The entertainment industry remains at a critical inflection point, and needs the vision of a game-changing move
It seemed like a quiet year as the entertainment industry continued down its uncertain path into the 21st Century.
No big mergers occurred. No major bankruptcies, save Blockbuster and MGM. Carl Icahn kept tilting at Lionsgate. Billionaires like the Gores brothers kept pretending they want to invest in entertainment.
But the truth is, no major capital really is investing in Hollywood at the moment. And the entertainment industry remains at a critical inflection point.
Indie film continues to gasp for air. The major studios are now forced to think long and hard about where their financing for franchises and blockbusters is going to come from. Television is lucky to have cable – for the moment.
It’s pretty clear: This industry needs a game-changer.
That game-changer is already here in the form of technological innovation: new media, web-based streaming and the hardware that is catching up to these virtual-era breakthroughs.
But up to this point, no major media company has figured out how to embrace this revolution. None has integrated that change into its core – or seen its core identity melded to the next generation of media. AOL-Time Warner was a bust. Rupert Murdoch is saddled with a MySpace that has no synergy with the rest of NewsCorp.
But that does not mean that a game-changing move is not critically needed.
Netflix is the most obvious example, a new media company on a meteoric rise that consumers have embraced for its canny understanding of the user experience. We could reasonably ask why a studio didn’t buy Netflix early on, which – as TheWrap reported earlier this year – was within the grasp of several of them, including Warner Brothers.
Failing that, even this year some visionary media company should have been looking to buy it, as Netflix’s stock rocketed from $55 to $185. Someone still should, even if they end up overpaying; they’re buying the future.
Here’s a more modest, but potent idea: Why hasn’t a traditional media company bought The Huffington Post? Arianna Huffington and Ken Lerer’s new media juggernaut proves day after day that they understand how the intelligent consumers seek to communicate and engage with information.
Change is a way of life at that website, and users have flocked there by the millions.
For a relatively small sum – $100 million or somewhere in that neighborhood – a content company can acquire cutting edge clarity and a culture of rolling innovation.
It’s just the kind of thing that used to define Disney and its Imagineers. (In fact, Disney did circle Huffington Post a couple of years ago; the company denies it, but TheWrap has spoken to several sources that confirm a deal was on the table. It went away over valuation discussions and instead Huffpo raised a bunch of capital.)
I shouldn’t single out Disney. Of all the media companies, it seems to be reaching hardest in that direction. With Steve Jobs on the board, Disney has access to the sharpest thinking in consumer-oriented technology.
More promising is the hiring this year of two razor sharp new media executives, John Pleasants and Jimmy Pitaro, to oversee all online initiatives.
The game-change could come in the reverse direction. Many believe that Google should buy a content company. But the problem there is that content companies need innovation far more than Google does, which sits on a mountain of cash and is driven by a culture of independent thought.
Anyway, the search giant already owns a video distribution network in YouTube but has not reached out to entertainment sources in any significant way. That should tell you something about their intentions.
These days, change is a necessity.
The biggest change in the world of media broke loose a couple of years ago. But Comcast buying NBCU represents the end of something, not the beginning of something. The world of media and entertainment needs a true rebirth, not mere consolidation.
A day will come, not too far off, when Google will break down and buy a content company. Or Facebook will start its own movie studio. Or Youtube will actually live in concert with television (whatever that is these days).
But Hollywood can’t wait for that day. The industry needs to make innovation to happen, to use a crowbar to create cultural change internally.
That’s the kind of thing that will make 2011 fundamentally different than the first decade of this century.
What is still missing is a major media company that can demonstrate the vision, and the cojones to lead toward it.