-- H.G. Wells
20 years ago, television could only dream of the serialization and big budgets that define Hollywood. Before the advent of DVR, services like Hulu, or even file-sharing like BitTorrent, you would have to be some sort of technical wizard with mastery over your VCR's (It stood for Video Cassette Recorder, young'uns; ask your parents) timer settings and the foresight to tune your television to the appropriate channel if you wanted to record a show to watch later. Thus, syndication-ready shows like "Law & Order", "Seinfeld", and "Friends" ruled the roost. What was the most "serialized" element of "Seinfeld"? George's job? Elaine's hair? The character relationships never change. Running jokes are added, but fundamentally, you can watch any episode of "Seinfeld" without having the faintest clue how it falls in the timeline and it subtracts nothing from your enjoyment. Try watching a random episode of "Mad Men" or "The Walking Dead" the same way and you'll see the effect serialization has had on television.
Ironically, the movie industry of today, with its overreliance on big budgets and sequels, is more suited to dominate the market 20 years ago than it is to compete today. Both of those elements have successfully crossed over to television (with continuing story arcs representing sequels). The dragons in "Game of Thrones" look better than the werewolves in Twilight. The impending finale of "Breaking Bad" was met with the same cultural fervor as the release of Catching Fire. Box office receipts have never been higher, but a "market correction" is in order to trim down the number of competitors in an over-crowded arena. The problem is, the market's only crowded because Hollywood has had to increase budgets to massive heights just to maintain an advantage over television.
The problem is that charting these trends long-term, it's tough to be optimistic about Hollywood's current model. When the last domino falls, and cable channels go à la carte (their stubborn refusal to do this is likely an upcoming Monday Rant even though this is a movie blog), the channels who've shown a willingness to spend money (HBO, AMC, etc.) will have an even greater share to distribute. With the FCC's loosening of standards on cable, that medium has become a viable place to push boundaries, try new things, and generally be avante-garde.
So if Hollywood's previously sacrosanct benefits of huge budgets and free experimentation are dwindling, where does the industry go? Up to this point, the response has been to just get larger and even more grandiose, or tell stories that don't have the legs for multiple seasons on television; things like Godzilla, or The Hunger Games being prime examples of stories that work as periodic, limited-run events, but could never work on a timeline that needs to be flexible in length. Arguably, this is the same question I asked in the Rant linked above, just in a more macro sense, but now we're talking about even if Hollywood stopped throwing millions of dollars at terrible movies; even if this was a perfect world where they only released movies worth watching, the outlook may still be bleak.
One answer would be to lean on the built-in advantage of the almost "event" status of a new release. But the thing that should trouble Hollywood are the television shows being made right now that are custom-built to be movies instead. Shows with such a high concept that they predictably run out of steam after a season or two at the most. Shows like Homeland and The Americans come to mind. Where are the cracks in Hollywood's system that these ideas are falling through into the waiting arms of TV? These sort of fantastic ideas with an easy to define beginning, middle, and end should be the new movie industry's bread and butter! Yet somehow they're going unclaimed until a television producer convinces themselves that they can stretch the middle out indefinitely. Hollywood HAS to reclaim these ideas or risk television eventually overtaking it like it did radio, and just ask radio: there's no coming back from that.