Tech companies will conquer Hollywood in 2013

I wrote here nearly a year ago that there would be no more annual lists of predictions and I’m sticking to that, but I want to take the time for a series of columns on what I think will be an important trend in 2013 -- the battle for Hollywood and home entertainment.

The players here, with some of them coming and some of them going, are Amazon and Apple and Cisco and Google and Intel and Microsoft and maybe a few more. The battleground comes down to platforms and content and will, by 2015 at the latest, determine where home entertainment is headed in America and the world for the rest of the century. The winners and losers are not at all clear to me yet, though I have a strong sense of what the battle will be like.

Why fight for Hollywood? Because making our spreadsheets recalculate faster is no longer enough to inspire new generations of computer hardware. Because Silicon Valley has come to appreciate continuing income streams from subscription services. Because there are legacy players in the TV industry who are easily seen as vulnerable.

Notice I didn’t include Facebook in my list of combatants. Facebook will need the next two years to consolidate its existing businesses before it can even begin to think about Hollywood. Facebook will miss this cycle completely.

Another company I didn’t mention is Netflix. Though this pioneer of video streaming has been around since the 1990s it feels to me more like a acquisition candidate in this battle than a conqueror. Same for TiVO and even Roku: too small.

Still, it’s in Netflix-style Over-the-Top (OTT) streaming content where we’ll see lots of action that will eventually come at some expense to the incumbent cable companies. Some of these will choose sides, like Comcast is apparently doing with Intel, while others may be acquired or just fade away.

Look at both Motorola Mobility (Google) and Cisco trying to get out of their cable box businesses. This does not bode well for their customers, the cable systems.

Content comes down to TV, sports, and movies, with the big attraction of 2012 being sports because of its resistance to piracy.  Sports means large live audiences that are unwilling to wait for a torrent to deliver the Big Game two days later. CNN always does well with advertisers when there is a war or a disaster, but sports figuratively is a pre-scheduled war or disaster complete with cheerleaders and good lighting, which is why ESPN is worth more than CNN, MSNBC, and FoxNews put together.

Video games have peaked as a business. It was a great ride but the days of the $60 video game title are limited as mobile, casual and social gaming take over. This has Microsoft, for one, scrambling hard to make its Xbox game console into something like a TV network. Nintendo and Sony are not significant players in this space even though Sony thinks it is.  They, too, have peaked, which is surprising given Sony owns a major movie studio.

The dominant video platform or platforms will be determined by the content they carry, so we are going to be seeing lots of money going to Hollywood from Seattle and Silicon Valley, enriching networks and studios alike. Alas, I doubt that this effort, which is well underway, will show any clear winners simply because the major tech companies are going about it so stupidly.

I’ll explain over the next day the right way for technology companies to conquer Hollywood.

Photo Credit: Andrea Danti/Shutterstock

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