Final Essay

New Communication Technology and the Movie Industry by Emily Burns Tutor: Lauren Horner Due Date: 21/10/2011                    Film and cinema have been a large part of the world’s culture for over one hundred years. While the movies have adapted in their production, story length, and content, so has the culture of the cinema itself. What used to be an escape from reality in a full theater, watching movies has identified many other options for viewing your feature presentation. Through the development of new communication technology, the movie industry has suffered both financially and culturally. Due to the lack of financial support, the industry that we see today will not make as many movies or as much money as they once did, therefore changing the way movies are made and distributed, and watched forever. The new era in downloading has been putting movie industries in a financial crisis that is affecting how they are being distributed. Piracy, a growing popular way of downloading movies, has put a large dent in the movie industry’s pocket. A common website used to download movies illegally is Pirate Bay. The MPAA, Motion Picture Association of America, “claims that the industry lost eighteen billion dollars in potential revenues in 2005 due to global film piracy” (Ponte, 2008). Approximately 141,030 people have lost their jobs due to this piracy because of the slow decline in revenue and cutting costs for movies (Ponte, 2008). While piracy is illegal, there are many websites and applications that can be found on the internet that have a main purpose to share information. Here we must ask ourselves, is sharing data just as illegal as piracy?             Sharing data is a very popular way to exchange data from one person to another. Loading music or movies on to a USB and transferring it to another computer is sharing copyrighted data that has not given you the right to do so. In the late 90s, there was a trial between the RIAA, Recording Industry Association of America and the online music sharing site, Napster. This trial resulted in the shut-down of the online company because of its copyright infringement (Choi, 2007). It made peer-to-peer (p2p) file sharing more accessible and has grown to sharing all types of data including software, movies, and television shows. This has created a public debate between the movie industry and the public (Casadesus-Masanell, Andres Hervas-Drane, 2010). This development of new technology makes it very difficult for those working in the movie industry to make money due to the illegal sharing and downloading of their product. This copyright infringement does not only affect the industry financially, but it changes the culture of movie theatres and movie goers. With the advancements of new communication technology, the culture of the cinema has also been affected. With the development of Netflix and other movie rental services, the attendance at movie theaters has significantly decreased and has also made consumers more apt to attend movies that will be better to watch in theaters. These movies include action-packed movies with large stars in it and disregard dramas and comedies. S. Abraham Ravid explains that “the hype involved in any release of a new film is often heightened by the participation of a major star or by expensive and unusual special effects” (Ravid, 1999). In order to increase the numbers in movie theatres, cinemas have been forced “to show ‘blockbuster’ movies more than before [and] if a movie did not do as much as expected, the movie theatre would  pull the movie because the consumers chose to ‘wait until the movie comes out on video’” (Zhu, 2001). This never ending cycle will change the industry by making the production of movies smaller and more expensive, and will limit those working in that field because of the lack of production. While the production of movies has decreased, movie theaters are still working to make a large amount of money. In 1990, the average cost to making a film was $26.8 million. Within ten years, the average cost sky-rocketed to $54.8 million (Zhu, 2001). This rise in prices to make movies has ultimately forced movie theaters to raise their price of tickets in order to make money and support themselves as a business. As Zhu (2001) continues to explain, this raise in prices will ultimately change the consumer’s choice of seeing a movie in the cinema to another option such as waiting for it to arrive on DVD or download it from the internet. Because of this rapid structural change in the culture of viewing movies, the movie industry must take further steps to utilize new communication technologies to distribute their movies without losing much money. While the movie industry is suffering from a loss of profit due to new technologies, they are also taking great strides to invent a new way to distribute their movies to prevent themselves from losing money. The technologies that are working against these major studies are encryption, digital file compression, streaming media, and broadband Internet connection (Zhu, 2001). To try and combat these new technologies, many studios and producers have been exploring the idea of “bypass[ing] traditional distributors and deliver[ing] movies directly to end consumers through new technologies such as video-on-demand” (Zhu, 2001). Companies that do not choose to transform their business to keep up with the changing technologies will either be terminated or forced to make the change. Video-on-demand seems to be the future of viewing movies. Although cinemas will still catch the eye of those who enjoy viewing movies traditionally, it will not continue to be the most popular way of viewing movies. The movie industry holds a large cultural background as well as an entertainment sector that never seems to go out of style. Watching movies will always be a large part of our society, but the way that these movies are made, viewed, and distributed will be highly different. With the new development of technology, watching movies will become more of a stay at home experience and it will all be digital online. It is difficult to project how the movie industry will react to this change financially, but it is vastly apparent that they will be greatly affected by this change in technology. References Casadesus-Masanell, R., Hervas-Drane, A.,2010. Competing Against Online Sharing. Management Decision, Volume 48, Issue 8. Pages 1247-1260. Available through Google Scholar. 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[Accessed 11 October 2011] RIAA, 2011. [online] Available at: <http://www.riaa.com/> [Accessed 17 October 2011] The Pirate Bay, 2011. [online] Available at: < http://thepiratebay.org/> [Accessed 17 October 2011] Zhu, K., 2001. Internet-Based Distribution of Digital Videos: The Economic Impacts of Digitization on the Motion Picture Industry. Electronic Markets, [e-journal] Volume 11, Issue 4. Available through Google Scholar. [Accessed 11 October 2011]