8/4/2019 Innovation Diffusion - Feature Films and Episodic Television - Sept 2011 - Dave Litwiller

1/4

Innovation Diffusion in Production of Feature Films and Episodic Television:

A Roadmap for Purveyors of New Technology

David J. Litwiller

September, 2011

The innovation diffusion rate in project-based industries has been studied by respected

academics1,2,3. The trigger observation for this research was that innovation diffuses moreslowly and haltingly in project-based industries such as feature film and episodic TV

production than in traditional vertically integrated industrial and commercial ecosystems.

Project-based industries are characterized by major development projects being carried

out by teams of independent contributors from outside the sponsoring firm. The teamcomes together for the project, and then disbands afterward. The project-based nature of

these industries has significant go-to-market and organizational development implications

for purveyors of new production technologies in order to maximize adoption speed,

revenue growth and profitability.

The following summarizes academic research and empirical evidence describing thecauses of cautious adoption, and goes on to detail the highest impact ways to enhance

adoption of new technologies in the project-based, production industry of mainstream

movies and episodic television:

o Much of Hollywood is about risk avoidance and de-risking. Many projects sputter

because of non-technical factors such as audience whim and executive discretion.

People do not want to compound this natural environmental risk with additional

technical risk. There is a pronounced tendency for people to want to be the second

to use the new, rather than first.

o In movie and TV production technology, incremental innovation (one person or

one business making an isolated change) happens much faster than systemic

innovation (adaptations requiring changing work methods and platforms formultiple people spanning multiple businesses).

This arises from:

The lateral nature of Hollywood (rather than vertical integration) making it

harder to get everyone on the same page for changes that cross

organizational boundaries,

1http://cife.stanford.edu/online.publications/WP086.pdf

2http://cife.stanford.edu/online.publications/WP089.pdf

3http://www.springerlink.com/content/u29n33370g90jm6v/fulltext.pdf

David J. Litwiller, 2011

http://cife.stanford.edu/online.publications/WP086.pdfhttp://cife.stanford.edu/online.publications/WP086.pdfhttp://cife.stanford.edu/online.publications/WP089.pdfhttp://cife.stanford.edu/online.publications/WP089.pdfhttp://www.springerlink.com/content/u29n33370g90jm6v/fulltext.pdfhttp://www.springerlink.com/content/u29n33370g90jm6v/fulltext.pdfhttp://cife.stanford.edu/online.publications/WP086.pdfhttp://cife.stanford.edu/online.publications/WP089.pdfhttp://www.springerlink.com/content/u29n33370g90jm6v/fulltext.pdf

8/4/2019 Innovation Diffusion - Feature Films and Episodic Television - Sept 2011 - Dave Litwiller

2/4

Maturity of the industry, meaning much spending power and management

time among major players are dedicated to similar problems,

Oligopoly of the major studios, dampening competitive intensity to try to

get ahead with new technologies, and,

Project-based nature of content creation. Teams re-form from project to

project, changing stakeholders. Decision team reconstitution brings the

solidarity of three+ problem in risk assessment about carryinginnovations from past projects to new ones. This is where an advocate for

a risky position potentially faces several opposing people. Also, project-

based work with team reform each project means intellectual propertymoves around, lessening the incentive for businesses to invest in

differentiating technological or work-process intellectual property beyond

a minimum competitive threshold.

o Adoption S-curves of multiple technologies are underway simultaneously,competing for finite capital expenditure, R&D and training dollars, as well as

appetite for risk, especially in a fixed, mature oligopoly. Innovation moves faster

when it has fewer competitive s-curves of conviction or there is more rapid growthto fuel investment enthusiasm.

o Empirically, systemic innovation diffuses at half to a quarter of the rate of

incremental innovation in Hollywood. Even among technologies destined forlong-term adoption success, it is common for systemic innovation to take four

years from launch until the 10% penetration point into the accessible market is

reached. Beyond the onset phase, a further twelve years is typically required to

progress from 10% penetration to 90%. The inertia of systemic work methods andwork flows do not allow tipping point moments of rapid turnover to the new.

This time scale can come as a shock to technology entrepreneurs and those who

hold them to account whose backgrounds may be in other technology applicationmarkets with dramatically faster adoption and change patterns. An adoption time

constant in the vicinity of half a decade brings with it a necessary bias toward

deferring fixed organizational costs, sometimes for years, until product-market fitis established, the resounding value proposition is known and validated, when

scaling of the business beyond a small missionary team first becomes appropriate.

o Faster take-up comes in part from innovations that are widely perceived to yield

stronger revenues, due to hit driven nature of Hollywood (the biggest successescover the losses from a large proportion of projects which are financial flops, and

still provides an overall investment return). Adaptations in technology or work

methods with strong financial performance for early projects are widely andrapidly imitated. The challenge is that attribution for success is often subjective

and spread among a variety of factors (such as script, genre, actors, topicality,

director, VFX, etc.), making it often a challenge to get sufficient credit assigned toa new technology.

David J. Litwiller, 2011

8/4/2019 Innovation Diffusion - Feature Films and Episodic Television - Sept 2011 - Dave Litwiller

3/4

o Operating cost savings from a new technology are usually not as compelling to

drive widespread user adoption as revenue enhancement. Empirically, operating

cost savings tend to be partially diminished by sloppier, wasteful usage patternsduring production and post-production rather than maintaining disciplined work

methods to deliver ultimate savings. Revenue expansion doesnt experiencesimilar erosion.

o Best technology take-up comes from innovations with a learning curve which can

be completely traversed in one project. Otherwise, inability to get consistent use

from project to project slows the transfer of tacit knowledge dramatically to attain

full efficiency with the new technology. Where the learning curve spans multipleprojects, then team reconstruction from project to project compounds slowness of

adoption because of both solidarity of three as well as inadequate availability of

sufficient apprenticing time.

o Because of how resources are marshaled in Hollywood to initiate a content-creation project, and the high statistical fall-out from inception to approved

production, the fastest technologies to be adopted are those that are seen to lift the

likelihood of reaching green lit status from the studios.

o The project-based nature of work means that first adoption can happen quickly,

since risk for stakeholders is limited to just one project. At the same time, the

spread of advantageous mutations in work process and technology can beforestalled especially if there is any undercurrent of disappointment with early

project results. Evidence of first use, even enthusiastic, has significant head-fake

potential with respect to rapid follow-on spread of usage.

Influence, Promotion and Intervention to Accelerate Adoption

With these observations and factors in mind, there are several model communication and

intervention implications to promote a new technology:

o Show how better revenue came from early projects using the technology.

o Make one of the most influential prospective users a partner in development and

pilot usage. The most respected and connected people have immense impact

through persuasion and social proof over how others will go about production ofmovies, episodic television and big budget commercials.

o Show how all key players felt early projects were de-risked or otherwise enhanced

from using the new, such as the producer, director, cinematographer, script writer,

and perhaps even the art director.

David J. Litwiller, 2011

8/4/2019 Innovation Diffusion - Feature Films and Episodic Television - Sept 2011 - Dave Litwiller

4/4

o Show the learning curve for all involved with using the new technology as being

much less than the time to complete one project.

o Provide knowledgeable users and support staff for adjacent organizations to assure

the ease and productivity with which those entities interact with the new.

o Deliver compelling economic and publicity opportunities to all ecosystem players

who need to contribute to making the new technology a success.

The Gold Standards for Relatively Rapid, Systemic Adoption

o Technology that is an order of magnitude less expensive than its predecessor at the

same time as providing expanded creative control, such as was the case with digitalediting suites, digital compositing, and certain digital cinematography cameras.

o Technology that resoundingly increases property revenue, as was the case with theearly use and rise of big budget VFX for blockbuster movies, and to an extent with

the onset of 3-D.

Additional Care for Boards of Directors and Executives

o The star power, visibility, and bragging rights of success in Hollywood attract more

capital and talent into many parts of its ecosystem than its pure economic returns

would justify. The best performing production and post-production technology

vendors make a concerted effort early to really understand the profit pool of the

product or service sector they are targeting, to ensure that an adequate return oninvested capital is available.

Further Reading

o Capabilities in Motion: New Organizational Forms and the Reshaping of the

Hollywood Movie Industry, Lampel and Shamsie, Blackwell Publishing, 2003

http://ideas.repec.org/a/bla/jomstd/v40y2003i8p2189-2210.html

About the Author

David J. Litwiller is an Executive-in-Residence with Communitech, based in Waterloo, Ontario. His

background is in wireless devices, precision electro-mechanics, semiconductors, electro-optics, MEMS,

biotech instrumentation, and enterprise software. He serves as an advisor to various private corporations inmatters of strategy, technology, operations, finance, governance, and business development. Mr. Litwiller

is the author of Rapid Advance - Mergers & Acquisitions, Partnerships, Restructurings, Turnarounds and

Divestitures in High Technology.

David J. Litwiller, 2011

http://ideas.repec.org/a/bla/jomstd/v40y2003i8p2189-2210.htmlhttp://ideas.repec.org/a/bla/jomstd/v40y2003i8p2189-2210.html