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4 Types of Digital Disruption

10 Oct, 2014 By: Stephanie Prange

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Digital changes are shaking the industry like earthquakes, and I see at least four major disruptions facing the home entertainment industry.

1. Breaking windows — After taking on appointment TV by offering original episodic programming all at once (“House of Cards,” “Orange Is the New Black”), Netflix is planning to offer digitally for streaming feature film product traditionally offered first at the cineplex. The Weinstein Co. inked a deal with the online service to release the Crouching Tiger, Hidden Dragon prequel to Netflix streaming subscribers at the same time it hits theaters. Also, Adam Sandler, a longtime draw at the movie theater, signed a deal to bypass that venue and offer his uniquely crude humor on smaller screens via Netflix streaming.

2. Business model bustup — As has long been noted, the revenue model that has underpinned the entire Hollywood ecosystem is under assault. The theatrical business looks shaky. The summer box office disappointed, as consumers found other things to do (including watching digital content). Meanwhile, studios can no longer count on bigger and bigger, or even the same, bags of money coming from the sale of discs as consumers decide to stream rather than buy their content. Meanwhile, advertising upfronts are taking a hit in the TV business as time-shifting and social media disrupt the traditional advertising model.

3. Talent revolt — Those who create content are looking for a bigger piece of the revenue pie and greater creative freedom as the distribution model shifts. Sandler isn’t the only star looking to find a new partner in the digital world. Comedian Chelsea Handler broke up with E! and is looking to create the next form of talk show in the digital realm on Netflix. It’s happening in the music arena as well. According to a report in the Los Angeles Times, at a recent industry event musician Jimmy Buffet asked the CEO of the music streaming service Spotify if he would pay talent more than the traditional labels.

4. Entertainment in new forms — And there’s the possibility that the entertainment of the future won’t resemble the feature film and episodic TV model of the past. What makes 30-minute or hour-long episodic TV or a roughly two hour film the most popular models for visual entertainment? Until now, that kind of entertainment has been shaped by the distribution model, i.e. how long folks can stand to sit in a theater seat, etc. On the web, small-bite entertainment may play a bigger part. Witness the success of sketch comedy online. Also part of the new entertainment model: watching folks play and comment on video games. Witness the outlandish success of Twitch, worth nearly a billion dollars to buyer Amazon.

Yes, the entertainment ground is shifting.

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