MPAA Strategy Analysis [7:37 pm]
Why are media companies so resistant to change, especially when compared to their technology brethren? One obvious answer: Tech companies are entrepreneurial. They live and die by the success of new inventions. Hollywood’s main concern is content and, in recent years, it has pursued a deeply conservative content-creation strategy, churning out movie franchises largely based on comic books, remakes and sequels.
[...] “The battle that the studios lost [the Betamax decision] actually created the business mechanism that can help them deal with the Internet,” says William Morris agent Marc Geiger, a cofounder of Artist Direct, an entertainment company that serves as a one-stop commerce outlet for music fans. “They have seven or eight different ways for a consumer to watch a movie, depending on their habits and the price they’re willing to pay, from theaters and DVDs to HBO and pay-per-view. And it’s all because movies are essentially already distributed digitally. I go home at night, call up a movie and store it in a hard drive — it’s called TiVo — and I’m doing exactly what the music business is screaming about, except I’m doing it legally and paying for it.”
The studios have other advantages besides flexible ways to sell and price their product. The same consumers who feel gouged by record company CD prices have fewer complaints about the value of movies and DVDs.
[...] In part because of piracy concerns, Warner Bros. last week released “The Matrix Revolutions” on the same day, even at the same hour, in every major global market.
Warner’s chief, Meyer, predicts that “there is a day coming when, to properly protect movies from piracy, we’ll leverage off the original theatrical marketing campaign and release movies any way the consumer wants it — on his computer, on his TV or at Wal-Mart — all at the same time.”
Even in this era of sweeping technological change, one immutable law remains: The customer is always right. The record industry has been staggered because it was two steps behind its audience, which is bad enough when you’re promoting a new song, even worse when you’re trying to build a new business. The movie industry realizes that it can’t afford to be slow off the mark.
As [News Corp.'s Peter] Chernin put it in a recent speech: “How do you create a new economic model faster than the old ones are being destroyed?”
If history is any judge, Hollywood will have to take some big risks to discover the answer.