Industry analyst Michael Gubbins explains why, when it comes to updating industry business models, change is the only way forward…

Innovation has become one of those terms that has lost much of its currency through lazy application. While there are unquestionably examples of businesses using new tools to reach audiences, they remain a minority. Far too often an ‘innovative’ company turns out simply to have an email account and a Facebook page.

Everyone now knows the language: we ‘embrace change’ and ‘engage customers’ with ‘multi-platform’ strategies. And yet, for the most part, we are still a business for whom the Internet remains ‘new’ media, despite the fact that we are well into the second decade of its business evolution.

A discussion on marketing online with a studio and independent distributor suggested that innovation too often remains an add-on to the same old approaches, or arises from having one bright spark in the team (or, sometimes, on work experience).

There is, of course, a fair argument for a degree of reticence. The enthusiastic early adopters may be applauded for their bravery in being first out of the trenches, but they tend to be mown down nonetheless. The no-man’s-land of digital transition is already littered with failed business models and false hopes. It is rarely sensible for established business to be ahead of the curve. But is it sound policy to at least recognise that a curve exists?

One of the current dangers is that we are slipping a little too much into ‘it ain’t broke so why fix it’ thinking, seduced perhaps by box-office strength. What’s more, government cuts—like those due to be imposed in the UK—explicitly promise to keep the tax break for production.

But here’s the issue. We are now fast heading towards the fruition of a number of digital changes that have taken longer than anticipated to make an impact.We are already past the point, for example, where D-cinema—boosted by 3D—has become the de facto standard for all future cinematic development. You don’t have to like it but, as the interviews in this issue with the trade bodies for both exhibitors and distributors demonstrate, you have to accept it as a fact in order to seize the opportunities. And we will soon discover that the ability to send films via files that can be instantly accessed is a revolutionary change for a business thus far based on the movement of physical products and clear release windows.

The recent Media Arts Festival in London, bringing together leaders in film and the arts, highlighted the online reality that understanding, identifying and servicing consumer demand is now the critical issue. Innovation, in that sense, is being focused on creating a viable infrastructure for creative business. The focus for public intervention is then on creating the playing field, not funding the games.

Being able to deliver content directly to entertainment jukeboxes in homes—servicing web-connected and 3D screens—requires new strategies for being seen and new business models for making money.

There are big questions to be asked about how, in a world of choice, individual films and film as a medium can build the audiences of tomorrow. The ageing audience has already reached the top of the agenda for many of the key film conferences and events in recent months. Government cuts naturally grab the headlines, but they must not be allowed to distract from the more fundamental long-term changes that were already in play before the banking crisis.