How the movies beat disruption

With the movie industry’s Academy Awards taking place last night, albeit not without mishaps, it’s worth reflecting on how Hollywood has defended itself against a range of disruptions.

With the movie industry’s Academy Awards taking place last night, albeit not without mishaps, it’s worth reflecting on how Hollywood has defended itself against a range of disruptions over the last century.

From when the first movie was shown by the Lumiere brothers in Paris just after Christmas 1895, cinema has been both a disruptive force and one that’s been subject to its own challenges.

The immediate effect of the new technology was an explosion of new businesses, trades and techniques not dissimilar to the first dot com boom of the early days of the web as the traditional theatre industry was displaced by movie theatres.

As the  technology evolved, the movie industry itself was subject to disruption as sound was developed – ending the careers of many silent film stars – followed by colour both of which allowed new techniques and markets to developed.

Then came television and, it would have seemed, the end of the movie industry. Although that didn’t happen and it’s instructive how the industry reacted to the challenge.

In a 2007 paper, academics Barak Orbach and Liran Einav showed the movie industry’s evolution starting just after the introduction of talkies in 1927.

The shift to sound drove the movie industry to its all time heights prior to the Great Depression, however the economic downturn hit the film business hard – something to consider when people talk about the ‘lipstick effect’ -however steady growth returned through the 1930s and until the end of World War II.

Following the war, economic change and the arrival of television were tough for the movie business as attendances fell dramatically until stabilising in the late 1960s. Interestingly, the price of movie tickets went up dramatically shortly before the decline tapered off.

The graph finishes at 2002, at the end of the first internet boom and it’s notable the early days of the web, or the rise of Pay-TV in the 1970s and the Video Cassette Recorder in the 1980s had little effect on the industry’s attendance figures.

Despite those new technologies, the movie industry managed to attract audiences despite the plethora of entertainment options on offer at home.

Much of this was due to technological change with advances in computer generated graphics and recording techniques giving film makers far more creative scope while the roll out of multiplex cinema complexes allowed patrons far greater choice in movies.

Fifteen years later the effects of technology are still telling. In 2002, the average American was buying five movie tickets a year, according to the 2016 Motion Picture Association of America’s annual report this had fallen to 3.8, no doubt partly due to the success of Netflix.

However the film industry has still remained lucrative, partly through developing alternative streams of income like product licensing and international sales – China is by far the US industry’s biggest market and non-North American sales are growing by 21%. At the consumer level, movie houses increasingly make their money from concession sales and add-ons like premium seating.

So the answers to the movie industry’s success in staying profitable in the face of disruptive technologies seems to be in adopting new tech, diversifying income streams and globalising their product – although a bit of legislative protection in extending copyright probably helps.

The lessons though from a century of disruption though are clear, how well the movie industry responds to continuing disruption from the likes of streaming services like Amazon Prime, Netflix and their Chinese equivalents remains to be seen.

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Data and the modern movie producer

WETA Digital shows the way on how other businesses will have to manage data in coming years.

Dealing with the massive wave of data flowing into businesses will be one of the defining management issues of the next decade. One company that is already dealing with this is New Zealand’s Weta Digital.

Wellington based Weta that’s best known for its work on Lord of the Rings and is part owned by director Peter Jackson employs 1400 staff for its movie special effects work and has won five visual effects Academy Awards over its 23 years of operations.

Kathy Gruzas, WETA Digital’s CIO, spoke to Decoding the new Economy at the Oracle OpenWorld forum in San Francisco this week about some of the challenges in dealing with the massive amount of data generated by the movie effects industry.

“We have some very heavy loads.” Kathy states. “We push our systems to the limit.”

Applying powerful systems

One challenge is the sheer computing power required, ‘the render frame processes one frame per server until you have four seconds of footage. Sometimes that takes over night or even longer and for that we use a lot of storage,” Kathy says. “The render farm being six thousand servers will write 60 to 100 terabytes of data a day and read a quarter to half a petabyte each day.”

“We need systems that will be very large to handle the volume of data we generate but also be very quick to handle those read and writes.”

“One render could use a thousand computers, sometimes more, and all of those will be reading and writing against the same block of storage so we have our own software layer that directs those loads but we try to minimise the load on our storage but we have the worst work load you can imagine with lots of servers, lots of small reads and writes and many of them random and concurrent with pockets of hot files.”

Despite the automation, the business is still extremely capital intensive. “In visual effects you probably need at least three hundred artists to work on one film, it’s a very labour intensive process to do the artistry and much like a production line.”

Going mobile

The nature of modern movie production means the effects teams are now part of the shoot which adds another level of complexity for Weta. “Although we are visual effects which is largely post-production we do go out with crews when they’re shooting the movie so we can do reference photography,” says Kathy.

“We do 3D scans so if we need to do something digitally and we do motion and facial capture as well,” she says. “There are 240 muscles that we tweak individually to get the expression. That’s a huge amount of data to capture.”

To do this, Weta created their own ‘road case’ that contains everything they need to grab the shots and store the data they need, “you can’t ask the director retake the shot because we missed something.”

Into the forest

“We have to take the case into the forest and into the rain and everywhere. It’s good having that roadcase that has storage, networking and servers in it.” The case, which was self assembled by Weta’s team is “probably the most travelled Oracle system on the planet,” laughs Kathy with “lots of data capture and sub-rendering.”

Weta’s story illustrates just how managing data is becoming a critical issue for companies. While movie special effects is very much a specialised field that’s far ahead of the curve in its technology use than most businesses, they do show the importance of managing and securing their data.

For other businesses, lessons from Weta is understanding your company’s – including staff and customers’ – needs then investing in the right tools to deliver is essential.

One important difference between technology intensive businesses like Weta and most other organisations is the New Zealand company is doing most of its processing and storage in house. Those without the same needs will almost certainly be shifting these tasks onto the cloud.

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