Movies, Videos, Change, and Competition

Want to see complex competitive dynamics in action? Start tracking the home video space... Filmed content is something nearly all of us consume in copious amounts, and the space is rife with change. It's consternating for some players, delightful for others, and a doomsday for a few.

Let's think of the options today vs. just a generation previous. For most consumers in the past, "filmed content" was a simple choice: go to the movies or stay home and watch t.v. Technology has changed this simplicity. Today's options subdivide the space via type of content, access device, fidelity (sound & picture quality), etc. New competitors are rising, previously successful firms are crumbling, and the future outlook is murky in many ways.

Don't believe me? Consider this... Television shows are distributed today via free t.v., syndication as repeats, online as ad-supported content via Hulu, for rent at iTunes, on DVD, and in snippet form on YouTube. Movie options are nearly as myriad, and the advent of mobile devices more capable of video playback in higher fidelity (think iPad here) promise even more splintering of options in the future.

Blockbuster is one firm that's failed to cope with the changes well. Redbox has done quite nicely. Netflix is openly embracing the changes, pursuing enhanced ability to deliver digital content with fervor. The movie studios, television networks, and cable providers are all scrambling to discern how they can best extract value from their content in a market which is evolving with pandemic virus voracity.

Contemplate the factors influencing pricing in this arena: Desirability of the underlying content is still primary. Avatar is a terrific example of a great movie doing exceedingly well at the box office. But, once it's out of theatres, what next? "Windows" on content delivery, pacing release by channel, used to be relatively easy for the studios. The process is becoming blurrier as options for consumers proliferate.

Today, Apple is playing with pricing for rental of t.v. content, Netflix is being compared to HBO, and YouTube is trying to figure out ways to monetize its business by renting movies. Huh? iTunes as threat to cable operators, Netflix as competitor to premium movie channels, YouTube as alternative Blockbuster? Yup.

This market is one which rewards agility, creativity, experimentation, insight, and a willingness to view change as opportunity. Firms which cling to past models for success (hello, Blockbuster?!) will be pummeled for their stubbornness. Oh, and today's darlings (redbox, Netflix)? Even they can't rest on their laurels. How it all plays out is anybody's guess, but two things are for sure: 1. What works today ain't what's gonna work tomorrow, and... 2. The evolution is gonna be a fun show to watch.