suggested to me (probably through Steve Sailer) that boxing is no longer the huge industry it once was because the proliferation of pay-per-view events has priced new fans out of the market.  The theory is that lifelong sports fans are created in childhood; minimizing the barriers to interacting with the sport results in more consumers in the future.  Now it’s impossible to watch boxing without paying, which eliminates the casual fans and their children.  Such a primal sport will never disappear entirely but it’s likely to become something like horse-racing, important to a monied clique but reaching the public conversation only occasionally.

According to the last point of this Cracked article, gaming--at least console gaming--is going in the same direction.  Microsoft’s XBox One has gotten a lot of flack for their used-game policy--namely, used games no longer exist.  This raises gaming’s entry price, an irritation for an adult player and an obstacle for the curious.

As a former Colecovision player, I can attest to a secondary barrier.  If a potential gamer doesn’t literally get his hands on a console early, he’ll probably never gain the familiarity he’ll need to handle the controllers of modern games.  I was used to a joystick, a single button and numeric keypad that was rarely used.  The cartridges were only capable of holding three levels of each game and I grew bored of the limitations.  When Nintendo came along with a slightly more complex controller, I had already found other entertainment.  Fast forward to the controllers of today and I’ve got no idea what I’m doing; it’s like putting a blind man behind the controls of a bulldozer.  If a kid doesn’t get those skills when he’s a tween then he’s not going to develop them when he’s an adult and has disposable income.

My guess is, if this kind of thinking continues not only will the market shrink but so will the number and types of games offered on consoles.  I can see the console market looking much like your local cineplex, all big-budget, big-name productions with a little something for everybody but loved by almost no one.

Which begs the question:  why go with gaming consoles, anyway, if PCs offer more processing power and flexibility?