What are the effects of digitalization on the Hollywood film industry
How the effects of digitalization could change the future of the Hollywood film industry
Introduction
This paper will explore the different effects that digitalization has on the Hollywood film industry. Digitalization technically means turning different types of information like sounds, texts or images into binary code. This seemingly small change in technology has a great impact on the production, exhibition and distribution of Hollywood films. The industry is currently forced to change their traditional business model, and adopt new models to adapt to this technological change and to exploit its benefits. First, we will examine the traditional production chain of the industry. Secondly, there will be an analysis of current changes in the industry caused by digitalization. In the final part of the essay, we will try to predict the future of the way the industry is functioning illustrated by two new business models. Along the way we will touch upon several economic aspects of the cultural industries, such as experience goods, the lock-in effect, industry structure and many others. As becomes clear from this proposed structure, we will mainly focus on the production side of the industry. Although the effects of digitalization will be equally important for the consumer side, this focus was purposefully chosen for the paper to maintain a comprehensible and specific character.
The traditional structure and chain of production of the Hollywood film industry
To be able to put the changes caused by digitalization for the film industry into context, we must first study the traditional structure and supply chain of the industry. The structure of the industry could generally be considered as an oligopoly. Although there are many firms active in the market, the lion’s share of total revenues is generated by the six largest companies. According to Currah (2006), 90% of all revenues in the industry are being controlled
Introduction
This paper will explore the different effects that digitalization has on the Hollywood film industry. Digitalization technically means turning different types of information like sounds, texts or images into binary code. This seemingly small change in technology has a great impact on the production, exhibition and distribution of Hollywood films. The industry is currently forced to change their traditional business model, and adopt new models to adapt to this technological change and to exploit its benefits. First, we will examine the traditional production chain of the industry. Secondly, there will be an analysis of current changes in the industry caused by digitalization. In the final part of the essay, we will try to predict the future of the way the industry is functioning illustrated by two new business models. Along the way we will touch upon several economic aspects of the cultural industries, such as experience goods, the lock-in effect, industry structure and many others. As becomes clear from this proposed structure, we will mainly focus on the production side of the industry. Although the effects of digitalization will be equally important for the consumer side, this focus was purposefully chosen for the paper to maintain a comprehensible and specific character.
The traditional structure and chain of production of the Hollywood film industry
To be able to put the changes caused by digitalization for the film industry into context, we must first study the traditional structure and supply chain of the industry. The structure of the industry could generally be considered as an oligopoly. Although there are many firms active in the market, the lion’s share of total revenues is generated by the six largest companies. According to Currah (2006), 90% of all revenues in the industry are being controlled
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