Question
Should Apple buy Hollywood?
Answer
As other Q&A threads on this theme have concluded, this whole "Kill Hollywood" meme doing the rounds in Silicon Valley says a whole lot more about the hubris and complete misunderstanding of film-making in the software world.
It's a case of "when you have a hammer in your hand, everything looks like a nail."
Sure, software is eating the world, as Marc Andreessen said. This does not mean Silicon Valley is eating the rest of the economy. That's like mistaking weather satellites for weather.
Yes, software will disrupt Hollywood. No, it will not happen via software companies attempting to engineer such disruption directly. It will happen via marginal elements within Hollywood itself, who understand the industry intimately, can tell the baby apart from the bathwater (as Yishan Wong pointed out in this comment: http://www.quora.com/Future-of-E...), and know how to engineer the David-vs.-Goliath takedown.
Silicon Valley can at best keep a keen eye out for these players and pour fuel on whatever fires they start.
The book industry example is revealing. Many other companies had more depth of capability to build ebook reader devices and software (Sony comes to mind, or for that matter, Apple and Google). But Amazon is the one that actually pulled it off. Why? It was already a marginal player (online distribution) with the right position in the industry from which to strike. They also cleverly built off an earlier disruption (laser printers disrupting high-end offset starting in the early 1990s, which created the print-on-demand industry, which first weakened the publishing industry for the death-blow of ebooks).
The music industry, notably, was not taken down by Apple. Apple wisely stepped in later in the game to co-opt and pour fuel on the Napster revolution.
Amazon is trying that with its Studios move, which can be viewed as part of a "looking for the Napster of Hollywood" radar-building effort.
It is too early to tell where the disruption will come from. George Lucas is one interesting wildcard character (with his steady underwriting of the costs of shifting to digital projection technology, and his ability to market and distribute movies like Red Tail which Hollywood (correctly) assessed as unmarketable in the traditional way).
Lucas may do an "assist" but perhaps it will be a major distribution player like Loews that will finally make the big move. In TV, the race seems to be heating up between Netflix, Hulu and others (I am betting on Netflix, despite their recent PR troubles).
But the one big unknown is the creative+talent piece. That piece needs to be disrupted for the industry as a whole to be taken down. Hollywood has not yet had its Nine-Inch Nails moment. Sundance style indie creative culture won't really cut it.
Here's a clue about where the disruption of the creative piece of the value chain might come from. I recently watched the first season of The Booth at the End (available on Hulu). It is a very low-budget show that was stitched together from what were originally a collection of 2-minute webisodes, all conversations that take place in a diner booth.
You'd think it would be tough to do much with this format, but the show succeeds brilliantly given how it started. It got picked up first on Canadian TV and then on FX. Think of how startling this sourcing path was. No screenwriter-waiters hopelessly pitching 2-hour scripts or pilots. No endless rewrites or options being passed around, expiring etc. No frustrated world of screenwriters hovering. Instead, you have the equivalent of a minimum-viable creative product finding traction and then scaling organically.
Early days yet, but the pieces of the new value chain are starting to coalesce slowly. At some point, some visionary is going to have an Aha! moment about how it all fits together, step in with brutal efficiency and do a major consolidation of the new value chain. Then we'll see a decade of competition where the new value-chain steadily gains competitive advantage over the old one, and finally, the old value-chain will be weakened to the point where it becomes the new one's bitch.
That's what has happened in the book publishing market, which is now at an end-game stage, where Amazon is finally moving decisively to make the old value-chain its bitch, with its push of Kindle lending and Kindle-first-exclusive promotion of ebooks as the primary market, with paper formats being shoved into the souvenir end of the market.
It's a case of "when you have a hammer in your hand, everything looks like a nail."
Sure, software is eating the world, as Marc Andreessen said. This does not mean Silicon Valley is eating the rest of the economy. That's like mistaking weather satellites for weather.
Yes, software will disrupt Hollywood. No, it will not happen via software companies attempting to engineer such disruption directly. It will happen via marginal elements within Hollywood itself, who understand the industry intimately, can tell the baby apart from the bathwater (as Yishan Wong pointed out in this comment: http://www.quora.com/Future-of-E...), and know how to engineer the David-vs.-Goliath takedown.
Silicon Valley can at best keep a keen eye out for these players and pour fuel on whatever fires they start.
The book industry example is revealing. Many other companies had more depth of capability to build ebook reader devices and software (Sony comes to mind, or for that matter, Apple and Google). But Amazon is the one that actually pulled it off. Why? It was already a marginal player (online distribution) with the right position in the industry from which to strike. They also cleverly built off an earlier disruption (laser printers disrupting high-end offset starting in the early 1990s, which created the print-on-demand industry, which first weakened the publishing industry for the death-blow of ebooks).
The music industry, notably, was not taken down by Apple. Apple wisely stepped in later in the game to co-opt and pour fuel on the Napster revolution.
Amazon is trying that with its Studios move, which can be viewed as part of a "looking for the Napster of Hollywood" radar-building effort.
It is too early to tell where the disruption will come from. George Lucas is one interesting wildcard character (with his steady underwriting of the costs of shifting to digital projection technology, and his ability to market and distribute movies like Red Tail which Hollywood (correctly) assessed as unmarketable in the traditional way).
Lucas may do an "assist" but perhaps it will be a major distribution player like Loews that will finally make the big move. In TV, the race seems to be heating up between Netflix, Hulu and others (I am betting on Netflix, despite their recent PR troubles).
But the one big unknown is the creative+talent piece. That piece needs to be disrupted for the industry as a whole to be taken down. Hollywood has not yet had its Nine-Inch Nails moment. Sundance style indie creative culture won't really cut it.
Here's a clue about where the disruption of the creative piece of the value chain might come from. I recently watched the first season of The Booth at the End (available on Hulu). It is a very low-budget show that was stitched together from what were originally a collection of 2-minute webisodes, all conversations that take place in a diner booth.
You'd think it would be tough to do much with this format, but the show succeeds brilliantly given how it started. It got picked up first on Canadian TV and then on FX. Think of how startling this sourcing path was. No screenwriter-waiters hopelessly pitching 2-hour scripts or pilots. No endless rewrites or options being passed around, expiring etc. No frustrated world of screenwriters hovering. Instead, you have the equivalent of a minimum-viable creative product finding traction and then scaling organically.
Early days yet, but the pieces of the new value chain are starting to coalesce slowly. At some point, some visionary is going to have an Aha! moment about how it all fits together, step in with brutal efficiency and do a major consolidation of the new value chain. Then we'll see a decade of competition where the new value-chain steadily gains competitive advantage over the old one, and finally, the old value-chain will be weakened to the point where it becomes the new one's bitch.
That's what has happened in the book publishing market, which is now at an end-game stage, where Amazon is finally moving decisively to make the old value-chain its bitch, with its push of Kindle lending and Kindle-first-exclusive promotion of ebooks as the primary market, with paper formats being shoved into the souvenir end of the market.