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Technology Unit



Digitaltechnology on movies

Inthe last two to three decades, the mainstream media has highlightedthe plight of several major firms that have been rendered irrelevantin the market courtesy of digital technology. Digital technology isdefined as the storage of data in electronic format in a variety ofdevices and tools. This technology has not only simplified storageof data but also the transfer and processing of data to performvarious functions. The disruptive nature of digital technology hasbeen witnessed in numerous areas of life, workplace, home and even ingovernance. The American pop culture and lifestyle have beensignificantly affected by the digital technology. One area that haswitnessed phenomenal change is film and TV shows viewing anddistribution. While Hollywood is a large industry with a globalfooting, the distribution of content produced there has in the pastbeen a preserve of a few firms including DVD rentals such asBlockbuster and Redbox and cinema theaters. Some of these enterpriseshave responded positively to this disruptive nature of technologywhile some are practically dead or are waiting for their inevitabledeath unless they adapt. Thus, it can be argued that digitaltechnology has caused a significant shift in the market whosebenefits and detriments are being revealed with time.

Digitaltechnology has enabled access to video on demand and online streamingmeaning that accessing DVDs from libraries is not necessary. Ideally,firms that rely on the internet for streaming such as Hulu andNetflix have a unique advantage over businesses using the traditionalmethods such as tape and DVD rentals for distribution. This advantagepertains to the elimination of costs in physical inventory, set-topboxes, remote controls, and modems (Aliloupour 6). Furthermore, thefirms utilizing the digital technology enjoy governmentinfrastructural support in the form of national broadband internetconnectivity. Again, the accessibility of various internet-enableddevices such as personal computers, laptops, smart TVs, tablets, andsmartphones has made it possible to increase content consumption andenjoy more convenience. Such low costs and availability of neededinfrastructure to distribute content enable these firms to do so atvery competitive prices. For companies still using the traditionaldistribution models, they have had to review their pricing andbusiness models.

Digitaltechnology has increased competition to the benefit of consumers. Inthe past, there were relatively few firms involved in thedistribution of entertainment content mainly through cable andsatellite. In North American, the leading players in the last two tothree decades have been Comcast, Direct TV, Time Warner Cable, DISHNetwork, Charter Communications, Cablevision Systems, Echo Star, ShawCommunications, BCE Inc., and Rogers Communication. Comcast andDirect TV dominate the market of which 70.4% is dominated by justfour players (Aliloupour 7). Thus, an industry worth an estimated$202.5 billion was controlled by only a few firms thereby creating anoligopoly (ibid). Economic theories indicate that in oligopolisticmarkets, major companies form a close alliance amongst themselves andagree on how to run the industry for maximum gains. The result is anexploited market characterized by exorbitant prices and reducedproduct range and differentiation.

Withthe entrance of Hulu, Netflix, and Amazon in the content distributionbusiness, there has been a drastic change in the market structure.Consumers have a greater choice, and prices have come downdrastically. At the same time, the viewing experience has also beengreatly enhanced through richer content. The digital contentcompanies have been at the forefront in developing their content fordistribution. This type of integration in the market has an impact onthe market. As indicated above, having a relatively small number ofplayers in the market will create an oligopoly that ends up hurtingconsumers. Arthur (6-7) claims that the interaction of digitalcontent firms and the rise of large corporations in the industry islikely to hurt the viewership of low-budget and artistic films. Heargues, that this class of films, which he labels as avant-garde andacknowledges the controversy that such a definition may rouse, willsuffer in the age of digital content. He says that DVDs arerelatively cheaper and effective for distributing such short and lowbudget films. He says that these films target small niche marketsthat may not interest large firms such as Netflix and Hulu. Again,consumers in the market have been weaned on an entertainment diet offamous Hollywood stars meaning that they are likely to purchasestar-studded films as opposed to new and experimental films. Inother digital markets such as the social media, the dominance ofparticular firms is already being witnessed with many startups beingunable to compete with the large entities that control the market.

Culturally,the digital technology in the film and TV content industry has beendramatic. Previously, visiting DVD rental shops was a favorite pasttime for Americans. Firms such as Blockbuster and Redbox providedample space for display of DVD films and TV programs. Theseactivities shaped the social life of shoppers and provided a uniqueforum for shoppers to discuss and share their views on various films.However, this trend is slowly dying as new online platforms, andforums, where consumers can exchange views about movies, are comingup. Sites such as IMDB and Rotten Tomatoes provide forums where userscan review and rate films (Scheible 55). Some of these websites alsoprovide informational content on the movie stars, film background andplot summary thereby eradicating the need to travel to a rental shopand view DVD covers that were previously the primary source ofinformation a few years ago. Thus, shopping for films was animportant part of the American cultural scene that is slowly dying atthe hands of digital technology.

Similarly,the cinema theater, which is a major American cultural icon, is underthreat from digital technology. Previously, going to the cinema wasan important part of social bonding for American families and evencouples. In fact, going to the cinema was an almost ritualistic partof dating that is slowly being replaced by “Netflix and chill”(Tski 38). Initially, this phrase was applied to watching Netflix inthe confines of a home but has been used as slang for casual sex onthe internet (Herbert 9 Tski 38). Briggs et al. (46) also addressthe concept of cult cinema as an important part of the Americanidentity. The authors say that part and parcel of identifying thecult cinema as a social movement was showing unbounded loyalty andlove to various films as Dracula and Star Trek. This devotion wasbest exemplified at cinemas through attire or mere presence with somegoing to the extreme levels of tracking where the film was showing.Visibly, these are some of the cultural, social and moral issues thathave been brought about by the digital shift.

Therise of digital technology has also forced traditional contentdistributors to change their business models. Firms that relied ontraditional methods of distribution such as Sony and HBO arere-engineering their business models to fit into changing times andmarkets. Three things primarily motivate the companies (Steel). Thefirst thing is the declining market share in the traditional marketas they have been shedding their market share to digit firms such asNetflix and Hulu. Secondly, the firms are inspired by the successesof Netflix and Hulu that have recorded impressive financial resultsby enjoying the pioneer advantage. Thirdly, these companies have toconform to the changes in consumer preferences and lifestyle changes.As earlier noted, the consumption of media through portable devicessuch as tablets and, mobile phones has formed these distributors torethink their product offering. Furthermore, access to content thatappeals to unique and small markets such as the LGBT community iseasier to distribute on the digital platform (Tski 38). In anunexpected twist of events, digital native firms such as Netflix arethinking of shifting towards the traditional distribution model ofcable TV and satellite as they continue to face competition from newstreamlining startups and firms that were in the traditional market(Nocera).

Asdemonstrated above, the internet and digital technology havedrastically changed the market and the social and culturalenvironment in the entertainment consumption and distributionindustries. The shift is affecting both consumers and distributors.How each group has responded is determined by the specific needs. Inthe case of the public, the accessibility, price, and lifestylechanges have been the greatest motivators in adapting digital media.Various authors have also supported the view that the digital shifthas affected other areas of life. Notably, cinema theater is losingits iconic place in the dating scene where cultural and fashionmovements inspired by various movies were witnessed in the 1970’sand 80’s are slowly being phased out. The concept of discussingfilms and airing films as well as loyalty and commitment to certainshows and films is being done over the internet. Thus, it is evidentthat digital technology has changed the consumption and distributionof entertainment content forever.


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