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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 iTunes application.

"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 public domain.

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 intervention.

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.







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