1. Innovation Diffusion in Production of Feature Films and Episodic Television:
A Roadmap for Purveyors of New Technology
David J. Litwiller
September, 2011
The innovation diffusion rate in project-based industries has been studied by respected
academics1,2,3. The trigger observation for this research was that innovation diffuses more
slowly and haltingly in project-based industries such as feature film and episodic TV
production than in traditional vertically integrated industrial and commercial ecosystems.
Project-based industries are characterized by major development projects being carried
out by teams of independent contributors from outside the sponsoring firm. The team
comes together for the project, and then disbands afterward. The project-based nature of
these industries has significant go-to-market and organizational development implications
for purveyors of new production technologies in order to maximize adoption speed,
revenue growth and profitability.
The following summarizes academic research and empirical evidence describing the
causes of cautious adoption, and goes on to detail the highest impact ways to enhance
adoption of new technologies in the project-based, production industry of mainstream
movies and episodic television:
o Much of Hollywood is about risk avoidance and de-risking. Many projects sputter
because of non-technical factors such as audience whim and executive discretion.
People do not want to compound this natural environmental risk with additional
technical risk. There is a pronounced tendency for people to want to be the second
to use the new, rather than first.
o In movie and TV production technology, incremental innovation (one person or
one business making an isolated change) happens much faster than systemic
innovation (adaptations requiring changing work methods and platforms for
multiple people spanning multiple businesses).
This arises from:
• The lateral nature of Hollywood (rather than vertical integration) making it
harder to get everyone on the same page for changes that cross
organizational boundaries,
1
http://cife.stanford.edu/online.publications/WP086.pdf
2
http://cife.stanford.edu/online.publications/WP089.pdf
3
http://www.springerlink.com/content/u29n33370g90jm6v/fulltext.pdf
© David J. Litwiller, 2011

2. • Maturity of the industry, meaning much spending power and management
time among major players are dedicated to similar problems,
• Oligopoly of the major studios, dampening competitive intensity to try to
get ahead with new technologies, and,
• Project-based nature of content creation. Teams re-form from project to
project, changing stakeholders. Decision team reconstitution brings the
“solidarity of three+” problem in risk assessment about carrying
innovations from past projects to new ones. This is where an advocate for
a risky position potentially faces several opposing people. Also, project-
based work with team reform each project means intellectual property
moves around, lessening the incentive for businesses to invest in
differentiating technological or work-process intellectual property beyond
a minimum competitive threshold.
o Adoption S-curves of multiple technologies are underway simultaneously,
competing for finite capital expenditure, R&D and training dollars, as well as
appetite for risk, especially in a fixed, mature oligopoly. Innovation moves faster
when it has fewer competitive s-curves of conviction or there is more rapid growth
to fuel investment enthusiasm.
o Empirically, systemic innovation diffuses at half to a quarter of the rate of
incremental innovation in Hollywood. Even among technologies destined for
long-term adoption success, it is common for systemic innovation to take four
years from launch until the 10% penetration point into the accessible market is
reached. Beyond the onset phase, a further twelve years is typically required to
progress from 10% penetration to 90%. The inertia of systemic work methods and
work flows do not allow “tipping point” moments of rapid turnover to the new.
This time scale can come as a shock to technology entrepreneurs and those who
hold them to account whose backgrounds may be in other technology application
markets with dramatically faster adoption and change patterns. An adoption time
constant in the vicinity of half a decade brings with it a necessary bias toward
deferring fixed organizational costs, sometimes for years, until product-market fit
is established, the resounding value proposition is known and validated, when
scaling of the business beyond a small missionary team first becomes appropriate.
o Faster take-up comes in part from innovations that are widely perceived to yield
stronger revenues, due to hit driven nature of Hollywood (the biggest successes
cover the losses from a large proportion of projects which are financial flops, and
still provides an overall investment return). Adaptations in technology or work
methods with strong financial performance for early projects are widely and
rapidly imitated. The challenge is that attribution for success is often subjective
and spread among a variety of factors (such as script, genre, actors, topicality,
director, VFX, etc.), making it often a challenge to get sufficient credit assigned to
a new technology.
© David J. Litwiller, 2011

3. o Operating cost savings from a new technology are usually not as compelling to
drive widespread user adoption as revenue enhancement. Empirically, operating
cost savings tend to be partially diminished by sloppier, wasteful usage patterns
during production and post-production rather than maintaining disciplined work
methods to deliver ultimate savings. Revenue expansion doesn’t experience
similar erosion.
o Best technology take-up comes from innovations with a learning curve which can
be completely traversed in one project. Otherwise, inability to get consistent use
from project to project slows the transfer of tacit knowledge dramatically to attain
full efficiency with the new technology. Where the learning curve spans multiple
projects, then team reconstruction from project to project compounds slowness of
adoption because of both “solidarity of three” as well as inadequate availability of
sufficient apprenticing time.
o Because of how resources are marshaled in Hollywood to initiate a content-
creation project, and the high statistical fall-out from inception to approved
production, the fastest technologies to be adopted are those that are seen to lift the
likelihood of reaching “green lit” status from the studios.
o The project-based nature of work means that first adoption can happen quickly,
since risk for stakeholders is limited to just one project. At the same time, the
spread of advantageous mutations in work process and technology can be
forestalled especially if there is any undercurrent of disappointment with early
project results. Evidence of first use, even enthusiastic, has significant head-fake
potential with respect to rapid follow-on spread of usage.
Influence, Promotion and Intervention to Accelerate Adoption
With these observations and factors in mind, there are several model communication and
intervention implications to promote a new technology:
o Show how better revenue came from early projects using the technology.
o Make one of the most influential prospective users a partner in development and
pilot usage. The most respected and connected people have immense impact
through persuasion and social proof over how others will go about production of
movies, episodic television and big budget commercials.
o Show how all key players felt early projects were de-risked or otherwise enhanced
from using the new, such as the producer, director, cinematographer, script writer,
and perhaps even the art director.
© David J. Litwiller, 2011

4. o Show the learning curve for all involved with using the new technology as being
much less than the time to complete one project.
o Provide knowledgeable users and support staff for adjacent organizations to assure
the ease and productivity with which those entities interact with the new.
o Deliver compelling economic and publicity opportunities to all ecosystem players
who need to contribute to making the new technology a success.
The Gold Standards for Relatively Rapid, Systemic Adoption
o Technology that is an order of magnitude less expensive than its predecessor at the
same time as providing expanded creative control, such as was the case with digital
editing suites, digital compositing, and certain digital cinematography cameras.
o Technology that resoundingly increases property revenue, as was the case with the
early use and rise of big budget VFX for blockbuster movies, and to an extent with
the onset of 3-D.
Additional Care for Boards of Directors and Executives
o The star power, visibility, and bragging rights of success in Hollywood attract more
capital and talent into many parts of its ecosystem than its pure economic returns
would justify. The best performing production and post-production technology
vendors make a concerted effort early to really understand the profit pool of the
product or service sector they are targeting, to ensure that an adequate return on
invested capital is available.
Further Reading
o “Capabilities in Motion: New Organizational Forms and the Reshaping of the
Hollywood Movie Industry”, Lampel and Shamsie, Blackwell Publishing, 2003
http://ideas.repec.org/a/bla/jomstd/v40y2003i8p2189-2210.html
About the Author
David J. Litwiller is an Executive-in-Residence with Communitech, based in Waterloo, Ontario. His
background is in wireless devices, precision electro-mechanics, semiconductors, electro-optics, MEMS,
biotech instrumentation, and enterprise software. He serves as an advisor to various private corporations in
matters of strategy, technology, operations, finance, governance, and business development. Mr. Litwiller
is the author of “Rapid Advance - Mergers & Acquisitions, Partnerships, Restructurings, Turnarounds and
Divestitures in High Technology”.
© David J. Litwiller, 2011