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July 09, 2008

Anthony DiClemente Is A Patso

You know, the economics of this industry as changing. A lot.

But I am endlessly amazed at how analysts at major financial institutions don’t seem to be able to separate fact from fiction.

The myth of the film and television industry being under the same burden that the record business once was is fueled by seeing everything on a macro level and not thinking for a second about the micro details. The devil is, indeed, in the details.

People who don’t understand the details of it all look to the only example they can find that seems like an obvious match, in this case, the record business. But over and over again, we see the same excuse being used for every alleged downturn in the market. And the argument didn’t make sense, doesn’t make sense, and won’t make sense. Why? Because the business situations are significantly different from the ground up.

What’s really sick about DiClemente’s old-headed thinking is that it means that he is completely unaware of the very real issues in the film and television business today. There are two major fronts of trouble. One is costs versus returns… and that will get corrected naturally by the industry marketplace. This will be painful for agents and super-high-end real estate agents and egos, but not for studios, unless they don’t make the adjustment quickly enough. The other front is media saturation… and that is only going to get worse, forcing a long tail on an industry that doesn’t really want one and making the short tail harder to navigate financially.

The industry, which DiClemente doesn’t seem to be watching very closely, has already started the painful process of testing out all kinds of new delivery opportunities… unlike the record companies. In my opinion, the answer will be a combination of ALL of them. The long tail will also be a long tail of delivery options in which the consumer gets to choose how many options and what kind of options, all for a price. The issue that is the danger zone of all this is not piracy, but price point.

The record companies got crushed by the confluence of technology and quite intentionally not giving its buyers what they were asking for. If the film business was continuing to do this, I would be willing to more seriously consider DiClemente’s argument. But the movement has already started and the lessons, positive and negative, of DVD – the first true private ownership technology in film - are showing in the actions of the studios. To downgrade Disney, which is doing all kinds of things in pursuit of the widest variety of delivery methods, as part of this overall bad argument is insane, though the issue of gas prices and the parks and the history of that spelling trouble is worth exploring in a serious way. (And Disney should be pushing the idea that once you are in Disney World, gas prices may no longer be relevant during your stay, making The Magic Kingdom more attractive than a road trip.) Sony, a little less… not because of the movie division, but really because Blu-ray is the one area in this business when old time business practices still seem to be in effect and the company is not moving quickly enough to give the excellent new technology – even without the HD competition – a chance to thrive before a host of other, not-equal but good enough, delivery systems become mainstreamed.

Posted by dpoland at July 9, 2008 11:15 AM

Comments

I think AP took the music industry tag and ran with it beyond intention. There was a broader comment that sounded to me like the slap was beyond the inefficiency to find alternate revenue streams. The complaint I've heard is while the congloms do zero experimentation to find new platforms, the tech sector bangs several attempts out a year, and then the media companies either overpay or fail to embrace.

You're certainly right that the piracy generalization of movie/TV to music doesn't gel, but because the reaction to Youtube reads like the initial reaction to Napster, the road appears to be paved.

Posted by: Martin S [TypeKey Profile Page] at July 9, 2008 06:07 PM

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