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What Would It Take To Kill Hollywood? And Should We Try?

Paul Graham, the founder of start-up seeder Y Combinator has decided that the fight over SOPA and PIPA proves that Hollywood is a dying industry, and has issued calls for competitors to kill it:

That’s one reason we want to fund startups that will compete with movies and TV, but not the main reason. The main reason we want to fund such startups is not to protect the world from more SOPAs, but because SOPA brought it to our attention that Hollywood is dying. They must be dying if they’re resorting to such tactics. If movies and TV were growing rapidly, that growth would take up all their attention. When a striker is fouled in the penalty area, he doesn’t stop as long as he still has control of the ball; it’s only when he’s beaten that he turns to appeal to the ref. SOPA shows Hollywood is beaten. And yet the audiences to be captured from movies and TV are still huge. There is a lot of potential energy to be liberated there.

How do you kill the movie and TV industries? Or more precisely (since at this level, technological progress is probably predetermined) what is going to kill them? Mostly not what they like to believe is killing them, filesharing. What’s going to kill movies and TV is what’s already killing them: better ways to entertain people. So the best way to approach this problem is to ask yourself: what are people going to do for fun in 20 years instead of what they do now?

That’s a big task, and one that comes with formidable obstacles. First, there’s the cost. Hulu’s spending about $500 million on content in 2012. That’s the total cost of making Avatar, including investments in cameras and a $150 million marketing budget. There are other companies that are spending more money, Netflix among them, but that money is going to buy up access to back catalogues as well as to original programming. But the point’s clear: it will take time for rivals to rise up who can spend as much money creating and marketing products as Hollywood does. And while there’s certainly proof that you can make fascinating, visually engaging, and financially successful movies for less than Hollywood typically does (District 9, anybody?) you’re not going to put Hollywood out of business when you’re at a huge disadvantage in terms of making product and getting consumers interested in it.

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Second, and relatedly, knowing how to distribute content isn’t the same thing as knowing how to produce it, or to spot what’s good about a project, or to know how to make it work. That means that organizations like Yahoo, Netflix, and Hulu, all tech companies that are producing original content, are going to have a learning curve in producing good material. Particularly if the reason to try to kill Hollywood stems more out of a distate for SOPA than for formulaic storytelling or the lock of straight white men on the industry in a way that limits storytelling. And they’re going to have to figure out how to get customers to consume it regularly without the predictability of a movie release calendar or a network. These challenges aren’t impossible to overcome, but they are a hurdle.

Third, I don’t know that there’s good evidence that there will be a direct tradeoff between movie spending and other forms of entertaining. Video game sales are outstripping movie tickets, but it’s not like movie ticket sales have declined in relation to the rise of video games: in fact, both industries have experienced a similar downturn in the recession. And certainly, video game creators have an interest in Hollywood surviving as a way to spin off games into movies that help extend and make more durable existing franchises. There may be new forms of entertainment in 50 years, but I’m not sure it’s going to entirely replace movies or television, both of which have proven to be durable art forms even as our ways of consuming them change, posing both distribution and storytelling challenges. I don’t doubt that we’ll get new and exciting forms of entertainment. But I don’t think we’ll have to kill Hollywood to get them.