April 16, 2013
The video entertainment business is facing disruption as online services such as Netflix, Hulu and YouTube continue to shape media consumption. What if the unavoidable disruption isn’t actually the worst thing for the industry? Some see digital disruption to mean a complete replacement of traditional models, while others see an array of opportunities made possible by expansion of the video business.
“Replacing old business models can be cost-efficient, and grow the entertainment marketplace,” suggests Variety.
“Instead of being replaced, the video business is about to get much, much bigger,” suggests the article. “That’s right, contrary to what you think the lesson of the music industry is, digital disruption expands industries, it doesn’t shrink them.”
While it may be true that music labels have experienced a downturn, it is also true that consumers listen to more music on more devices than ever before. “And more individuals are engaged in making music for those listeners than before — just a casual glance at the thousands of musicians on YouTube confirms this,” notes the article.
Variety refers to this trend as the Law of More, in which digital creates more of everything: “More value for more customers experienced in more ways, creating more opportunity.”
Since consumers are watching more video per day than in the past, and mobile technology continues to impact accessibility, the Law of More already applies to video.
“When HBO recently suggested it might allow broadband providers to bundle HBO GO with broadband-only packages — a cable-cutting nightmare for video distributors if ever there was one — many people interpreted this as an attempt to replace the old way of reaching customers with a new one,” notes the article. “Wrong again. It’s about expanding the video business, not replacing it. The fact that an established firm like HBO is behind it only proves that incumbent players in an industry can disrupt.”
The article suggests that when extreme action sports clips do exceptionally well on YouTube, the trend does not replace ESPN or MTV, but can be viewed as an expansion to it.
Regarding Netflix’s recent foray into original programming with “House of Cards,” which alarmed some industry insiders, the article suggests that “Netflix’s action wasn’t intended to cause a change in the industry, it was a reaction to the fact that digital gives the company and its customers the opportunity to experience content in more ways.”
According to this view, digital is about expanding the video business, not replacing it. “True, a few years from now, when digital disruption has so fully expanded the video business that it becomes clear that some of our old technologies, business models and customer experiences are no longer relevant, we will happily replace them,” concludes Variety. “But at that point, we will be the disruptors, not the disrupted.”