The earliest motion pictures were a series of short 50-second films created by the French brothers, Auguste and Louis Lumiere. In 1895, they demonstrated their invention — a hybrid portable recording camera, film processing unit, and projector called the Cinemagraphe — to a paying audience. A year later, the Edison Manufacturing Company showed an improved Vitascope projector, the first commercially successful projector in the United States.
Over the past 120 years, there have been any number of twists and turns that have affected the motion pictures industry, but here are six technologies that have in turn destroyed the industry as it was known and set it on a new path:
The 1910s and 1920s saw the first explosion of film, and the Silent Era had its own slate of star actors and filmmakers: Rudolf Valentino, Charles Chaplin, Douglas Fairbanks, Buster Keaton, Ernst Lubitsch, Cecil B. DeMille, Louise Brooks, Clara Bow, Max Linder. The introduction of “talkies,” films with synchronized audio, in the mid 1920s, especially The Jazz Singer, the first talkie feature film, in 1927, led to the first upheaval of the film industry. By 1929, silent films had ceased to be box office draws, by the early 1930s, talkies were a global phenomenon. Silent film stars who couldn’t shift to newer, less emotive acting methods, disappeared, and a new generation of studios and filmmkaers took over.
Prior to and during World War II, the cinema was a standard entertainment option for most of the industrialized world; about 60% of Americans saw a film at least once a week in the war years. After 1948, however, television sets shifted from technical curiosities to standard household appliances and regular weekly movie attendance declined to about 10% of the population by 1964. Across the 1950s, between 5–7 million sets were sold each year in the US, for a cumulative installed base of 67 million units at the end of the decade, or 1.3 sets per household in 1960. Television’s popularity growth across the 1950s led Hollywood studios to adopt a “coopetition” strategy, in which the studios shifted their focus to blockbuster productions, launched production of their own television series, and also began selling rights to rebroadcast rights to pre-1948 films. The first feature film broadcast on US television was The Wizard of Oz (1939), which aired on November 3, 1956. Once again, the established Hollywood studios with their closed shop systems of producers, directors, and actors disappeared, and a new Hollywood system with distributors at the financial center took over.
3. Videotape and Digital Video Discs
The first consumer videocassette recorders were Sony’s U-matic from 1971 and Philips’ N1500 launched the following year. The development of two standardized tape formats — Sony’s Betamax (1975) and JVC’s VHS format (1976) led to an explosion of supply and demand along with rapidly declining device prices across the 1980s. Initially, studios fought the technology as a method of piracy of its copyright content, but by the mid-1980s, studios discovered that consumers were willing to rent or buy movies, and home viewing became a source of revenue as large as the theatrical release phase in many countries. Cult films and other specialized content allowed studios to make money from projects that would have been flops under other circumstances. By the mid-1990s, studios shifted more and more resources to promote DVDs, which offered many technical advantages: they could be viewed repeatedly without wearing out, they were more durable, could not be erased, and DVDs could offer more viewing formats, plus extra features not possible with VHS. DVD sales peaked in 2004.
Home entertainment revenues dramatically changed the economics of the film industry. Theatrical release schedules became marketing events for resales of old titles, and the number of profitable films exploded with this new opportunity for direct-to-consumer sales and rentals.
4. Netflix and Streaming Video
Netflix was founded by Reed Hastings and Marc Randolph in 1997 with a DVD-by-mail rental concept that attacked Blockbuster and similar retail outlets with a flat-rate pricing plan that allowed subscribers to watch and return movies without incurring late fees, a key customer dissatisfier of the traditional DVD rental industry. In 2007, Netflix launched an online streaming video on demand (SVOD) service; after 2010, Netflix began to expand internationally, and Netflix now operates services in 190 countries. Shifting to a global SVOD platform moved Netflix from being an expert in logistics to being the leader in video content distribution networking. The latest strategy shift, from film and series merchandising to integrated production and distribution, began in 2013, and is just starting to drive competitor responses by Disney (acquiring Fox Searchlight) and Amazon.
“Netflix and creative destruction” produces over one million hits on a standard Google search. Beginning with a New York Times article in 2010 and a Harvard Business Review article the following year, Netflix became one of the most documented examples of Clayton Christensen’s theory of successful disruptive businesses. The Netflix Effect first destroyed the DVD rental business leaders, Blockbuster and Hollywood Video. Then the company turned its attention toward the studios themselves, producing and distributing its own content outside the Hollywood studio distributor system, beginning with a new format, binge-watching a season’s worth of content in one long weekend, to today’s plan to make and promote as many as 80 films in 2018 alone, with a budget of $7–8 billion.
In response to this destructive stack on DVD sales, the major Hollywood distribution companies have been consolidating. Ten studios account for 90% of all theater revenues and more than 70% of all film income. Almost all of the energy of the top studios is focused on billion-dollar blockbuster productions, most of which involve multiple sequels or other forms of off-shoots. Nine of the top 10 US grossing films are sequels or spinoffs; only one, It, based on the 1986 Stephen King novel, does not stem from a previous film.
5. Augmented Reality
Creative filmmakers have described fantasies and utopian or dystopian futures since the earliest silent film days. Every decade has brought advances in set design and animation to allow a blend of live and virtual action, from King Kong in 1933 to the latest billion-dollar Star Wars film, The Last Jedi. Virtual Reality (VR) headsets were invented in 2000 as a personal way to augment reality, tricking the eyes and ears into believing that you are moving through a different and personal universe. Recent proliferation of smartphones capable of supporting virtual or augmented reality (VR/AR) experiences is enabling an explosion of new content formats that may dramatically change how consumers choose their entertainment experiences.
Currently, the industry is in its early stages, advancing rapidly in both hardware and foundational software. Video game developers have taken an early lead, modifying multiplayer games with an immersive experience. Augmented experiences for travel and immersive stories about exotic locations are starting to appear, and new standards for format will enable thousands of storytellers and filmmakers to expand into a new medium of immersive augmented reality experiences.
Bitcoin and Ethereum are foundational technologies that enable distributed apps to replace the cartels that characterize much of today’s media and entertainment industries. Blockchain platforms allow filmmakers to crowdfund their projects and keep control over their projects rather than cede the financial interest to Hollywood. Decentralized smart contracts allow intellectual property and content revenue streams to be shared with the owners. Online blockchain distribution changes the economy of deploying proprietary content networks, with peer-to-peer sharing of video content shards providing more security than traditional encrypted file formats.
Just as blockchain decentralization is transforming the world’s foreign exchange system and the online gaming industry, the same technologies are starting to transform many marketplaces, including the media and entertainment industries.
StreamSpace, www.stream.space, is one of the leaders using blockchain to disrupt the streaming video industry. StreamSpace is developing a blockchain content distribution network (CDN) and a blockchain-powered marketplace for independent filmmakers to connect with their fans and offer views of their film projects directly to consumers around the world. The project uses social media so filmmakers and fans can interact without intermediaries.
The winners of all of these technological innovations are the consumers, the fans of compelling content. From the earliest examples such as The Great Train Robbery to today, people have wanted to tell and be entertained by stories. All technological advances raise the standard for consumer entertainment, making it more powerful, more personal, and more popular. Who knows what the next decades will bring?
Photo source: WikiCommons, Director Cecil B. DeMille, page 60 of the July 1922 Photoplay.