I was doing some surfing yesterday to see if anyone had analysed the patterns of retro, that is the inevitable when what has come before returns again. We currently seem to be in the 80’s right now. I’m unsure what part of the 80’s, perhaps all of it. I was just wondering when the 90’s would come back and what exactly defined the 90’s anyway. I didn’t find any analysis on the subject only some amusing satire and another article which was more of a tangent to the whole retro thing.

The tangent was an article titled “The Long Tail” published by Wired magazine. It sidelined my retro analysis quest because The Long Tail outlines the saviour of the entertainment industry!

The basic gist of The Long Tail is, currently entertainment is hit driven. It’s hit driven because inefficient distribution (shelf space and cinema screens) means that for entertainment to be profitable it has to reach a critical mass of sales to pay for it’s retail space. Anything that doesn’t have that mass market appeal often doesn’t even get stocked. Not because there isn’t a market but because that market is more distributed, “In the tyranny of physical space, an audience too thinly spread is the same as no audience at all”.

With the advent of online retail and distribution entertainment is no longer limited by shelf space, it is changing the way people consume media and giving rise to a new business model for entertainment.

The current hit driven model works on the 80-20 rule. 20% of entertainment content will be a hit, that is sell enough to be profitable, the rest will not. Evidence from online retailers suggests that while you get the “power law” demand curve that looks like any offline retailers with with huge appeal for the top tracks, tailing off quickly for less popular ones. Beyond the hits the offline retailers demand curve drops to zero, because they don’t have more obscure media in stock for one. However with the online retailers the demand keeps going, this is The Long Tail. What’s more is The Long Tail is huge, some online retailers such as Amazon are finding the non-hits have got a market bigger than the hits.

There has been a lot of lamentation in the games industry on the lack of innovation and original content being created. The games industry is very much a hit driven economy, very few games made actually turn a profit. More and more publishers are spending their money conservatively on existing IP through sequels and movie tie ins. I’ve heard the big publishers only spend 10% to 15% on original ideas. This hit driven economy is frankly getting pretty stale. How long will people keep buying the next iteration of Need for Speed? I think the Long Tail may be the light at the end of the tunnel for the video games industry. It means there is a market for the non-hits of the industry. Sure the money isn’t as big as the hits but there is still money to be made and there’s always shelf space at Amazon. Hopefully as online retails grows and online distribution becomes a reality we’ll start to see some risks being taken again.