Dear Hollywood: It's Time To Realize Artificial Scarcity Is Gone… And That's A Good Thing
from the it'll-make-this-all-much-easier dept
If you haven’t yet, you really should read Greg Sandoval’s excellent report from Hollywood on how the major studios are feeling about Netflix these days. The whole thing is quite enlightening, but can basically be summed up thusly:
The prevailing feeling among the studio managers I spoke with is that Netflix’s streaming service will be a good outlet for the least-valuable material. If they have their way, Netflix will be the Internet equivalent of a swap meet, where only the most dated and least popular titles are available. The studios are betting that eventually people will get bored with the service.
Yeah. Good luck with that. But the statement I wanted to focus on was one that preceded that, and which explains why the movie studio execs think the above is even possible:
Netflix takes the scarcity out of the equation, one film industry insider said. People can watch any of the service’s commercial-free films and shows anytime they want.
Notice that this is said as if this is a bad thing. And that, right there, is a one sentence summary of all of the industry’s problems. It still looks upon scarcity as a good thing, and is seeking ways to bring back scarcity where there is none. This shows a rather confused understanding of economics — one that doesn’t recognize that abundance increases market size and opportunity, while scarcity decreases consumer value and market potential. Abundance is what leads to economic growth. It may require different strategies to capture pieces of that economic growth, but it inevitably leads to greater economic opportunity.
And part of the way that you capture that economic opportunity is to focus on adding value to consumers not taking it away. Yet what these studio execs appear to be doing is exactly the opposite. Consumers like Netflix’s setup because it takes away scarcity. They see that as a good thing. They’re actually paying for that. And the studios’ reaction is that this has to go away? It’s incredible. What kind of execs actually look at what consumers like and are willing to pay for… and decide “that has to be shoved aside”? If the studios are flopping it’s because of thinking like this.