Broadcast Contracts Will Kill Hollywood

It does not surprise me that Game of Thrones is the most pirated show on television. Without cable, I have no way to watch it. I’d happily pay $20 per month if HBO GO was open to people without cable subscriptions. Unfortunately, that’s not that case. None of HBO’s shows are available on iTunes, Netflix, Hulu or Amazon. I have no way to watch any of HBO’s shows except pay a $75 per month cable subscription for a television I don’t have, wait for them to come out on DVD, or pirate them. I’m a good boy with little expendable time, so I avoid Game of Thrones altogether. But 25 million people have not been angels and found the show through whatever means necessary. Who knows how many more people opt out entirely and forever pass the show by?

I’ve said before that Hollywood should concern themselves less with piracy and more with audience access. Simple supply and demand metrics – audiences demand content and providers are failing to supply to increasingly popular internet channels. It’s the whole industry’s fault for inciting piracy. They are missing out on an expanding margin of customers. In defense of HBO and others, production companies have entangled themselves in lucrative and restricting contracts with cable partners. To offer direct-to-consumer digital distribution would breach their contracts and deprive them of their single strongest revenue source. For most companies like HBO, that may never happen – at least not until everyone has internet televisions or the cable providers themselves die.

Broadcast contracts may be a reasonable excuse for holding content back from web distribution. But if companies plan to stand behind that excuse, they need to stop making such a big deal about piracy. By threatening or incriminating millions of people who cannot access your primary distribution method, you are alienating potential evangelists of your content and failing to understand the trajectory of your market. Web television is not a trend. In five years, most motion picture content will be consumed online – on connected televisions, game consoles, mobile devices or computers. To fight or deny this is foolish and egoistic.

I left Hollywood because no companies were willing to put the engineering muscle behind personal distribution channels. Beyond sheer web design and database builds, online services require customer service and billing infrastructure that can cost a lot of money. Fortunately, these things are getting easier and cheaper. An independent production company with enough content to leverage could easily set up shop on the web with a very controllable investment and small handful of people on the tech side.

If you want a sustainable career in the movie business, start or work for a company with full digital rights. Careful signing onto productions with traditional broadcast contracts and no digital rights – these opportunities, no matter how lucrative, are sinking ships. If they cannot find a way to breach contracts soon, they may not survive the next wave of liberated web-savvy competitors.

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