Remember How VHS ‘Destroyed’ the Movie & TV Business?

In the wake of  news reports across the variety of media that declare the film industry in Los Angeles is at the lowest point it has been in 16 years; and as the "pirates" of the Pirate Bay are declared guilty for illegal file sharing … er, copyright infringement … I am reminded of the early ’80s and how many an executive decried the oncoming torrent (pun intended) of home video and how it would ultimately destroy the theatrical and television business.

I have to remind everyone how that one turned out:

VHS spawned a whole new revenue stream for the studios who were initially slow to capitalize on it but caught up by sheer volumes of entertainment in their libraries.

And I also must remind everyone of the fact that VHS spawned the direct-to-video industry — which in some cases saved the studios’ bottom line by being cheap, easy to manufacture and outrageously priced for rental.

And, of course, this new media became DVD which became a whole other animal, but it  illustrates the “tail wagging the dog” theory when it comes to revenue streams in Hollywood. The new media eventually becomes the old, and it’s there to promote the new.

Example: Big theatrical releases became just the advertising and marketing campaign for the DVD sales (where the real money is/was).  Studios also created “DVD Premieres” to augment those properties.

Now we have our pals at YouTube (and Hulu, Veoh, Cinema Now, Itunes, Comcast, TW, etc.), who are slowly taking over that portion of the business once firmly grasped by DVD and Cable.

Video-on-Demand is the new revenue stream du jour for those in the know. Why else do you think YouTube is signing deals with the likes of Disney?  Why else do you think Hulu was able to get both NBC and Fox on board?

And what happened with VHS and DVD is going to happen with the internet. Let’s call it D2I (Direct-2-Internet — a phrase coined by writer Warren Ellis). We will see more “movies” (though they may be chopped up in chapters like Crackle.Com/Sony TV’s "Angel of Death"), more TeeVee and more hybrid content (like ARG’s) from the internet.

But what’s changed dramatically, some would say catastrophically, is that much of this content can and will be user-created and uploaded for sale.

For once, the studios are going to go up against the band of guerilla film and media makers out there who can not only write, shoot, edit and deliver a broadcast quality show, they can do it on their kitchen table and/or collaborate with other talented individuals across the web.

These media makers are networked … and as the U.S. Army or the CIA has found out — it is really hard to target (in this case compete with) people who don’t have a headquarters and exist only as cells in a network. Take one out and 10 more arise to take its place.

Let’s just say that like VHS and DVD before it, this new media is going to be interesting. It’s going to open up a lot of opportunity for those people who were working in the movie business. They’re going to be working for themselves or work for companies that don’t necessarily produce movies … they produce downloads.

The more things change…the more it changes things.