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Over the holiday season, I spent some time back east with family and friends.

Aside from shoveling snow and fighting the cold winter in Pennsylvania, getting outside of Hollywood for a few weeks provides a time of relaxation and reflection. And at the same time, spending time with friends and family almost always reveals coming trends in the movie industry.

Let me explain.

Based on some popular entertainment oriented Christmas gifts, it’s evident that changes in the movie industry are upon us. Thanks to VOD innovations like the the Roku HD Player and some new television sets that directly link to the internet, I predict that 2010 will be the beginning of the end for movie rental kiosks, movie rental stores and as a result, studios will experience further decline in physical DVD sales (including Blue Ray.)

While my prediction may be a little ahead of the curve, I think it’s important to prepare your movie business accordingly. These innovations (over time) will eliminate traditional, physical movie sales channels – Diminished revenue may result in less production and you might experience a decrease in movie production work.

Conversely, streaming, down-loadable movies on demand will also create a enormous opportunity for filmmakers wishing to reach the global masses without asking permission. For the right producer, this is an exciting time!

But in order to profit from these innovations, let’s analyze the ripple effect. Here are some things we might expect:

5 (possible) PREDICTABLE movie business DECLINES

1. Decline in traditional home video channels (video rental business, video delivery business and home video purchases will decline.)
2. Decline in traditional hardware like DVD Players and Blue Ray Players.
3. Decline for dub houses, DVD manufactures and DVD shipping boxes.
4. Less pre-sale predictability. Tell your investors that you’ll put the movie on iTunes and then try to project potential revenue. Have fun.
5. Less investor cash means there will be two motion picture tiers for your day rate: micro budget features and mid-to-high budget studio features (with theatrical outlets for distribution.) Budget ranges in-between are becoming increasingly too risky to finance.

7 (possible) PREDICTABLE movie business OPPORTUNITIES

1. Providers of VOD and digital down-loadable content will increase.
2. Innovations in hardware (TV Sets, Roku Devices and TiVo type products) will increase.
3. Instead of getting your day rate, more professionals will be forced to take back end points. (This is the movie making equivalent to getting start-up stock options.)
4. State movie production tax incentives will influence production of higher budget pictures.
5. Distribution channels will be many. Look for more and more indie production companies to create in-house marketing arms and PR firms to promote movies across the globe.
6. Additionally, movie internet marketing experts will become an asset to your production. (OK – a little self serving. But after successfully producing and marketing one of our movies on the internet, this is something I’m passionate about.)
7. This is totally optimistic: but we might also expect more outlets for TV content. HDTV accessible website will spring up where you’ll post your content, build a VOD following and leverage your following to increase targeted advertising revenue. (Check out Hulu.com for an example.)

Great. What does this mean for you?

Save your money! Speak with a financial adviser and learn how you can make a financial plan for your future. Seriously. Learn how to make your money work for you. Then -

If you want to produce movies: these industry changes mean you should cultivate relationships with “name” actors and join forces with all the folks you’ve been working with for years and years. Start to create your own micro-budget projects and get super creative on the financing end. Find folks with equipment. Work out deals and see if you can pay in both up-front money and back-end points.

Additionally, if you go this route, you should become friends with movie producer marketers, PR professionals and sales consultants who have successfully sold movies over the net. These folks will help you create a plan for ROI – And while nothing is guaranteed, if you can create 5-7 movies in your career that supply your bank account with cash each month, it’s a nice place to be.

If you make money working as a freelancer – you may have to change some of your focus (as is very common) to television commercial work, corporate video work and high-end music video work. These avenues seem to have more frequent production instances… And you don’t have to give up months for money.

Surviving the Movie Industry in times of change is similar to surviving other industries going through change. Necessitated by the need for cash (survival), many of you will be forced to see the world as an entrepreneur. Even if you aren’t ready, you may have to learn how to produce your own profitable movies.

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