CINEMA : COPING WITH THE DIGITAL DOMAIN

Chinese will produce more quality films

Hollywood has been downplaying the rise of online outlets for movies, television, and video content.  The fear has been that movies and television were headed for the same loss of audience and distribution suffered by the print and music businesses - as millions of consumers now read news online and access music digitally.  This theory has proved true to some extent with the rise of such entities as Netflix and Redbox, which have cut into DVD sales and ruined retail video outlets, such as Blockbuster.

For the most part, regarding film and video content, Hollywood is coping with the digital disruption quite well. First, video content is not easily shared like music.  The file size of a movie or TV show is enormous vs. a song.  That makes it much more difficult to copy and distribute. Second, media companies learned from the mistakes they made in the publishing and music businesses and have adapted.  For example, Hulu - a popular online TV channel (created by Disney, Fox, and Universal) -streams a wide-range of movies and TV shows available for free viewing with advertising support or with membership fees for premium content.  Hulu is working well for its studio owners in terms of revenue and as an alternative to Netflix and other online content streamers.

Redbox: foe of the cinema and DVD sales

Regarding movie exhibitors, theatre owners have kept close tabs (on their own and through blogs like Cinema Much Gusto) on the rise of internet or on-demand films offered by cable networks and others and how the Studios are reacting.  So far, the Studios have given cinemas an open and exclusive distribution window and this policy has worked will - as the old business model continues to reap profits.  This is particularly true in the overseas markets, which are expanding at a rate of 7% per year and provide the double benefit of countries, like China, becoming move aggressive in protecting movie copyrights and enforcing piracy laws as they now have a vested interest in expanding and protecting their indigenous movie business and cinemas. Digital cinema projection has also helped.  Cinemas can now easily and quickly install new pre-feature advertising and have a greater opportunity to exhibit alternative content.

So, for the time being, I believe, movie theatres will continue to benefit from their exclusive distribution window on filmed content as Hollywood has no compelling reason to change the current situation.

Best & Happy Movie Going !
Jim Lavorato