The history of the entertainment industry is littered with new products and technologies it has resisted that have later turned out to be money-spinners. For Hollywood's movie studios, nothing illustrates this point better than video tapes and DVDs. Jack Valenti, the onetime head of the MPAA, made the famous quote that VCRs would be the "Boston Strangler of the movie industry" -- but it went on to create a booming new business for the studios, while their claims about the DVD were similarly unfounded. Hollywood has a terminal resistance to new products based on the unrealistic fear that any new product will cannibalize the sales of an existing one. But this isn't the case -- for instance, a new study shows that people who watch movies on video-on-demand services buy just 0.1 fewer DVDs per year now than before they used VOD -- hardly making it out to be a sales killer -- and rent, on average, just 11 percent fewer movies. While the figures aren't totally complete, it sounds as if people who use VOD don't just replace their other movie spending with it, they add to it. Hollywood doesn't want to accept any cannibalization of existing products -- perhaps part of the reason things like their movie download services are so bad -- even if that new product can raise overall sales. The movie industry is caught in a rut, with a strategy of simply trying to maintain its existing sales, rather than trying to grow its business with new and innovative offerings.
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