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(PART ONE OF TWO)

The entertainment industry is changing. Everyone knows that. Even the thickest executive to the most stoned production assistant sees the writing on the wall. Usually when you hear the industry is changing, it’s meaningless execuspeak for wall street earnings reports or it’s an excuse for lowball contract negotiations with writers directors and actors. It’s usually nonsense. But not this time. This time things really are changing.

From the advent of motion pictures and television a handful, that’s right a HANDFUL of studios, networks and big entertainment companies controlled what you watched. Maybe less than 10 CEOS of Newscorp, Viacom, Disney, etc controlled what you saw. Not just on networks but on basic cable too. How did they do this? It’s really quite simple and genius. You can control what people watch by controlling only two things: Distribution and Money. Controlling those two things have allowed essentially old white men to keep a lock on the entertainment industry for years.

But what happened when basic cable came along? All those channels, all those choices. That should have spurred competition, right? Most of them were crap, and then the ones worth anything, what did the studios do instead of competing? They merged and bought. Now look at your cable landscape. Almost every channel is owned by someone else. FX (FOX) SCI FI Channel (UNIVERSAL) Comedy Central, Nick, (VIACOM) and anything with Disney and ABC in the title is all one company. CBS owns Showtime and they have a system developed where they can make feature films at zero risk as they already know they’ll play on Showtime and CBS. From the March Hollywood Reporter Article:

“Moonves has signaled CBS could produce four to six films a year in the $10 million-$50 million budget range, allowing Showtime to partly make up for some lost film product on canceled output deals while also giving it a chance to participate in the upside. CBS executives have said the company could make up its film costs thanks to other rights, such as TV and international, before the box office run of movies even starts. And after several years, CBS would have a library it can further leverage in the digital age, they have argued.”

And yet, even with all of this spending and pedantic hands-on micro management from start to finish, the studios and networks know they are losing control. Why? Because of the reason you tech savvy reader already knew about. The internet.

Studios have always competed with each