What is Scarce When Quality is Abundant

Where Does Value Accrue?

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Vizcom rendering of my sketch

Many of my recent posts explore the following idea: the last decade in film and TV was defined by the disruption of content distribution and the next decade will be defined by the disruption of content creation. The premise is that over the next five-seven years several technologies, particularly AI (including GenAI), will further blur the quality distinction between professionally-produced (or “Hollywood”) content and creator or independent content, resulting in effectively “infinite” quality.

This idea raises a lot of questions, some of which I’ve tried to answer in posts like Forget Peak TV, Here Comes Infinite TV, How Will the Disruption of Hollywood Play Out? and AI Use Cases in Hollywood. But here’s another question: what becomes scarce when quality is abundant? Where will value accrue in an abundant quality world?

Tl;dr:

• In analyzing any industry, it’s critically important to understand which resources are abundant and which are scarce. That’s because value accrues to the scarce resource in a value chain and, accordingly, it shifts along the chain when the relative abundance/scarcity of resources changes.
• Hollywood will need to prepare for abundant quality content.
• Last year, Hollywood released about 15,000 hours of new TV episodes and films in the U.S. Creators upload 500 hours of content to YouTube each minute, or over 250 million hours per year. If consumers consider just 0.01% of this to be competitive with Hollywood, that would double Hollywood’s annual output; if they consider 0.1% competitive, it would be 20x.
• AI is set to democratize high production values. At the same time, many consumers’ definitions of quality are shifting away from high production values — and therefore lowering the bar — at least some of the time. YouTube is already the most streamed service in the U.S. to TVs, equivalent to Hulu, Disney+, HBO Max, Peacock and Paramount+ combined. Or, consider that Mr. Beast’s last video, which is performing near his average, got enough viewing to be a top 10 series on Netflix globally.
• So, what becomes scarce (and more valuable) when quality becomes abundant? A few things: consumer time and attention; hits; marketing prowess; curation; fandom and community; IRL experiences; premium IP; library; and (maybe) certain picks and shovels.
• Big media companies should invest in scarce resources where they can.
• One opportunity is a much more purposeful effort to cultivate fandom, or what I refer to as “fanchise management.” Below, I discuss what this might mean in practice.

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