For years, Hollywood has been engaging in monopolistic practices in an attempt to fight the coming obsolescence of its business model. Hulu, the online television website, relies on the television studios colluding to avoid handing out their product for free online; the success of movie theaters relies on the studios refusing to release enough worthwhile material to streaming sites.
Nonetheless, the future is here. To the chagrin and bewilderment of the Hollywood moguls, Netflix, the company that allows users to stream new movies and TV shows or to rent movies by mail for pennies on the dollar, is soaring in its earnings. Today, Netflix reported net income of $7.9 million for Q4 of 2012, down 77.6 percent from 2011, but a gross of $945.2 million in the same period, an 8 percent increase. Experts thought Netflix would clock in at more than $11 million below that number. Netflix now has 27.15 million domestic streaming customers, a jump of over 2 million from Q3 of 2012.
The real threat has yet to manifest itself: once Netflix begins producing entertainment itself, it will render the studio system useless. Hollywood had better adapt; Tinseltown is going to the cloud.
Ben Shapiro is Editor-At-Large of Breitbart News and author of the book “Bullies: How the Left’s Culture of Fear and Intimidation Silences America” (Threshold Editions, January 8, 2013).