Just as radio revolutionized the entertainment world at the turn of the century, satellite broadcasting, the Internet, VCRs, and new communications technologies are transforming the entertainment industry, said Universal Studios chairman Frank J. Biondi, Jr. (MBA '68), the keynote speaker at a recent HBS conference on the media and entertainment industries. Sponsored by the HBS Entertainment and Media Club and Price Waterhouse, the March event - "A View from the Top" - brought together senior executives from several leading media and entertainment companies to share their views on the future with an audience of some 350 people.

Biondi said that future success in the entertainment industry will depend on senior executives' ability to predict trends from new technology. He reminded participants that TV executives, for example, missed their cue and did not foresee the tremendous commercial implications of the VCR - one of the "most powerful" innovations in the industry.

Biondi was joined by a panel that included Richard J. Bressler, CFO, Time Warner Inc.; Bruce Paisner, president, Hearst Entertainment; Arnold Rifkin, executive vice president, William Morris Agency; Harold L. Vogel, managing director, Cowen & Co., and author of the influential book Entertainment Industry Economics; and Strauss Zelnick (MBA/JD '83), president and CEO, BMG Entertainment North America.

Harold Vogel observed that while new technologies have created opportunities, stiff competition within the United States and from international markets and skyrocketing production costs pose huge challenges to the movie industry. Film- production costs alone, Vogel pointed out, have risen 9.5 percent annually since 1980. Strauss Zelnick agreed, noting that as recently as a few years ago, the average Hollywood blockbuster cost $40 million. At the time, many industry leaders considered that an outrageous sum but today, the average megapicture requires about $100 million.

How are Hollywood studios coping with these rising costs? They are producing more of these same, high-priced spectaculars, films that are frequently criticized as mindless thrillers. In defense of the film industry, Bruce Paisner pointed the finger at "a very cynical, superficial" society that is willing to support these mass-appeal productions. "A lot of things you don't like about what we do has to do with what you don't like about our society," he said.

Arnold Rifkin argued that offsetting this blockbuster mania are numerous examples of high-quality television programming and filmmaking. He cited recent independent films such as Sling Blade and The English Patient, each of which cost less than $30 million to make. Success in the movie business is unpredictable, Vogel asserted. "If you made all the movies you turned down, and turned down all the movies you made, you would still come out the same," he said.

On balance, the panelists agreed that the entertainment industry is in a state of flux and that much of its uncertainty is due to the megamergers of the past fifteen years when, Frank Biondi noted, all the major networks and film studios were sold. As Harold Vogel put it: "There are hardly any more multimillion-dollar deals to be made - the big wave is over. Now we have to make corrections."

On a more expansive note, looking to the future, the panelists agreed that lucrative opportunities will likely be found in emerging overseas markets, particularly in Asia.

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