Here's what I expect for 2010.
1. Control over distribution will shift to consumers.
Expect an increasing amount of control over how, when, and where you consume content. A decade after TiVo debuted its commercial-skipping abilities, more and more technological innovations are shifting control from the hands of companies over to consumers. You can watch, listen to or read pretty much anything you want, whenever you want, thanks to Hulu, iTunes, satellite radio, Video on demand and thousands of free web sites. The variety and flexibility of access is only going to become more diverse.
In 2010, premium cable content will become broadly available on consumers’ terms—as the cable and content companies team up for "TV Everywhere," password-protected, on-demand content for subscribers.
Smart phones will become more prevalent and NetBooks will take off, which along with broader WiFi and faster broadband speeds will make it easier to access even high-definition content on the go.
I expect the movie giants to experiment with "collapsing windows," thereby offering video-on-demand before DVD releases, giving consumers more home video options closer to a movie’s theatrical release.
The big question is whether consumers will have to pay for access to the distribution stream, as moguls like Rupert Murdoch threaten to start charging for News Corp’s web sites.
But even if sites start charging, there will always be a free alternative. And when you do pay, it will be for premium, differentiated products—the equivalent of HBO and Showtime—and will probably seem worth it.
2. Social media will grow and be increasingly influential.
Social networks and communication tools will only grow in size and influence. Twitter and Facebook allow word of mouth to travel faster than ever, and that will only accelerate as more people get smart phones and sign up for social networking services.
Social media will prove increasingly crucial for marketers to reach consumers on their home turf. And it will increasingly be the filter through which we find and consume content.
The platform Twitter and Facebook provide for consumers to broadcast their opinions will continue to disarm traditional advertising. Opinions fly so fast that movie marketers can no longer “buy” a huge opening weekend; now it’s far more important to get moviegoers on board, to have them spread the word about the film.
We can expect marketers of every kind to try to learn from the huge success of Paramount’s “Paranormal Activity.” The film's promotional campaign asks consumers to “request” that the movie open in their town.
Social media is sure to also have growing influence over the way we consume content. We follow the lead of friends who share articles or videos on Facebook. Twitter enables a customized news feed, with nearly every possible publication, blogger and journalist on board. And MySpace is turning itself into a destination for content, and for strangers in real life to be virtual friends because of shared interests.
3. More content than ever will be produced, forcing media giants to distinguish themselves from unprofessional alternatives.
The sheer amount of content available in 2010 will explode. These days it’s so easy to produce and distribute content, through YouTube , blogs populated by ads, or even a Twitter feed. That means consumers will be able to find that a blog or news site seems made just for them. Fragmentation reaches far beyond user-generated content, the cable world will continue to profit from this drive for narrower channels.
Oprah Winfrey’s move from broadcast syndication to her own cable network, OWN, speaks to the ongoing shift to greater choice that we’ll see in 2010. Viewers will continue their shift away from broadcast to more niche cable networks and advertisers will follow them. People will still watch TV instead of YouTube videos because the quality and the production value are still that much higher; user-generated options just can’t compete.
Print media will struggle even more to compete in a world crowded with citizen journalism and user-generated blogs. We can expect more local newspapers to go under as they lose subscribers and ad dollars to free, online alternatives. Even web sites like Huffington Post, which doesn’t pay many of its bloggers, can deal a real blow to national papers’ online traffic.
Meanwhile, the movie studios are dealing with the proliferation of entertainment options by moving in the opposite direction; they’re looking to capture the mainstream. Making movies is so expensive it doesn’t make sense to invest in a movie that will only attract a tiny niche. The studios will make fewer films, eliminating specialty- or art-film divisions, and instead invest in sure-thing bets. They will acquire independent films if they see real mainstream potential, like Paramount did with “Paranormal Activity,” but they won’t invest in making and distributing niche products.
If you’re looking for a documentary about bird migration in Brazil, it’s certainly out there. You can find that niche product at film festivals, on Netflix , or independent film web sites. Just don’t expect the studios to invest in anything that doesn’t have a big audience. One of the few remaining communal media experiences is at the movie theater. And as 3D explodes in 2010, I expect the mainstream movie business to get bigger than ever.
The media business is certainly moving in the directions I predicted, but slower than I thought—and, perhaps, slower than executives struggling to compete with piracy and new model would like.
The industry faces the same issues: a shift to digital distribution, increasing fragmentation, and a push for more accountability and targeting from advertisers. No one has found a silver bullet; we're just seeing a continuing push to experiment with new business models to find that holy grail
Overall I'd give myself an A-/B+. Here's how they stacked up.
1. The media landscape faces mega shifts.
I was absolutely right that the media landscape was due for some M&A action, but I didn't guess which deals would happen. I pointed out that General Electric, parent of CNBC, said it's interested in purchasing media assets and that News Corp pointed to its war chest of cash.
I didn't predict that GE would be on the other end of an the acquisition—now reportedly on the verge of making a deal with Comcast for its NBC Universal unit. I also didn't guess that Disney would make a major acquisition, as in the $4 billion purchase of Marvel Entertainment .
2.Movie studios will focus and streamline to ride out the financial downturn.
We have seen more layoffs and consolidation across the industry. The specialty film units, those divisions known for producing artier, sophisticated Oscar bait, have nearly disappeared. They just simply don't have the appeal of big-budget, popcorn movies.
Layoffs continued industry-wide in 2009, with Hollywood insiders saying that the recession provided an opportunity to trim the fat. Disney streamlined its Miramax division to a mere shell of itself and restructured its studio with new execs at the helm while Universal restructured its executive ranks. Now there are rumors that Universal's Focus Features could face some major changes.
3.Movie theaters will pull out the stops to keep you buying tickets.
I had pointed out that the theatrical business faces the challenge of heightened competition from home entertainment and lower spending from cash-strapped consumers. But in fact, the theatrical business has held up better than anyone thought.
One of the negative impacts of the economic downturn is that it's slowed the rollout of digital 3-D. There weren't enough digital 3-D theaters for Dreamworks Animation to release "Monsters vs. Aliens" exclusively in 3-D as it had planned.
More 3-D systems are expected to be in place by the time Fox's "Avatar," James Cameron's latest, opens in mid-December. The roll-out of 3-D is coming, it just hasn't been as fast as expected, though higher prices for tickets did help boost the overall box office numbers.
4. TV networks will fight to maintain their dominance.
I was right that TV networks had a tough fight on their hands. In fact, the upfronts—the ad buying period in May when the nets try to secure buyers for a good chunk of their ad time—were a big disappointment. The ad buying period dragged out for months and months, far longer than expected, and the nets sold a smaller percentage of their ad inventory than in past years, at lower prices, for the most part. NBC made the bold move to move Jay Leno to the 10 p.m. ET primetime slot, replacing pricier, scripted programming. Leno's trying to battle the TiVo effect by doing in-show product placement. Still, it's unclear if moves like these can battle the shift to cable.
5. You'll treat the Internet like another TV set.
Last year, I pointed out the pivotal role Hulu plays as a destination for free, ad-supported TV content via the internet. This year, Disney jumped on the Hulu bandwagon, joining NBC Universal and News Corp as a co-owner and offering its shows on the site. The more content that's available on Hulu, the more it becomes a true TV alternative.
In the same vein, cable and content companies like Comcast and Time Warner started teaming up to bring password-protected, on-demand cable content to the web. The idea is that such content will keep subscribers paying their cable bills, instead of "cutting the cord" and relying exclusively on content via broadband. If consumers pay for premium content, shouldn't they be able to access it when and where they want it?
6. The music industry will find a new model, with concert tours and megastars at its core.
The big headline for the music industry this year wasn't a new business model, but that the concert business still reigns supreme as the most profitable outlet for artists, Note the proposed merger of Live Nation and Ticketmaster, which leaked out in February.
The combined company would be vertically integrated and powerful, which is why the merger is under review by antitrust regulators. The two companies will likely have to divest some of their overlapping divisions to get approval. Live Nation said in November it expects the deal to close in the first quarter of 2010.
7.The publishing industry will continue to suffer and will shift more online.
The newspaper industry continues to suffer. Ad revenue at US newspapers fell by nearly 28 percent in the third quarter, continuing a brutal slide. Average daily circulation for 379 daily newspapers was down 10.6 percent in the second and third quarter compared to a year ago.
Earlier this year, the century-old "Christian Science Monitor" stopped publishing a physical paper and switched to a web only model. Major daily news papers in major cities—Denver's "Rocky Mountain News" and the "Seattle Post-Intelligencer"—folded.
8. Social networks will start translating their members into advertising dollars.
Facebook has slowly but surely proven that it has a business model that works. Its annual revenue is estimated at more than $500 million, which may not be on the scale of its massive audience, but the company is cash-flow positive and growing.
The social media break out this year was Twitter, which went from niche to mainstream, as celebs like Ashton Kutcher and Oprah made 140-character messages compelling. Twitter hasn't prioritized profitability; it's been focused on growing its customer base and developing its applications. The company has talked about the potential in ads on Twitter and products to help companies communicate with their customers and gauge consumer sentiment, we're sure to see some revenue come from these businesses next year.
9.Video games and Hollywood will become more intertwined.
The twowere already pretty intertwined and I don't think they've become any more so. Video games suffered a decline this year as consumers watched their wallets. Music video games in particular saw a big slide in the first half of the year.
It was simply too easy to download new songs and there was little impetus to buy a new game. But there were some big new game releases. "Call of Duty: Modern Warfare 2", for example, generated more in sales in its first day than any movie ever has.
There are a handful of big video game titles that are being turned into movies for 2010 release, including "Prince of Persia: The Sands of Time" from Disney's Buena Vista label and "Resident Evil: Afterlife," from Sony's Screen Gems. If those films are hits we could see those two mega entertainment industries come closer together.