To properly understand a new term these days, one must Google it. A quick search revealed this definition for “disruptive technology” from Wikipedia:
A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.
Disruptive innovations typically start out small and benign, with no appearance of taking over a larger market. It’s called disruptive because if the innovation is successful, it can quickly reach a point that threatens an existing market.
Digital cinema was designed as a replacement technology for film projection. Because it offers a new value proposition to distributors, and because the industry relies on a highly developed value chain, the new technology was carefully nurtured into play. As part of this process, major studios subsidized equipment costs (virtual print fees or VPFs) to ensure that a protracted transition would not take place. Digital cinema did not create a new market. It only improves an old one, and in that, the improvement is largely one-sided.
Had the digital cinema transition occurred as a disruptive innovation, it would have been driven by new sources of content, opening up new markets for that content, and possibly introducing new and different venues for consuming that content. Instead, VPFs, which are designed to match the fulfillment costs of wide release movies, block new sources of content by raising costs for non-wide-release fulfillment.
While digital cinema may not be a disruptive technology today, the seeds are growing for disruption to occur. Low cost digital cameras and desktop editing have caused a steady increase in the number of independent productions. Marketers are exploring low cost techniques such as social networks to market movies. Low cost equipment is blocked from the market by major studio compliance standards. Mom and pop cinemas will close as they can’t afford the transition to DCI compliant equipment. And independent content requires a release window shorter than 4 months to minimize the total cost of marketing.
If there were just one or two of these items at play, there would be little to take notice of. But the volume of issues point to a ripe opportunity for something different to emerge. We won’t recognize it as a threat when we see it. And if it succeeds, we’ll call it disruptive.
