Trends, Innovation and Money

In reading and tweeting on a few news items this morning, I was compelled to write a quick blog post.  I think I am restating the obvious, but sometimes it's good to remember simple lessons.  So, here it is:

If you want to make a lot of money in the entertainment business (or any other business), solve a real problem for a price that people are willing to pay.  That's what successful companies do.

What does that have to do with trends and innovation?  Every time the ground shifts in any industry, there are new rules and new issues to be solved.  Identifying those issues early and creating great solutions is the essence of opportunity.

No reason to belabor this point.  Here is the bottom line:

1.  Watch the trends.
2.  Understand how the industry is innovating and responding to those trends.
3.  Assess what new challenges will be created as a result.
4.  Devise brilliant, practical solutions to those new problems.

So, in our business, technology is driving tremendous changes in every area of the industry.  In an hour of creative, enlightened thought, any of you could probably think of ten problems that will need to be solved as a result.  Want to make a lot of money?  Start solving.

The Most Important Trend for Entertainment 2010

At this time of year, it's interesting and fun to think about where our industry is headed.  More specifically, what are the important trends in entertainment?  Which changes are most likely to impact those of us who don't work at NBC Universal?

We can talk about the various developments and what they might mean for the various sectors, but I think this coming year there is one single development that will be a game changer in almost every area of the business.  It is the convergence of the Internet with the home theater. 

Internet content has been moving closer to the living room for several years.  One major hurdle in that process has been the lack of enough bandwidth and speed to deliver large format HD content on a real time basis.  The combination of effective compression and faster networks has pretty much solved that problem.

Also, a truly effective and dominant solution for getting the digital content on to the TV screen had not yet emerged.  The TV manufacturers have taken matters into their own hands by integrating Internet inputs into the hardware architecture, and establishing alliances with content providers.  Problem solved.

So, for 2010 we will see the emergence of huge, sharp TV screens equipped with hardware and software that provides seamless access to everything on and off the 'Net.  We will be able to get endless amounts of full-sized HD content with surround sound at the push of a button.  Vevo, Netflix, Hulu and dozens of lesser known companies are poised to fill this newly minted content pipeline. 

And all of those TV sets boast at least a 120 Hz refresh rate, so they are 3D ready.  (In-Three and Reliance, Katzenberg, Cameron, and dozens of others are poised to feed dimensional content to consumers, both in theaters and at home.)

What's the business impact of this new technical capability?  It's quickly eliminating the DVD business.  It will be the final and fatal blow to the CD business.  It is putting pressure on theater owners to develop and deliver a superior experience.  It is already eliminating the "windows" strategy in the film distribution business.  It will give small film makers the ability to find their own audience (just like iTunes allowed independent music artists to find an audience).  It will create upheaval in the broadcast and cable businesses, forcing these companies to find better business models and deliver better programming. 

Virtually everything about our business will change when this final link is placed in the chain.  It is something that cannot be ignored; it must be embraced.  There is tremendous opportunity afoot for those who are poised to take advantage, and tremendous struggles for those who delay or resist.  My friends, the cheese is about to move in a big way.  If you have any doubt about whether I'm right, come to CES in Las Vegas next month and tell me what you see. 

The new horizon is now going to be solving the marketing problem.  It's hard enough to figure out what to watch with a couple hundred available channels.  How about when that number is infinity?  How do you decide what to watch when your choices are endless?  Whoever solves that problem stands to make a lot of money.  (Personally, I'm betting on Google.  They are really good at solving that type of problem.)

As always, I welcome your thoughts.