Two high-level participants in the entertainment industry told a group of Wharton grad students last week that although foreign countries had begun to make inroads into the biz, the U.S. is positioned
to withstand the onslaught and attain even greater domination of the entertainment worldwide. Jeff Berg, president of International Creative Management, and Suhail Rizvi, head of an investment firm
that invests in Hollywood, told the students that production might go offshore, as it already has, but most of the critical talent is U.S.-based, which means valuable content will still be owned by
American companies. However, both men expressed concern about how the music and movie companies will deal with the popularity of file sharing. "The music industry has taken a 'sue-the-customers'
stance, trying to force file-sharing services out of business," according to Wharton marketing professor Peter Fader, who added that the original Napster may be gone, but the underlying problems
remain. Further, according to Wharton's
Strategic Management, "Digital technology won't disappear, and consumers, especially younger ones, have demonstrated their dissatisfaction with
the inconvenience and cost of compact discs." The publication reports that "movie distributors haven't found their predicament as tough. Berg suspects that's because 'it's a pain to wait an
hour and a half for a movie to download.' And unlike music companies, studios were quicker to embrace new channels, giving consumers more freedom to choose prices. Avid film fans can pay the most and
see a movie in a first-run theater, while more frugal consumers can wait until it hits the second-run circuit, rent a DVD or opt for on-demand cable TV."
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