Hollywood + Silicon Valley = Frenemies?

03/18/2010 05:12 am ET | Updated May 25, 2011

When it comes to Hollywood and Silicon Valley, it's all turf wars and cattiness, the trash talk only put on hold for the occasional air kiss and photo op. Sound familiar? Maybe like Paris and Nicole? Lauren and Heidi?

That's right -- I'm saying Hollywood and Silicon Valley (and by that, I mean tech in general) are frenemies, and always have been. A few half-hearted overtures of friendship here and there when it suits them, but otherwise they just peer warily at one another from across the club (Think Motion Picture Association of America v. BitTorrent, or MPAA v. RealNetworks).

But that has to change -- and fast. If Hollywood and Silicon Valley don't ditch the defensiveness and start truly playing nice, the credits threaten to roll on movie revenues as we know them -- and both sides will lose out.

Don't believe me? Take a look at the music industry.

The labels fought the digital realm so long and so hard that by the time they accepted the change, music fans had already been re-engineered. They'd grown accustomed to pirating music, peer-to-peer sharing, and getting their favorite artists immediately, and for free. It's tough to unlearn bad habits, and the music labels learned the hard way how critical it is to be part of the consumer re-engineering process.

Hollywood needs to learn the same lesson. And fast. If it's going to stay viable and relevant, Hollywood needs Silicon Valley -- and vice versa.

The process of re-engineering consumers' consumption of movies and TV is already well underway -- and immediacy is becoming a key element. Over the next few years, the two sides need to create and test a wide variety of potential new business models -- together -- or the movie studios, TV networks and digital webmasters run the risk of losing out on the consumer experience (read: purchase process).

So, can "frenemies" work together?

The answer should be yes. The Valley can provide distribution methods that give consumers what they want -- new releases, on demand. And Hollywood can deliver quality content in a variety of forms/formats the digital distributors need. Together they should both make money.

Unfortunately, so far, it hasn't been so simple. Hollywood has held tightly to protecting its Home Entertainment (DVD) and Pay TV (HBO) revenues, while the Valley has leveraged studio content, through all means, to build a business without sometimes paying studios their fair share. In cases where the "frenemies" have partnered, today's online services fall short to public demand. Take a look at one of today's most popular movie and TV streaming services -- Netflix. It's great for library movies and direct to DVD stuff, but where are the new releases that everyone wants? CinemaNow (Sonic's Roxio) and Movielink (Blockbuster) were the early pioneers of online video. Their lack of consumer uptake is a clear sign that the industry has not yet discovered the winning formula. With that as recent history, it's hard to see how Hollywood and the Valley can kiss and make up. But it's imperative that they do. The cold shoulder benefits no one.

After all, they're not that different. One may think of itself as "new" and the other as "old," one may be Fortune 500 while the other is dominated by start-ups, but the fact is that both are entrepreneurial risk-takers. Every new film or television show, just like every new technology play, is a high stakes gamble.

And it's that commonality, and that history, that both industries need to think about as they look forward. Hollywood can't be afraid to take risks. And Silicon Valley shouldn't try to cut the content providers out of the picture.

The answer is out there. Taking risks, trying all types of different things, and working together is how it will be found.

In this past weekend's New York Times, Brooks Barnes tells the story of the studios' quest for "life after DVD's." Between the DECE (Digital Entertaiment Content Ecosystem) and Disney's Keychest initiative, it seems like Hollywood might be on the right track.

With perseverance (and a 'tude adjustment), the two will find a money-making model that offers new releases and library titles, a la carte purchases and memberships, on TV, PC and portable devices. We can reach the giant movie-library-in-the-clouds, where consumers get the content they demand, and studios and distributors get the percentage they're entitled to.

With eroding DVD sales, accelerated by Redbox and Pay TV emphasizing on exclusive originals, the studios are facing tremendous pressure to act.

After all, if Lauren and Heidi are on speaking terms again, there's hope for us too.