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in Filmmaking
on Aug 14, 2012

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In Bob Dylan’s 1965 song “Ballad of a Thin Man,” he famously observes: “Something is happening here/But you don’t know what it is/Do you, Mr. Jones?”

Well, something is sure happening to the U.S. movie entertainment business and nobody seems to know what it is. Most disturbing, the MPAA reports box office ticket sales have been declining for the last decade and a leading market research firm, Digital Entertainment Group, reported DVD sales continue to shrink. Making matters more trying, there has been no comparable increase in web streaming revenues to make up the difference.

Adding to this bleak picture, a recent Wall Street Journal article reported that “publicly traded cable, satellite and phone companies had a combined net loss of about 200,000 subscribers in the [2nd] quarter.” Among the companies it tracked and their respective subscriber losses are: Charter (72,000), Comcast (176,000), DirecTV (52,000), Dish (10,000) and Time Warner Cable (169,000).

The Journal also reported that the investor research firm Sanford C. Bernstein found that 400,000 pay-TV subscribers cut the cord during the same period. It noted that since 2010, “the pay-TV industry has experienced five different quarters when the number of subscribers declined.” However, it did warn that the April-June quarter is “traditionally a weak period for pay-TV operators, as college students disconnect their service, typically returning in the fall.”

Surely, part of the reason for the cord-cutting and cord-shaving (i.e., service cutbacks to save money) is the deep economic crisis many Americans face. Another factor is the growing popularity of streaming video services, particularly free or inexpensive programming available from Google’s YouTube, Amazon, Netflix, iTunes and Hulu. In addition, there are some two dozen online micro-services offering indie movies either free or very inexpensively.

A third factor is the growing popularity of what is known as “multi-screen” TV viewing, that is people watching TV over Internet-connected devices. A recent ComScore report found that 17 percent of Americans identify themselves as multi-screen TV viewers. In addition, 11 percent of Americans watch TV exclusively over PCs, laptops, tablets and/or smartphones.

This phenomenon is driven by the rapid adoption of smartphone and tablets. Michael Degusta, writing recently in MIT’s Technology Review, noted that smartphone adoption, after taking the better part of a decade to reach 10 percent, has jumped to 40 percent ownership in just two and a half years, faster than any technology except television.

In addition, the Consumer Electronics Association reported that as of June 2012, tablet ownership among online American consumers reached 29 percent, a 45 percent increase from the end of the previous quarter.

The U.S. entertainment video market, and especially the movie industry, is in a state of freefall. New mobile technologies and program distribution options are shaking up, restructuring, a well-established business. Not unlike the changes that racked the pre-recorded music industry a decade ago, “Something is happening here/But you don’t know what it is/Do you, Mr. Jones?”

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David Rosen is a writer and business-development consultant. He is author of the indie classic Off-Hollywood: The Making & Marketing of Independent Films (Grove), originally commissioned by the Sundance Institute and the Independent Feature Project. He can be reached at drosennyc@verizon.net. For more information, check out www.DavidRosenWrites.com and www.DavidRosenConsultants.com.


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