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Ignorance or Arrogance:
What Hollywood Has to Learn from the Extinction of the Incan Empire
by Jason Berry
On November 16, 1532, in the Peruvian highland town of Cajamarca, Spanish conquistador Francisco Pizarro stood face to face with an Incan army of 80,000 men led by their emperor, Atahuallpa. Pizarro was backed by a mere 168 Spanish soldiers, sixty-two of which were mounted. According to Jared Diamond's book Guns, Germs, and Steel, Pizarro sent a friar to face Atahuallpa and demand that he subject himself to Christ and the Spanish empire. The friar offered the Bible to the Incan nobleman. Atahuallpa, worshipped as a god by the 80,000 men surrounding him, responded by throwing the book to the ground. Pizarro immediately gave the signal to attack. His men lifted their guns, twelve in all, and fired into the ocean of Incan soldiers.
The massacre that ensued was epic. By nightfall 7,000 Incan soldiers lay butchered. Not one Spaniard fell. One of the soldiers later wrote, "If night had not come on, few of the more than 80,000 indian troops would have been left alive." [1]
In 1993, a Northeastern University undergraduate student with an affinity for the band Phish wrote a software application which allowed an online network of friends to share MP3 files. The student, Shawn Fanning, wrote the shareware application he called Napster for his friends who shared similar musical interests. The application spread across the web like wildfire. Unknowingly, Fanning and his small group of friends had launched a revolution against an empire: the recording industry.
Pizarro's small crew was able to topple an army which outnumbered them 500 to one because of the tools, or rather weapons, available to the army. The Incans' quilted armor and clubs were little threat to the heavily armored Spaniards wielding steel lances, swords, and daggers. The Incans had never encountered a foe armed with steel weapons and mounted on horseback. They stood dumbfounded as the Spaniards mowed them down.
Shawn Fanning and his small band of "pirates" were able to pull the rug out from under an established multi-billion dollar industry because of the new tools at their disposal: binary code and access to a global network.
The Incans were oblivious to the technology they so brutally encountered that horrible day in Cajamarca. No shame on them.
The recording industry, however, was highly aware of the emerging technology, most of which was being authored a day's drive up Highway 101. Instead of creating this technology or financing its creation, the industry stuck their heads in the Los Angeles sand with their tail feathers pointed at Silicon Valley. The result was a swift kick. When they pulled their heads out of the sand to see what had kicked them, their butts were covered in ones and zeros—a language they hadn't bothered to master. Shame on them.
The ascension of digital technology has acted as a universal acid on the media industry. It has eroded traditional business hierarchies from their foundation and is rapidly changing the face of media as well as the methods used to create and distribute media. The unwillingness of recording industry executives to "face the music" during the early stages of the Internet and codec development may well go down in business history as the biggest blunder ever.
Whether a result of ignorance, as demonstrated by the Incans, or arrogance, as was the case with the recording industry, the introduction of a disruptive technology into an existing system can be disastrous to those who value the old ways. To make matters worse, we are living in a time when disruptive technology is evolving on an almost daily basis, and even that pace is increasing.
Anyone working in the video and film production arena is keenly aware of this phenomenon of acceleration. When Avid outflanked Sony in the early nineties with the introduction of non-linear editing (actually, Media 100 was the pioneer of the NLE but never grabbed the market like Avid), hundreds of editors and photographers saw the opportunity to go solo. The investment and time needed to produce video projects had decreased significantly. For less than 150,000 greenbacks, give or take, one could have a functional post facility. The number of industrial, corporate, and training videos being produced in this country increased dramatically. On the creative side, more documentaries were being produced as well as an "independent" film or two, a genre which was just being imagined.
The importance of Avid and NLE cannot be stressed enough. This disruptive technology set the course for the digital revolution. Until that time, Sony dominated the professional video market—production and post. Few professionals could imagine having their own post facility. The equipment needed to run a linear analog suite and the time required to produce a quality product in a linear environment were prohibitive. Effects were especially difficult; a simple dissolve or slow-motion effect required a time base corrector (TBC) and lot of voodoo. Avid was the first step to autonomy. The foundation to digital authoring had been laid, and hundreds of photographer and editors who had been shooting used car commercials for local television stations saw that the means to express their creativity independently was within their grasp.
One of the immediate benefactors of this development was the content-hungry cable television market. Cable itself had been a disruptive technology, but by the early nineties it was an established industry expanding as quickly as content could be produced. The migration of video professionals from television stations to independent ventures proved a boon for Cable as the amount of original content being produced increased and at a much cheaper cost. We began to see more specialized programming: from channels devoted completely to animals to those devoted completely to food. The content market wasn't just fragmenting, it was fragmenting exponentially. This change was advantageous for the advertising market as well. Advertisers were able to advertise products to specifically targeted markets. Mattel could run Barbie ads on the Disney Channel and Nickelodeon all day long and rest assured their message was reaching the desired audience, for significantly less than what it previously cost them to run a single Saturday morning ad on one of the major networks. Naturally, this marginalized the traditional hierarchy as eyeballs and money were re-directed.
Another important aspect of Cable was that it allowed Disney and other content creators to launch their own channel and distribute their products directly and independently of the major networks, thereby generating direct revenue from their content.
Underlying these changes was the development and rapid evolution of the video coder-decoder (codec). In 1988, the Moving Picture Coding Experts Group was formed and the official birth of the video codec followed a year later with MPEG-1. By 1995, Sony had honed a digital video format called DV or MiniDV. DV cut through the industry like a torpedo and left many six- and seven-figure post-production houses in its wake. From a quantitative perspective, DV converts video into ones and zeros at a rate of 25 mbps at a 5:1 compression ratio, using 4:2:1 color sampling, and currently maxes out at a little over 500 lines of resolution (high definition video excluded). What that means in a qualitative sense is a highly debated matter, and it has been highly debated since its release. Those who had invested in higher quality—and costlier—formats such as DigiBeta (a 50 mbps format with 2:1 compression, and 4:2:2 color sampling), scoffed at DV and passed it off as a consumer format, not measuring up to "broadcast standards." The problem was, no one listened. Within a few years, $4,000 DV cameras flooded the market, and everyone was using them—from CNN to Steven Soderbergh to Al Qaeda.
Just as the DV revolution began to peak around 1998 and 1999, Avid made a curious move. Avid's NLE's had traditionally been mounted on the Macintosh platform exclusively. They suddenly had a change of heart and decided to release an entirely new product line exclusively on the Microsoft Windows NT platform. Whether this was a reaction to developments within Apple or a proactive move by Avid is not clear. Regardless of the motive, it was the beginning of another revolution. Apple immediately announced they had plans to release their own NLE, called Final Cut Pro. Indeed they did for the low, low price of $999—a mere fraction of the price of the average Avid. In the meantime, Avid's client base, who had for years known and loved/hated their Macs, threw a fit because they were being forced to change platforms. Avid begrudgingly relented and offered solutions on both Mac and Windows operating systems—at the old price points of course. Upon Final Cut's release, there were once again howls of protest that it wasn't good enough. And once again, no one listened. Apple had successfully launched a coup against Avid, just as Avid had cut into Sony's market years before.
The combination of DV and Final Cut Pro redefined the video production landscape. Now instead of hundreds of post houses, there are thousands, many of them housed in college dorm rooms or garages, but selling video services nonetheless. This means the amount of content being produced is growing exponentially again. Much of that content is less than spectacular, but for every ten documentaries or feature films made, one or two shine through the rubble and a storyteller is born. Which means there are a lot more unique and pertinent stories being told that aren't all set in Los Angeles or New York.
The last hurdle the independent visual storyteller must face is getting his product out to the public: distribution. Anyone who's made an independent film will say distribution is the hardest part. It still takes big bucks to distribute a film and that leaves most filmmakers begging at the studio gate. But not for long.
Through all of the changes in the visual media industry over the past two decades, the market has moved closer and closer to the code writers. It's no coincidence that Apple has become a "record label". It's no coincidence they were a big part of the DV revolution with Final Cut. Apple was a pioneer in codec development: Quicktime is arguably the most robust and oft-used codec on the market for digital authoring. However, distribution and delivery is another matter. The world may not be aware of it, but right now there is a massive corporate war taking place with all-too-familiar enemies: Microsoft against everyone else. We'll call it the "Codec War." The prize to be won by the outcome of this war is enormous. It's even more important than JVC's victory of VHS over a superior Beta format, or Avid's NLE revolution. The outcome of this war will quite possibly define the means by which all media is distributed for at least the next few decades. And right now it's anyone's game.
In the Microsoft camp lies Windows Media. As of now, Windows Media is a proprietary codec which can only be played by the Windows Media Player and some hardware devices. However, Microsoft recently submitted Windows Media 9 to SMPTE (Society of Motion Picture Television Engineers) for consideration as a standard. On the other side of the battlefield, Apple is leading the charge for the open source standard, MPEG-4, with a host of electronics manufacturers, most notably Sony, with open-source advocates backing them up. It is worth mentioning a third player, Real Networks, who looked promising in the early stages of the game. Unfortunately for them, Apple and Microsoft both had an operating system with which they could "bundle" their codecs. This doesn't create a very promising landscape for Real, whose entire business is based on a product other companies are giving away. Real has resorted to following the path of companies like Sun Microsystems and has filed a lawsuit against Microsoft for unfair business practices. We all know the success rate of suing Microsoft. So, barring an unforeseen act of God in the Real Networks camp, the battle is between Windows Media 9 and MPEG-4. One of these two codecs will be the "VHS" of the next few decades, from DVDs (currently encoded in MPEG-2), to handheld audio players, to streaming video delivered to computers, television sets and cell phones, the entire world of digital distribution is at stake. So who's winning?
Up until the release of Apple's iPod, it looked like Microsoft had pulled, well, another "Microsoft." But Apple took a page from JVC's VHS playbook and opted to take a hardware strategy. The iPod in conjunction with iTunes might possibly be Apple's biggest coup ever. The iPod was so far ahead of any MP3 player on the market, it reached a level of dominance in a very short period against established manufacturers like Sony and Panasonic. Coupled with their iTunes music store, no one has been able to catch up with them or match their market penetration. This is a very important event in the Codec War because the codec Apple is delivering their music in is AAC, which has the open source flavor of MPEG. Recently Hewlett-Packard announced plans to mass-produce the iPod for global retail delivery and bundle the iTunes software on all their computers. The market penetration of the player will increase dramatically and AAC will ride along with it. Bad news for Microsoft. The move prompted Microsoft's Windows Digital Media Division General Manager, Dave Fester, to call the two companies' alliance "unfair." Yes, believe it or not, Microsoft is accusing another company of being unfair. Windows Media still has a huge portion of the audio download world covered, and if I were a betting man, I'd bet they will find a way to tilt the playing field to their advantage.
Because audio downloads are smaller and more practical than video the online audio distribution market is obviously developing well before the video market which has yet to become practical. But as broadband connections increase across the country and globe, and streaming technology continues to develop, the distribution of film and video will undoubtedly move to the Internet in one form or another. Microsoft's eyes have been set on Hollywood for a long time, and they continue to woo the studios in hopes of providing the dominant vehicle by which studio products are delivered. Having seen the ass-kicking their music industry buddies have taken over the last few years, the reception from the studios has been lukewarm at best.
[In 2003], Landmark Theatres, a chain of fifty-four theaters nationwide specializing in independent film, announced they had teamed up with Microsoft to install digital projectors in all of their theaters nationwide, which would allow independent films to be distributed digitally, via hardware formats or on the Internet, to all fifty-four theaters. That venture was supposed to have been completed by now, but it seems to have gone completely off the radar with no word from Microsoft, Landmark, or DCS, the company supplying the digital projectors. It was an interesting move on Microsoft's part and one which I'm sure was designed to make the Hollywood brass squirm in their seats. It may have been nothing more than a veiled threat to get their attention.
If the plan were executed, it would be a boon for independent film makers and a nightmare for the traditional Hollywood distribution business. For the price of two to four DVD-Rs per theater, or about five dollars' worth of bandwidth per theater, indie filmmakers would be able to encode their digital masters to a Windows Media format and distribute their films to fifty-four theaters nationwide. That amounts to significantly less than it currently costs to send one reel of film to one theater. More importantly, if Landmark were to make this move, theaters nationwide would no doubt follow suit. The implications of this change can only be imagined. Theaters could shift their programming away from the routine Hollywood fare and showcase local independent film or movies from any place on the planet. It would also mark the death of the film distribution industry, decentralizing Hollywood's grip on the feature film market. DV and the NLE gave the power of creating films to the poor man; the Internet and digital projectors have the potential to do the same for distribution.
It's easy to understand why this would make the studios a little nervous. However, there is also enormous opportunity to expand their revenue streams. When the VHS market was first introduced it was met with much fear and even predictions that it would usher in the end of the "big screen." Instead of destroying the market, it was expanded, and it expanded even further with the evolution of the DVD. Had the VHS/DVD market been in place when Cinderella and Bambi were first released we might be one nation under Disney today. The potential of the Internet and digital distribution to change the market is endless. It will undoubtedly purge the market of antiquated "systems," and the industry will be forced to reinvent itself, whether it wants to or not. The big-budget studios will have the option of expanding their distribution directly into the home theater systems of Americans and could even sell pre-theater release versions of their features at possibly double the price they're selling DVDs. If pre-release versions of Star Wars or Harry Potter could be downloaded to your plasma screen for forty or fifty dollars, there would be thousands of fans who would shell out the cash. The studio could bypass any hardware distribution costs and the distributors (Blockbuster, etc.) themselves. The only cost would be in the network and bandwidth required to deliver the bits. Essentially they would be selling electrons and photons which are infinitely regenerative. The cost savings the digital model provides over printing thousands of reels of film and sending them out to theaters globally would most likely pay for the implementation of digital projectors and the networks within a year.
The digital distribution model is inevitable; the potential is too great, and economics will demand its implementation. The real question is how the Hollywood studio aristocracy will handle it. Had the recording industry taken a proactive stance with the Internet and digital distribution in its early stages, solutions like iTunes would have been in place years ago, and they could have bridled the technology and maintained the integrity of their market. Instead they've resorted to asinine attempts to plug the holes in their ship by suing their clientele randomly because they didn't provide the service the clientele wanted. I'm curious if there has ever been another point in American business history where an industry or company has resorted to suing their customers. It is indicative of just how desperate the industry has become.
The motion picture industry got lucky with a decade-long reprieve because their products required more ones and zeros to encode and more bandwidth to distribute. But the freight train is bearing down on the studios, and those who own the tracks are offering safe passage on their rails—for a price. If they make the same mistake their recording industry cohorts did and ignore the digerati's extended hand, Microsoft will undoubtedly become a movie studio the same way Apple has become a record label, and twenty years from now we may be watching the Academy Awards from the Windows Media Center in Redmond instead of the Kodak Theater in Tinseltown. Maybe their first blockbuster feature will be about Pizarro and Atahuallpa.
For the indies out there it's all good news. However the chips fall from above, one thing is evident: independent filmmakers will have ever-increasing avenues to show their films, tell their stories, and create revenue streams to support the process. The flow of information is increasing, new perspectives are shared—globally—and we have a better understanding of the world we live in. The new conquistadors will be traveling with digital cameras in hand instead of swords, with the intent of sharing culture, not imposing it. It's an exciting time to be alive...so grab a camera and tell a story.
1. Diamond, Jared. Guns, Germs, and Steel: The Fates of Human Societies, New York: W.W. Norton & Co., 1999.
As a director of photography, Jason Berry has been making documentaries, commercials, and industrial and marketing videos in various formats since 1991. Berry has been a re-seller for Sony and Media 100, which has supplemented his insight into Internet media trends. His company, DIG - Digital Innovations Group, specializes in various modes of Internet media distribution. Berry has served as a panelist for video workshops including "Digital Filmmaking" at the 2000 New Orleans Film and Video Festival.
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