Detroit Is So Hollywood, and Vice Versa
Interesting article in the NYT about the similar problems (and the decline) Detroit and Hollywood are facing … and business model migration.
[…] it suddenly seems the two industrial capitals have something in common. […] both are discovering that the strategy and tactics that until recently brought them huge profits have led them to re-examine their business models.
Innovations (well, yes, Business Model Innovations) are in no high regard in these industries, aiming for efficiency gains has come at the expense of creativity or risky business model innovations … aka, planning blockbusters no longer works …
In recent years, both industries thought they had settled on surefire formulas to cope with burgeoning competition, globalization and technological change. Develop a big, expensive blockbuster model, market it like crazy, and then return the next year with slightly tweaked, bigger and more expensive models.
This hasn’t worked out too well, add rising production costs and the minor problem that neither Detroit nor Hollywood has been able to pass on rising costs to consumers, so they are turning their interests to complementary businesses:
manufacturers in both industries no longer depend on earning profits from selling the products they make through the established distribution channel […] but on related activities. GM and Ford routinely lose money on their United States automaking operations, but are bailed out by their finance arms […] They’re essentially banks attached to unprofitable carmaking operations. Just so, the studios are really merchants of DVD’s, broadcast and pay-per-view rights attached to money-losing manufacturers of movies made to be screened in theaters.
more at the New York Times
