In Q2 2023, PARQOR will be focusing on three trends. This essay covers all three trends.

To remind you, PARQOR identifies a few key trends each fiscal quarter that reveal the most important tensions and seismic shifts in the media marketplace. Must-read stories or market developments are not always obvious from press reports or research analysis, and often require a deeper dive. PARQOR’s analysis questions established ideas and common wisdom, reassesses the moving pieces, and reveals the potential in the media marketplace in 2023.

I love the Tom Hanks quote that I found in the book “Powerhouse: The Untold Story of Hollywood's Creative Artists Agency”,  and recently used in my latest Medium Shift column:

“Every movie, every mom-and-pop chain rental store had to buy at least one copy—two or three if they wanted to make sure they could always have something for their customers. So that meant two or three copies times how many video stores were there across the country, half a million? Suddenly the VHS business was bringing in big money.”

It mirrors a quote I used in “The Linklater Problem” essay from Alan Payne’s book “Built to Fail”:

The video rental industry also launched and funded an unprecedented independent film movement. Films that previously would have never been made found an enthusiastic audience in the video store. As Quentin Tarantino put it: “From 1988 to 1992, people [movie producers] were all of a sudden getting $800,000 or $1 million or $1.2 million to make their little genre movie.”

Two of the biggest Hollywood creative talents of the past thirty years are saying that “free money’ from the VHS and DVD rental market has fueled the film industry’s growth. The decline of the DVD rental business suggests that “free money” from the rental business is approaching an end, and no alternatives have emerged.

Except that is not quite true: the past decade also has seen media companies and Netflix take on billions in debt fueled by zero interest rate policies (ZIRP) from central banks. In turn, that has enabled streaming services to spend billions of dollars annually to produce content. That was “free money”, too.

In other words, this moment in the media marketplace can be summed up as “It's about the free money... and it's about the free money.”

Key Takeaway

The first “It's about the free money” reflects how DVDs and VHS have subsidized the media industry, to date. The second reflects the two newer versions of “free money” to subsidize media companies during the streaming era. We are now witnessing the slow death of the first and weaknesses emerging in the second.

Total words: 1,900

Total time reading: 8 minutes