How To Make Money in a Recession

Thursday, November 06 2008 @ 11:15 AM EST

There's a fundamental theory in economics that if people want your product more when the economy is down your product is "inferior". Or stated in another way, everybody in the entertainment business is getting crazy rich right now. Take a look at yesterday's earning report from Time Warner: profit from the content business is up 14% from last quarter. Another entertainment powerhouse, Activision Blizzard, reported incredible earnings yesterday: revenue more than doubled. The CEO, Bobby Kotick, went on to state that "there's nothing that would suggest to us today that our business isn't going to continue to perform well".

So how can you get a piece of this action?

The studios have invested heavily over the years in distribution channels that are now performing like champs. As soon as their economists see a price sensitivity appearing in the marketplace they adjust their sales strategies to compensate. They are able to offer their product at multiple price points in distinct venues (theatrical, DVD, VOD, etc) and they have a huge amount of control over price. This "machine" is able to squeeze the most optimal price out of the consumer, resulting in optimal revenue. Unless you have a long standing relationship with WalMart no one is going to cut you in.

Thus your goal should be to create an identity in the marketplace that is of interest to the existing distribution channels. The best way to get your content's identity out there is to distribute your content, in an abbreviated form, at the $0 price point (i.e. free, online distribution). The studios have no interest in this price point, and as long as fresh content exists for sale to the studios after your initial phase of online distribution you won't be stepping on their toes. The "machine" will still run smoothly, just as long as you provide it with distinct content. Thus film festivals, where your entire product is on display, are a horrible venue, while online distribution of a single episode of your content is a brilliant way to get started.

My favorite example of online distribution right now is Strike.TV. Strike.TV was created by WGA writers during the writer's strike. They're a group of industry professionals that know how to work with the "machine" and the thing they've created is beautiful. Take a look at their site if you want to see how to create an online identity that could actually lead to something.

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