END OF DAZE
The (next) looming crisis for Australia’s film and TV industry is self evident -
except to those in the business itself who are still in denial. Audiences are no
longer a mass, but a million-fold audience of just one, and taking control of
the consumption of content, argues Creed O’Hanlon.
In the arcane jargon of futurists, a technological singularity is “the point in
the development of a civilization at which technological progress accelerates
beyond the ability of present-day humans to fully comprehend or predict.” The
idea was popularised in a 1993 essay by the mathematician, computer scientist
and author of science fiction, Vernor Vinge, who predicted that if the current
rate of technological evolution were sustained, we would reach this point in
less than a quarter of a century.
The entertainment industry has reached it a lot sooner than that. If as the
Academy Award-winning screenwriter, William Goldman, once joked about Hollywood,
“Nobody knows anything,” it is especially true now. When it comes to the future
of entertainment, nobody does know anything.
Except this: whatever it is, it will be digital.
In a global society in which the real and the virtual merge in the most
unexpected ways – and in which ‘wetware’ and ‘hardware’ are increasingly
interdependent – everything, it seems, can be reduced to packets of data to be
stored, analysed, monitored, enhanced, deconstructed, remixed, commoditised, and
traded, including all forms of entertainment. One of the consequences of this
the transmutation of ‘hard copy’ to data is that traditional concepts of
ownership have begun to unravel like lines of corrupt code. This is proving
ruinous to the entertainment industry whose revenue is almost entirely derived
from the licensing of rights. And as they cling to the wreckage of
once-profitable business models, adrift in an ocean of ubiquitous high-speed
sharing of data, its senior executives resemble the bedraggled gob-smacked
characters of old cartoons, muttering, “Wha’ happened?”.
It’s not just that their ‘ownership’ of the content they package and market is
being eroded; control of the content itself is being wrested from them. No
longer a mass, but a million-fold audience of just one, each one of us now has
the ability now to decided what, when, how and where they want to listen, read,
watch, or interact.
"we want to have it now"
And we are impatient. If the World Wide Web has engineered one significant
social revolution – and I think it has engineered several – it is the
expectation of instant gratification. If we hear about anything, we can find out
more about it immediately. If we like it, and we want it, we want to have it
now. And it’s no longer enough that our needs can be met 24 hours a day, seven
days a week – whatever we’re looking for has to be infinitely customisable to
our individual requirements.
The effect of this on traditional entertainment has been devastating. In the
U.S. ratings seasons between 2000 and 2005, the staple weekday evening TV
audience during ‘prime-time’ leaked between 25 and 35 per cent, mainly 18 to
30-year-old males who refused to watch their favourite shows at a time decided
by station programmers. During the same period, sales of recorded music, mainly
on CD, fell 31 percent, and the music industry was spurred to mount a series of
aggressive, international legal attacks on web-based, peer-to-peer file-sharing
such as Napster and Kazaa, and developers and users of file-sharing networks and
applications became the target of criminal and civil lawsuits by bodies such as
the Recording Industry Association of America. And yet entertainment industry
analysts argued that the crackdown was actually hastening the decline of the CD:
"The prepackaged CD, without a shadow of a doubt, is over the hill,” one analyst
has noted. Listeners no longer wanted to buy tracks that they might not listen
to: they wanted to create their own compilations and share them.
The phenomenal growth of a single product, the Apple iPod, has underscored this.
By the beginning of this year, around 20 percent of the U.S. market had adopted
one or other of the iPod range as its MP3 player of choice. Nearly all iPod
users download music purchased through Apple’s online store, iTunes, which
accounts for 70 per cent of the U.S.A.’s commercial download music market. 23.5
million iPods are predicted to be sold worldwide in 2006.
This year, the U.S. cinema business experienced the longest slump in its
one-hundred-year history, with theatre admission declining by 10 per cent on the
previous year over a 19-week period, and revenues slipping seven per cent. In
Australia and key Asian markets, the news is worse, with this year’s revenues
off by up to 15 per cent.
Even DVD sales, the strongest revenues for major Hollywood studios, are showing
signs of vulnerability. Consumer spending on DVDs in the U.S. had increased 71
per cent between 2001 and 2002, but it has increased just 17.5 per cent
year-on-year in 2005, with the bulk of these sales supported by the release of
old television series – without them, total sales growth would have been in
single digits. Nevertheless, DVD sales represent 60 per cent of the total gross
of a Hollywood feature film, and command almost three times as many consumer
dollars as cinemas.
Which may be why the New Zealand director, Peter Jackson, has proposed that
when his big-budget remake of King Kong is launched in December, this year, it
might well be released on DVD and pay TV at exactly the same time as it’s
showing in cinemas. North American cinema owners were incensed when Disney’s new
chief executive, Robert Iger, suggested a similar strategy for his company’s
future film releases during discussions with analysts in August, this year.
“There would be no viable movie theater industry in that new world,” the
president of the National Association of Theatre Owners, John Fithian, declared.
And as cinema-owners cling desperately to marketing and distribution models that
have persisted for over 75 years, the contradictory ‘singularity’ of these times
is emphasized by the separate commitments of billionaire technology geeks like
Mark Cuban and George Lucas to distribute films over digital network to cinemas
and pay TV simultaneously. Meanwhile, everyone is trying to figure out what
Apple’s Steve Jobs might have in mind for a video-enable version of his popular
"array of devices"
It might yet prove ironic that the film industry celebrated its 100th
anniversary in 1995, the same year that the World Wide Web was released into the
The array of devices that distract the attention of today’s audiences is broad
and complex. In addition to the TVs, DVD players, game consoles, computers and
radios scattered through most Australian suburban homes, there are palm-top
digital assistants (PDAs), rich-feature mobile phones, digital stills and video
cameras, iPods and other MP3 music players, and portable game consoles that
connect wirelessly to the web. There are digital video recorders atop
interactive, high definition TV screens, and satellite radio receivers. What’s
more, the various devices can interact with each other, sometimes without human
Which means no-one is watching what they’re ‘supposed’ to, let alone when.
“More money for less audience,” a disgruntled CEO of a major ad agency
complained at a conference entitled Mapping The Future Of Screened Advertising
Delivery, organised in June, 2005, by the Screen Producer’s Association of
Australia. He argued that the answer to promoting brand or product awareness
among Australian broadcast TV’s diminished and ever more distracted audience was
“better creative”. And yet studies led by Duane Varan, Director of the
Interactive Television Research Institute at Murdoch University in Western
Australia, showed that viewers’ awareness was actually greater when they
recorded their favourite TV shows and then fast-forwarded through the ad breaks
than when they sat through the ads in real-time: in other words, viewers’
cognitive bandwidth better accommodated abbreviated messages delivered at speed,
‘filtered’ of the distracting creative elements – “better creative” had nothing
to do with it.
The danger for the film and TV industry is that its content producers,
distributors and marketers, particularly outside the U.S., are living in a
curious state of denial. It’s as if the radical revolutions in information,
entertainment, communication, distribution, transaction and audience/consumer
expectation that have occurred during the past decade have not happened, and
everything is exactly as it was back in the days when John Ford, Howard Hawks
and John Huston were still making westerns. Despite the sharp downturn in local
feature film, TV and advertising production that has drop-kicked many of the
country’s best technical talents into dole queue, even the biggest local players
in film and TV distribution are paying scant attention to the hard lessons now
being learnt by their buddies in the recording industry, not a few of whom are
employed (or, soon, unemployed) by the same, multinational media and
entertainment conglomerates that own the major Hollywood film studios and TV
networks – and that finance up to 50 per cent of foreign film budgets.
The reductive process of digital production and distribution of film, the
evolution of viral and other peer-to-peer forms of niche marketing, and the
audience's demand for increasing customisation of how, when, and where they
access product mean that the film and TV industry is unlikely to look anything
like it does today a decade from now. Still, the local industry persists in
believing that it is, somehow, future-proof.
"star-studded war stories"
‘Old hands’ from Hollywood and London, the production, sales, distribution,
and marketing specialists still routinely visit Australia to speak at
conferences sponsored by the Australian Film Commission or professional
associations like the SPAA. They swap star-studded war stories of Cannes,
Sundance and events whose names are just initials – AFM, MIPCOM, and others –
and chuckle knowingly at each other’s sly references to deals gone bad and
actors and directors behaving badly. But they are anachronisms, the last of a
breed for whom the audience is still a faceless mass and the finished product a
stack of heavy cans of celluloid that have to be physically shipped from one
location to another.
The business they know so well will soon be gone. A lot of the Australian
industry will be gone with it.
Published November 10, 2005
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Once described by Radio Triple J as “the Malcolm McLaren of the Net”, Creed
O'Hanlon is best known – some might say infamous – as the founder and former CEO
of Australia’s first and, for a time, most successful commercial web development
company, Spike. He also had a hand in the foundation of Urban Cinefile. Now a
critically acclaimed writer, O'Hanlon continues to track the evolution of an
increasingly networked society.