Rewinding the Tape (Part 2/3): Beyond the Reels, The Rise of Home Viewing and Digital Distribution ??????
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In our last post of this mini-series looking into the historical evolution of Content Distribution in TV & film, we turned the dial back and tuned into the “Broadcast” Era where it all began.
We're now fast-forwarding to the 'Home Entertainment' Era, spanning from the 1980s to the early 2000s. For 90s kids like me, these were 'the good ol’ days.' This era saw the digitization of cable TV, the rise of home video formats, and the diversification of cable networks. Together, these developments laid the foundation for the personalized entertainment experience that has become the norm today. Welcome to Act 2, where no pay-per-view is needed!
RECAP ?? Act 1: The Broadcast Era ??
In many ways, the Broadcast Era, from the early 1900s to the late 1980s, was a transformative period in media, marked by significant technological and cultural shifts that established foundational structures and practices in both cinema and TV that are still prevalent today.
In cinema, the shift from film exchanges to nickelodeons marked a pivotal change in film distribution, leading to a more structured market, while the introduction of sound-on-film brought about the era of “talkies,” cementing Hollywood’s global structure. At the same time, in TV, advancements like VHF/UHF bands and color broadcasting propelled NBC, CBS, and ABC to the forefront of content creation and distribution.
2? The Home Entertainment Era (Late 1980s to Early 2000s) ??
As the curtain fell on the Broadcast Era, an era marked by its network giants and scheduled programming, the late 1980s ushered in an era that would take the power of choice from the hands of a few and place it into the hands of the many. The Home Entertainment Era was a period that redefined the concept of 'prime time' and introduced us to the luxury of content on our terms. The development of digital video compression and the emergence of the Internet would then give us an early glimpse of a new digital era, blurring the lines between technology and entertainment.
?? Late-20th Century: The Rise of Cable & Satellite TV and a Shift to Home-Based Entertainment ???
?? Key enablers: Cable/satellite infrastructure, FCC’s Open Sky Policy of 1972, Cable Communications Act of 1984, and VHS.
? 1970s-1980s: Cable & Satellite TV's Emergence ???
?? Early Infrastructure and Regulation Changes: The foundation for cable TV's rise was laid by significant improvements in cable infrastructure, coupled with regulatory changes. The development of coaxial and later fiber-optic cables enabled the transmission of a higher number of channels with improved picture quality. This technology was a game-changer, allowing cable providers to offer an unprecedented variety of content. While the FCC's Open Sky Policy of 1972 was pivotal, allowing for the use of satellites for broadcasting, which greatly expanded cable TV's reach.
These advancements provided satellite and digital cable providers – such as TimeWarner, Comcast, DirecTV, and DISH Network in the US – expanded bandwidth capacity, allowing them to broadcast more channels even in remote areas and break the monopoly of the major networks.
?? Premium Channels Emerge: The growth of cable & satellite TV led to intensified competition for viewers, spurring further innovation in content creation and commercialization. Cable channels, free from some of the content restrictions of network television, began experimenting with premium channels.
In 1972, Charles Dolan and Gerald Levin thought viewers would want to get unavailable content for a monthly fee and HBO was founded. This model opened up an even greater market potential for cable, as watching something on cable became, to many people, an event in itself. Shortly after, Showtime began offering subscription-based services featuring uncut and commercial-free films, original series, and special events.
? 1980s-1990s: Network Programming and a New Era of Cable ??
?? Further Regulation and Growth: By 1980, cable TV was really taking off, offering a wide variety of shows for all kinds of viewers. While it’s hard to list every single innovation from the early '80s, it’s clear that people were getting hooked on cable. The subscriber numbers say it all: by 1980 there were around 16 million total cable subscribers. Then came the Cable Communications Policy Act of 1984, which was a game-changer.
The Cable Communications Act essentially streamlined regulations across the country, making it easier for cable companies to expand their networks and services. The act limited the control local governments had over cable operations, encouraging growth and investment in the industry. It also offered cable providers a period of protection from competition, allowing them to establish a stronger foothold in the market. This played a key role in the rapid expansion and modernization of cable TV services during the 1980s and 90s.
By the late 1990s, the share of the major broadcast networks in the TV market had eroded from over 90% in the early 1980s to under 50%, with more than 57% of all subscribers receiving at least 54 channels, a huge difference to the choice 3-4 networks people had had access to since the dawn of television.
?? Fragmentation and Proliferation of Network TV: On the back of some of these regulatory tailwinds, we also saw a further fragmentation of the TV channel landscape.
Unlike the broad appeal necessary for network TV in the 1950s, cable & satellite TV enabled the creation of more specific “niche”/specialized channels targeting diverse content. ESPN catered to sports enthusiasts, MTV became a cultural icon by focusing on music videos, while channels like CNN, began offering 24-hour news, which fundamentally influenced people’s changing viewing habits and expectations.
?? The OG Explosion of Content: Naturally, the proliferation of new TV networks and channels led to an explosion of content being created. Between 1960 and 1980 — based on epiguides data — the number of new shows premiering on television networks per year averaged about 25, rising to roughly 50 in 1980, with each of the three major broadcast networks (ABC, CBS, and NBC) premiering roughly eight programs each. In contrast, between 1980 and 2000, the number of annual premieres rose from 50 to 100 (up 2x and 4x from 1980 and 1960, respectively!)
Growth in the 1980s largely came from syndicated shows (such as COPS and Punky Brewster), while growth in premieres in the 1990s came from basic and premium cable networks. While determining the number of new shows per year is not entirely straightforward, I’m a bit of a data junkie so here’s a rough attempt at a detailed breakdown of new shows by network:
?? Pay-Per-View (1980s-1990s): Cable also introduced the concept of Pay-Per-View (PPV), allowing viewers to pay to watch individual movies or sporting events like boxing matches on demand. HBO’s coverage of the heavyweight boxing match between Muhammad Ali and Joe Frazier, dubbed “Thrilla in Manila”, became cable’s first big live event special largely responsible for introducing professional sports to the world of PPV.
While the concept of PPV is still pretty popular these days, back in the 90s, the PPV industry harvested $7.9 billion(!) in revenues from 1990 through 1999. PPV’s total annual gross revenues ballooned from $248 million in 1990 to an estimated $1.9 billion in 1999, according to Showtime Event TV. Events like the infamous “Bite Fight” between Mike Tyson and Evander Holyfield, which garnered 1.9 million buys and >$100 million in revenue, wrestling, and concerts were stables of PPV.
The main reason for PPV’s explosive growth throughout the decade was largely due to the accelerating gain in households with access to it. Whereas only 15 million traditional cable households could call up a PPV movie or event in 1990, 26.5 million could do it by 1999.
? 1980s-1990s: Shift Towards Home-Based Entertainment ??
?? VHS vs. Betamax (1980s): The introduction of VHS (Video Home System) tapes in the 1980s marked a significant shift in film distribution. For the first time, consumers could watch movies at home at their convenience, fundamentally changing the relationship between audiences and film studios. This period also saw the famous “format war” between VHS (Video Home System) and Betamax. Despite Betamax's initially superior quality, VHS, developed by JVC, eventually won out due to affordability, longer recording times, and the ability to record television, as well as eventually having a more extensive library of available movies.
?? Home Video Distribution and Rental Stores (Late 1980s-1990s): The VHS victory led to an explosion in the home video market. Consumers could now rent or buy movies, watching them at their leisure. This development was a radical shift from the schedule-bound constraints of broadcast and cable TV. This shift towards home-based entertainment, a direct result of the VHS boom, also led to the rise of rental stores like Blockbuster (founded in 1985)…and home to epic characters such as Carl & Ray!
These stores became cultural hubs and played a crucial role in the film distribution ecosystem, offering a wide selection of titles and creating a new revenue stream for movie studios. The home video market became a significant revenue source for the film industry. Studios started to factor in potential home video sales when greenlighting projects, leading to the production of a broader range of films, including those that might not have been box office hits but had strong home video potential.
??TL;DR: The late 20th century witnessed groundbreaking technological innovations like cable TV and home video, which reshaped industry dynamics by breaking the broadcast monopoly and introducing new content distribution models. Notable examples like the rise of HBO as a content creator and the widespread adoption of VHS tapes illustrate the era's influence on both the industry and consumers.
This period marked the start of the move from collective to individualized and on-demand media consumption, with the advent of home video formats, combined with the diversification and digitization of cable TV, laying the groundwork for a more personalized entertainment experience and setting the stage for the digital and streaming revolutions that followed.
?? Late 20th to Early-21st Century: The Convergence of Tech & Entertainment ??
?? Key enablers: Telecommunications Act of 1996, digital compression (MPEG-2, and later MPEG-4), the Internet and convergence of tech & entertainment, file sharing, and DVR.
? Late 1990s to early 2000s: The Transition from Analog to Digital Formats ??
?? Further Deregulations: The Telecommunications Act of 1996 was a major update to U.S. communication law and changed the communication landscape, fostering a more competitive and integrated environment for telecommunications and broadcasting. The act allowed companies to offer both TV and telephone services, breaking down the barriers between different types of communication providers and opening the door for cable companies, phone companies, and internet providers to venture into each other's markets. This shift led to a surge of new entrants in the cable market. While not all of these companies survived, the overall effect was a boost in competition and an expansion of options for consumers. Among the most significant changes during this time was the notable merger between AOL and Time Warner.
On Jan. 10, 2000, Time Warner — then the home of Warners, HBO, CNN, TBS, Time Warner Cable, and Time magazine — was bought for $182 billion by AOL, which had 30 million subscribers using its dial-up service to access the internet and email. The union combined the world’s largest media conglomerate with the world’s largest internet provider, highlighting the era's trend toward media and technology convergence. (Sadly, within a few months of the deal happening, the economy fell into recession, the dot-com bubble burst and the AOL-Time Warner deal became known as “the worst merger in history.” Yikes!)
?? Digital Compression: The development and adoption of digital video compression techniques, such as MPEG-2 (used in DVDs) and later MPEG-4, were crucial developments. These technologies allowed for the efficient transmission of digital video, making it possible to compress video files without significant loss of quality, facilitating their distribution over the internet, and the storing of movies on DVDs.
?? DVD Revolution (Late 1990s): DVDs (Digital Versatile Discs) replaced VHS as the preferred home video format by the late 1990s. Offering superior picture and sound quality, DVDs also had greater storage capacity, which allowed for additional features like director's commentary, deleted scenes, and multiple language options.
This innovation not only enhanced the home viewing experience but also opened new revenue streams for studios through the sale of DVD copies and special editions. DVDs were smaller and easier to ship and store, reducing costs for retailers and rental stores. By 2002, about 80 million DVD players had been sold, making it the fastest-adopted consumer electronics device ever. And, by June 2003, DVD rentals had surpassed VHS rentals for the first time. According to this article by CNBC, at its peak, DVD sales reached $16.3 billion and were 64% of the U.S. home video market.
Perhaps most importantly, the rise of DVDs also led to the rise of services like Redbox and the OG version of Netflix, which allowed customers to rent movies from their kiosks, laying the foundation for what would become today’s leading, global streaming service.
?? Introduction of DVR: The late 1990s and early 2000s also saw the emergence of Digital Video Recorders (DVRs), like TiVo, which enabled viewers to record and store TV programs digitally, giving them greater control over when and how they watched their favorite shows. In many ways, DVRs, similar to VoD and DVDs, set an early foundation for modern streaming services.
?? Internet’s Emergence: Last but not least, the Internet. While, initially, the Internet’s influence in distribution was limited due to slow dial-up connections (more on the evolution of Internet speeds here,) it eventually laid the groundwork for future streaming technologies.
This era also witnessed the beginning of technological convergence, where the lines between computers, televisions, and other media devices began to blur.
?? File Sharing and Digital Downloads (Late 1990s): On the back of digital compression, and although still in its infancy, the late 1990s saw the emergence of online streaming and downloading of content.
The rise of file-sharing platforms like Napster and BitTorrent, which, despite legal controversies, highlighted a growing demand for digital and easily accessible content and saw the early stages of the Internet starting to influence online content distribution.
??TL;DR: This period was reshaped by several, key technological and regulatory changes. The Telecommunications Act of 1996 catalyzed competition and convergence in the media sector, exemplified by the AOL-Time Warner merger. Advances in digital video compression and the rise of DVDs enhanced home viewing experiences and studio revenue. Concurrently, the early internet, with platforms like Napster and BitTorrent, hinted at the future of digital content access. While the introduction of Digital Video Recorders (DVRs) like TiVo set the stage for on-demand viewing, foreshadowing the streaming revolution.
?? Wrapping It Up: The Big?Picture.
The Home Entertainment Era was a period of significant transition, marked by the move from collective to individualized and on-demand media consumption. The transition from the Broadcast Era to the Home Entertainment Era empowered viewers with unprecedented choice and control. Technological innovations like cable and satellite TV, driven by regulatory milestones such as the FCC’s Open Sky Policy and the Cable Communications Act, dismantled the monopoly of network giants. The rise of cable channels, including the advent of premium services like HBO and Showtime, and the diversification of content, from 24-hour news on CNN to niche channels like ESPN and MTV, redefined viewing experiences.
The era also saw the home video revolution, with the VHS format overcoming Betamax and spawning a rental store culture epitomized by Blockbuster. The shift towards digital formats in the late 1990s, bolstered by the Telecommunications Act of 1996, further blurred the lines between different media types. The DVD era and the advent of internet-based content distribution platforms like Napster foreshadowed the modern streaming era, while DVRs, like TiVo, set the groundwork for on-demand viewing.
As we wrap up Act 2, of this series on Content Distribution, we’ve seen how this Home Entertainment period laid the foundation for today’s landscape of personalized, digital, and streamable media, marking the beginning of a new chapter in the way we consume entertainment.
Stay tuned: In our final Act of this “mini-series” on the evolution of TV & film Distribution, we will focus on the Streaming era, a period that promised a future where any show, any movie, was just a click away – a future that is now our present. Be on the lookout for that!
?? In The Meantime…
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