Way back in 2008, I tried my hand at predicting what the entertainment industry might look like in 2015. More than halfway through that target year, it seems appropriate to check back on those aging predictions, which painted Apple (NASDAQ:AAPL) and Walt Disney (NYSE:DIS) as obvious giants in this digital age -- and you won't believe what I thought TiVo (NASDAQ:TIVO) and Netflix (NASDAQ:NFLX) would have done by now.
So let's flip back to 2008 and see how correct, naive, and/or totally wrong I was.
In a few cases, my crystal ball turned in a fine performance.
Take the TV market, for example. "Video on demand rules the roost, giving consumers the power to see what they want, when they want to, on any of a plethora of video-capable devices," I said.
That's fundamentally correct, even if I got the ruling medium slightly wrong. Video on demand never got the marketing push I had expected, but Internet-powered streaming video services grabbed that baton instead. Today, Netflix is stealing viewing hours from traditional TV stations by the bucketful, and the old-school TV titans are trying to figure out how to cope with this frightening cord-cutting trend.
Down at the cineplex, I scored another big winner. "Nearly every theater relies on digital distribution and projection now, pushing celluloid into vintage dollar theaters and high-end boutique venues where 'analog' has become a selling point," I said.
That's exactly right. Digital distribution is now the industry standard, as heavy and bulky celluloid reels gave way to satellite downloads and lightweight hard drives. The studios still slap their digitally produced movies onto film reels for the analog diehard crowd, cheered on by celluloid materials producer Eastman Kodak. But that's a tiny niche market, and the real business is done in 100% digital formats now.
In the music department, I reckoned that the major labels would stop selling albums and tracks to the consumer, instead settling for simply distributing largely free content.
That's not exactly right, but close enough to deserve a partial credit. Today, streaming services such as Spotify and Pandora Media (NYSE:P) lead the way deeper into the unpaid territory. Consumers have largely come to expect free access to any music they want, in exchange for a few advertising breaks along the way. And when we do pay for music, it's mostly to remove those annoying ad spots from the experience.
Even Apple has jumped on that bandwagon. The old iTunes moneymaker has been joined by Apple Music, which is another subscription-style service in the same vein as Pandora or Spotify.
The music industry has not abandoned the major labels yet, but the content flow has changed dramatically.
Oh, and I thought 2008-era iPhones would look as quaintly outdated now as bulky feature phones did from my 2008 vantage point. You be the judge on that one:
I was way off the mark in some places.
For example, I thought that TiVo would have abandoned its digital video recorder business by now, focusing instead on premium user interfaces for video-on-demand catalogs. Then it would have merged with Netflix, creating a massive media titan.
You could argue that I was on the right track with TiVo's user interface focus, selling software solutions to power cable boxes around the world. But the company still makes a living mainly from DVR sales and subscriptions. Meanwhile, Netflix jumped into the digital video market with both feet and is now the distribution giant I thought would require the combined expertise of two companies.
TV sets have changed for the better, but mostly in the form of higher display resolutions. The big-screen OLED TVs I was expecting are still on their way any year now. But you probably don't have one yet. And your high-def LCD set is most likely still hooked up to a TiVo-like DVR box.
The music industry is nowhere near the direct-to-consumer selling phenomenon I had expected, and I no longer see that happening anytime soon. We're converging on those streaming music platforms instead, which is a radically different model.
In this day and age, movies still don't debut on streaming services or on-demand platforms alongside their silver screen premieres. So-called "day and date" releases exist, but they're seen as far-out distribution experiments. There's a lot of tradition and ingrained business praxis to undo here, and it could take decades.
As for the smartphone evolution, I was hilariously wrong. "Now firmly embedded in the supply chain for entertainment content, the average mobile phone has either a large roll-up screen or a low-power digital video projector," I predicted.
These technologies exist, but they remain rare and expensive. So far, there's simply no demand for very large roll-out screens or battery-draining micro projectors. Larger phone screens and the rise of tablets will have to do for now, and that's what people use for digital video consumption on the go today.
Why did I miss so many fat pitches? Because I made unrealistic assumptions, of course.
Crucially, I thought that the media production industries would have figured out by now that consumers want high-quality services delivered in a convenient package. If you want to beat the bugbear of piracy, that's best done by treating free downloads as just another competitor -- and then crushing that illicit rival with the usual tools of business.
Following that path, the entertainment industry as a whole would eventually have to abandon inconvenient and expensive practices like digital rights management and restrictive licensing. Instead, they'd crush the pirates with an avalanche of easy-to-use services and high-quality content portfolios, all presented at an affordable price.
Netflix is close to getting this right, and actively working hard to get there. The company treats piracy as a useful market measurement tool, and pirating rates tend to drop wherever Netflix enters a new territory. But content licenses are still largely purchased separately for each new market.
And could you imagine the studio backlash Netflix would face if it ever tried to publish a video stream without encryption and geographic restrictions? It doesn't really matter that pirates eventually find their way around any copy protection system. Netflix (and everyone else) must still waste time and resources to combat this assumed threat, even if it makes the final product less useful and flexible along the way.
Disney follows close behind Netflix, and will use that platform to explore all-digital distribution in a big way next year. The House of Mouse has seen piracy as just another competitor for years, and is poised to reap the benefits of that attitude now.
Likewise, Pandora and Spotify are leading the music market in all the right directions. They face heavy political headwinds that give unfair advantages to traditional radio stations, which is why Pandora hardly makes any money.
And now we're back in the cinema again, where day and date releases could breathe new life into a slowly dying industry -- but nobody wants to try it, for fear of upsetting decades-old business relationship and traditions.
Media rights is an ugly business indeed, and that's why I whiffed on so many seemingly obvious predictions.
In general, I feel pretty good about my industry vision from seven years ago. Directionally, we're getting around to almost all of those ideas. Yes, even in the face of all the intellectual property ugliness. If you played along at home, picking up the fledgling giants of the digital generation when I wrote the original article, you'd generally be stomping the market right now:
I'll see if I can't come up with some forecasts for the next decade or so. Until then, you can point and laugh at my smartphone projectors and crazy merger ideas all you want. No one's perfect, but I did good.
Anders Bylund owns shares of Netflix, TiVo, and Walt Disney. The Motley Fool owns and recommends Apple, Netflix, Pandora Media, and Walt Disney. Try any of our Foolish newsletter services free for 30 days.