Film and TV Industry Forecast... Dark Skies, Showers
July 8, 2008

Given the explosion of the digital age and the popularity of the online world, the entertainment industry will have to adapt to yet another change, as the ratings for stocks of News Corp, Time Warner, CBS, The Walt Disney Co., and more were slashed by a Lehman Brothers analyst on Monday. After close monitoring of the music industry and its battle to combat the many challenges of digital distribution, the stock cuts and forecast were a result of increasing fears that the film and TV industry is set up in a manner that will negatively impact revenue generated from a movie and TV content.

Given the openness that the public has to entertainment content that’s accessible via numerous online avenues that bypass, or ignore, traditional distribution rights and copyrights, analysts have determined that the distribution and use of film and TV content is too similar in configuration to the music industry, setting the stage for a possible digital bloodletting of future profits.

According to Reuters, analysts reveal that new technology and devices now allow consumers to bypass traditional revenue generating models (ie: commercials) will have a significant impact on the entire industry. As Reuters goes on to reveal, shares of the five entertainment companies dropped on Monday, with CBS plunging the most with a drop of 4.5%. While News Corp, Time Warner, Disney and CBS face serious economic challenges that also trickle down to various subsidiaries, Viacom’s outlook remains the brightest thanks in part to its foray into the surging video game market with Rock Band. At the end of the day, News Corp, Time Warner, Disney and CBS averaged around $15 per share while Viacom closed out at $28.

Adding to the mix is the rapidly declining DVD sales on all fronts in favor of digital downloads and expanding options for the consumer in the digital market.

And this is just the beginning. The digital age opens up a wide variety of issues. Our take...

While Viacom and YouTube/Google are currently battling in court over Viacom’s claim that their copyright to various film and TV content has been violated (a completely separate but related issue), everyone, including the public, should be taking a step back for a second to get some perspective. Although the digital revolution is still in its infancy, and everyone’s looking at the short term, when the dust settles and solutions eventually get worked out - whenever that is - it’s likely the power structure will simply change hands with new players controlling distribution in the same way with everyone vying for the same pieces of the pie. In the end, money and revenue will likely create a new economic reality in which a new segment of the population will demand change and a similar battle will begin all over again. It’s the cyclical relationship between power, money, and human nature.

It’s interesting to think that because of the digital revolution truly independent filmmakers will be able to distribute their movies in new and exciting ways outside of the traditional studio distribution system. The possibilities are endless and truly exciting. But if the entertainment industry as we know it collapses, filmmakers will still be seeking to make money from their product. If viewers don’t want to pay for the product yet still want to watch it, it raises the possibility that corporations could end up paying filmmakers for sponsorship and visibility while distribution is left in the hands of the director instead of the studio. It's the reverse of what's already in place. That’s just one scenario, but it illustrates how money will still be the driving factor no matter how it evolves, with or without studio distribution.

On the public side of the fence, we’re hoping people realize that the "everything should be free" mentality can have a disastrous effect on much of what we currently enjoy and take for granted. It could mean that entire professions and industries would cease to exist because artists across the board (actors, musicians, crewmembers, and many more in the entertainment world) would end up working for free.

Yeah, we know it’s crazy, but we’ve just taken a step back for a second to get some perspective.