Ask any corporate chieftain about the current economy and – unless they sell burgers for a dollar, canned goods, or alcohol – they’ll tell you about the tough conditions their companies face. But within this economic crucible, the target is still moving: Entertainment and consumer tech companies are facing an entirely different set of challenges, as consumers have changed their entertainment habits.
As has been widely reported, the Hollywood studios have been hit particularly hard. DVD sales are down 6% over the past year, and Disney and Sony have already cut hundreds of jobs in 2009.
To be sure, some of this is a natural result of Hollywood’s insistence on churning out tedious, recycled narratives with the hopes that increased vulgarity and special effects will cover for their lack of creativity. But aside from the obvious criticisms that I, as a conservative, might lodge against the movie industry — Hollywood is also plagued by a refusal to embrace the emerging demands of the marketplace.
One emerging demand is the need for wholesome entertainment. Quality films like “The Incredibles” and even the now-classic “Forrest Gump” consistently out-perform R-rated films, yet Hollywood continues to ignore consumer demands and produce more and more “Rotten Tomato” films.
Unlike some of the collapsing industries in this country, new opportunities are being created for Hollywood all the time. To capitalize on these opportunities, the movie industry must adjust to changing consumer demands. Yet, they seem to never miss an opportunity to miss an opportunity to satisfy consumers.
In this regard, Hollywood is also missing the boat by resisting emerging consumer demands regarding technology and intellectual property rights.
A prime example is a new software program called RealDVD, which allows consumers to take any DVD they own and save one copy to their computer or laptop hard-drive (imagine that, owning the DVD’s you own!).
With a hard-drive library of DVDs, consumers wouldn’t have to worry about damaging or losing their original disks, nor do business travelers have to pack an extra bag of discs for long flights or vacation. And the inevitable children’s DVD your kids watch over and over that gets scratched or misplaced? A thing of the past: RealDVD gives consumers the freedom and flexibility to watch the movies they’ve already purchased anywhere, anytime – without hassle. (Of course, this is really nothing new. Consumers are already allowed to make personal copies of cassette tapes, CD’s, and VHS tapes — just not DVD’s.)
The Hollywood studios, however, see it differently. Rather than working to better monetize and reinvigorate the struggling DVD sector, six studios filed a lawsuit to stop the public sale of RealDVD (the case is set to begin today). These studios don’t think embracing RealDVD is in their interest, but they’re wrong.
This technology benefits Hollywood studios in significant ways. Primarily, RealDVD provides a tool to help the studios better deliver content to consumers and fight piracy – as it renders a copied DVD file non-transferable to other computers or users. The majority of consumers who want this technology also don’t want to break the law, and the technology available provides them with the only legal way to save their own property to their computers and laptops. Isn’t that outcome in-line with the major studios anti-piracy efforts?
Secondarily, this technology helps Hollywood studios maintain the DVD revenue stream. How? In order to use the software, consumers must have the original DVD to copy. This new technology wouldn’t replace traditional DVDs – it optimizes them to fit with consumer preferences that aren’t legally being met today. Additionally, this new technology would offer new ideas to consumers for other DVDs they may be interested in, based on the director, actor, or genre of the film they’re watching. This kind of targeted marketing could lead to more DVD purchases and more revenue for studios. For example, how many new songs have you purchased on iTunes because they were suggested for you? My point exactly.
Hollywood studios could – and should – embrace technologies that could bring new life to the home DVD market. At the moment, we are just scraping the surface of how consumers can interact with the DVDs they’ve already purchased and what new consumer purchasing opportunities are available to the industry if there was a partnership. Everyone wins if we can collaborate and innovate, but Hollywood’s lawsuit must be resolved before that can happen.
Hollywood studios should examine the changes in consumer trends that taught the music industry a painful lesson earlier this decade. Had the music industry embraced and developed new revenue streams while maintaining anti-piracy safeguards earlier in their fight, their business model might look a little better these days.
In this economy, with changing consumer habits, inherent time constraints and financial pressures, the movie studios don’t have the luxury of delaying the inevitable.
Hollywood should try to actually produce more quality films that people will want to pay $10 to go see. They also ought to pay attention to the fact that consumer’s demand freedom and flexibility to do what they want – when they want – with the entertainment content they’ve already purchased.
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