We all know that the Internet is hastening the decline of “old” media formats that require capital to produce and attention to consume. And movies are no exception, with exceptions for so called tent pole films or blockbusters that are increasingly dependent on international theatrical revenue. Nevertheless, more films than ever are being made.
Clay Christensen’s theory of disruptive innovation explains how incumbents are often trapped by their own success in a low innovation cycle. As they respond rationally to current incentives from their biggest customers to provide incremental improvements in their current products, smaller and lower margin market entrants can creep up the value chain with wholly new approaches.