The Digital Crystal Ball

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I'm Matt Holzman with The Business Brief, a guide to what's happening in and around the business this week.

You probably haven't heard much about Hollywood's labor strife in the last few weeks, and you're probably grateful, whether you work in the business or not.  But the truth of the matter is that if you can manage to separate the name calling and the contract-speak from the bigger, underlying issues, the whole debate is pretty fascinating.  Because what it's really about is predicting our wildly unpredictable entertainment future. Both the guilds and the producers are taking gobs of Windex to their respective crystal balls and trying desperately to prophesy how long DVD's will keep making money and what might replace them.

That divination is no easy matter in the age of streaming and downloadable media, DVR's, video iPods and video-enabled cell phones, social networking, game boxes that connect to the Internet, hi-def and 3-D -- and with technology and the way we use it changing every second.

The Writers' and Directors' Guilds and AFTRA, the smaller of the two actors' guilds, largely wrote off the present in favor of setting a precedent for the future.  They essentially gave up on a bigger share of DVD's -­ that's today's technology -­ for a foothold in the digital future, even though there's relatively little money there now.

Meanwhile, the Screen Actors Guild has doggedly pursued DVD money.  Even though their strategies and tactics have made them seem a bit rabid, they're probably smart.  As the insightful Jonathan Handel points out in his blog at, while DVD's may wane, there's still likely to be a huge amount of money in physical media for the foreseeable future.

Think about it this way: the chip in your computer is probably three times as fast as the chip in the computer you had five years ago.  And yet, the computer itself doesn't seem to go any faster. That's because everything's so much more graphics heavy than it used to be.  And all those pretty pictures eat up that processing speed.  Now think about movies and TV.  Just about the time that a majority of Americans finally have hi-speed Internet that should allow them to download and stream stuff at a reasonable speed, entertainment is going hi-def, and 3-D and who knows what else.  And those formats contain a lot more data and eat up a lot more bandwidth, more than even current hi-speed Internet can handle. So physical distribution will continue to make sense for some time.

There's also an issue of realpolitik that continues to hamper the growth of digital distribution -- and I'm not talking technology.  We're all more liable to do the digital thing when our computers and our televisions and stereos are integrated.  Right now, you can download a TV show on iTunes, but unless you have a box like Apple TV, you can only watch it at your desk. While the technology more or less exists to hook everything up, the thing that we're really waiting for is a single bill. I think we'd all get on the bandwagon pretty fast if we could get reliable Internet, watch our favorite TV shows, as well as buy or rent movies, TV, music and even games anywhere in the house and get one bill for all of it.  The problem is, the cable company, the hardware companies and the content companies are all loathe to give up their relationship with you. Until they can work that out, the growth of digital will be hampered.

What's ironic about all the back-and-forth between the guilds and the producers is that it leaves out the most important player: you.  Until you decide what you want to watch, where you'll watch it and how much you'll pay, all their forecasts are just educated guesses. So remember, when you decide to watch a movie on your laptop, or watch a TV show on your iPod, or watch YouTube on your TV, the studios and the guilds will be watching you.

I'D love to know what you think.  Send me an e-mail at

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Matt Holzman