[roc]

> "Another theory is that we're going to see a hollowing out of the middle tier of the film and TV businesses. You'll have giant studios making giant movies, and you'll have tiny indies making tiny movies. But there will be no middle ground, because it will no longer be profitable."

You can see this already in the game industry. EA, Activision and Ubisoft have all transitioned to a franchise-only tentpole-or-bust strategy. The independents are struggling to compete with those production values, while two and three-man shops are making respectable livings from sub-$10 downloadable games.

I personally think the middle-ground will bounce back eventually. If only as a place where smaller studios bet their past success on a passion project.

[jonnathanson]

On the movie side, I think the middle ground will reconstitute itself by way of vertical integration. The big studios will snap up the successful indie studios, and you'll have conglomerates once again.

The future is less certain on the TV side of the business. I don't know if TV networks exist 20 years from now, for example. I mean, the companies and the brands will still exist, but they'll probably all function like today's premium cable networks do: monetizing carriers of their content based on userbases. This will be an extremely painful adjustment for the big network congloms.

[warfangle]

They don't have to vertically integrate for the indie studios. What they do instead is create daughter companies that hang out at sundance and cannes and look for potential hits.

This is Fox Searchlight, etc.

[jonnathanson]

This is their model now, yes. But what I'm suggesting is that the economics of the business 10-20 years out might not even support Searchlight-level movies. They might not support any studio economics. We may well see a world, at the low end, where individuals or small production houses sell their wares directly to the Netflixes and iTuneses of the world and have no need of theatrical distribution or DVD distribution. We're not living in that world yet, but there is no reason why we can't or won't.