Will Silicon Valley & Hollywood ultimately converge?
Semil Shah stashed this in Technology
New media portals like FB and Twitter are here in the Valley. Justin Bieber played a concert last night but also invests in startups. If Hollywood wanes and FB and Twitter are the better channels, will Hollywood come up here and vice versa?
The industries are very very different. In many ways, antipodal.
Hollywood is a very slow-moving, mature industry. Power is very centralized both geographically and in an oligopoly of companies who control the means of distribution. Despite its enormous tolerance for risk in terms of producing content dependent on the capricious taste of the public, Hollywood as an industry loathes risk at every turn and hates change more than my grandfather.
They embrace new technology with the speed of the Amish despite the fact that most innovations have ended up being major cash cows and repeatedly saved their respective asses (VHS, DVD, etc.) Largely they have to be dragged kicking and screaming into the 21st century.
Unlike startups, movies don't get cheaper and easier to make as time goes on. They only get more expensive to create at the same time as marketing costs soar.
Hollywood is the apex predator of entertainment and so it is very slow to evolve. While small Silicon Valleys have popped up in NYC, Boston, Israel, etc no other place can hold a candle to the entertainment might of Southern California.
Hollywood's biggest threat is not from someone else making good movies, it's from limited hours in the day and the proliferation of different types of media that compete for our time. The internet is a firehose of time suck delivered straight to our homes. I don't think the 2hr feature film is going to go away by any means -- but it has never before faced such a relentless onslaught of accessible free competition delivered to directly to our couches -- or in the case of phone and tablet to *wherever* you may be.
All the Hollywood studios are now owned by conglomerates. This changed the game dramatically. They no longer needed to be profitable. In the past the studios successfully fended off new entrants into the market by a combination of 1) a monopoly on distribution (which is still largely an old school muscle game) and 2) having a library of thousands of films that provided passive income during down years when new movies flopped. New studios could not get their films on enough screens for long enough and did not have the billions to weather the storm of bad years.
Now, while many still desire to be associated the with sexiness and glamour of Hollywood, most smart companies would not want to touch it with a ten foot pole. It's too expensive, too risky to create the content. Better to handle it, distribute it, work around it but don't be the one forking over the 150M negative cost plus another 100M in marketing. Sony nearly lost its shirt itself trying to get into the industry. Even the combined forces of Steven Spielberg, David Geffen and Paul Allen weren't able to create a new studio on par with the big players.
Hollywood will stay relevant because they still make something everyone loves and they're still the only ones who can do it well. But Silicon Valley's and influence will grow as Hollywood is increasingly marginalized by other forms of entertainment that compete for our very scarce free time.
First off, great rant, and I mostly agree.
However, I'm wondering if YouTube could be the bridge.
YouTube shorts don't cost as much as a movie or TV show, and could be much cheaper to finance.
Just like music videos, they could be a great way for talent to start.
Great article. Thanks for sharing.
Geographically, I think so. Talent is scarce, real estate is skyrocketing, and the weather is not that great -- in San Francisco, which is the new hub for startups as opposed to the Santa Clara valley. With a decreasing cost of transportation, I think it makes sense. If you could get on a $49 flight twice a month to meet your investors, rent space for both office and home at similar prices, if not cheaper, than SF -- why as an entrepreneur not relocate to LA?
Zuck at startup school last year said if he were to start Facebook again knowing what he knows now, he wouldn't move to Silicon Valley -- a comment that caused much ado, but had some poignancy. I think what he meant is that once you know the game -- the investors, the execs, the connector -- one no longer actually needs to be physically located in SV, especially with advent of F2F communication technologies and $300 cross-country flights.
I have several NYC friends who get on a plane once a month, fly to California, meet their investors, and the same day fly home to NYC. In LA, that's even faster.
Ideologically, I think backplane / Troy Carter are a great example of the convergence. Hollywood background as Lady Gaga's manager coming north to recruit and build a team of engineers to build a tech property leveraging LG's community and fanbase.
I'm not sure that Hollywood or big media is waning; however. I think the debate is a great example that new media , if anything, augments the potency of old media by letting people quickly and easily share what they're thinking in real time, perhaps it increases FOMO of old media. If you're not watching the debates, Super Bowl, avengers, dark knight rises, et. Al -- and everyone is talking about them on FB/twitter, does it not increase the societal and peer pressure to join in the conversation by tuning into the old media?
I guess I should ask a more direct question -- will we see more Hollywood celebrities in the Valley, buying homes here, hanging out even more? The trend seems to point to "yes," but I want to hear others' opinions.
Yes and no.
George Lucas and Francis Ford Coppola have always called the Bay Area their home. Same with Pixar.
More recently Dreamworks opened a building up here, too.
But celebrities buying homes here? Not likely since its an easy plane ride from LA to SF.
Small comment: Pacific Data Images started in the early 80's in Sunnyvale. Carl Rosendahl, one of the founders, made a concerted effort to connect PDI business with Hollywood, culminating many years later with them becoming part of Dreamworks. PDI had what's considered a modern tech development environment (e.g. in house exercise room, food brought in) many, many years ago.
Sounds like PDI was a contemporary of Pixar -- similar backgrounds and philosophy.
They were about the same time, but PDI went after commercial projects, whereas Pixar started by making imaging computers and some film work, and then moved into shorts and eventually features. Other big studios at the time were Robert Abel & Associates, III, NYIT, and Cranston/Csuri Productions, where I was R&D lead. All of these studios did a mix of commercial and venture projects, but Pixar had the backing to do less of it than the others.