As the article on CNet explained, Hollywood’s world is dieing. It almost brings a tear to my eye as an aspiring screenwriter. I was hoping to slip into the industry before the collapse. Looks like I may be a little too late.

The past weekend, at a conference on the USC campus, Disney CEO Bob Iger said the “business model that formed the motion picture business…is changing profoundly before our eyes.”

Iger warned that studios must make profound changes, “or you will no longer have a business.”

It’s the same for all old media, their lock on distribution and production is fading and with it their massive profits. Hollywood needs to find a new way, but as anyone knows – change is hard. There are some who are trying to lead the way as I saw at the 2009 Screenwriting Expo where Anthony Zuiker was pitching is digi-novel Level 26. I was lucky enough to also catch Zuiker at the Virtual Worlds Conference in 2007 where he introduced the famous CSI Second Life episode and tie-in. I’ll give Zuiker credit, at least he is trying as he says, to merge Hollywood and Silicon Valley.

Returning to work after the screenwriting expo Monday I got to hear about the deep scars previous attempts to merge Hollywood and Silicon Valley had left behind. Visual Purple‘s roots are actually in interactive story or better known in the 90’s as interactive movies, producing such hits as Silent Steel and Blue Force. They’ve also worked on countless projects with Hollywood that went no where. Hollywood and Silicon Valley are of two different cultures – one doesn’t get story, the other can’t admit failure. But as they say, necessity is the mother of all invention and Hollywood needs something new.

What we can expect from Hollywood in the next few years:

1. A rush to ancillary sales – Disney has maximized this model with their theme parks
2. Smaller budgets – this isn’t any surprise as they try and ratchet back expenses
3. Experimentation with SaaS (Software as a Service) type model – maybe we can call it MaaS (Movies as a Service) but it’s pretty much the same thing as games moving to subscriptions with the likes of WoW

The last one, the SassS model, might be new for some people but it’s one of the only surefire ways to make money on the Internet. The only problem is how do you cram movies into such a model, something where the movie itself is in real-time and can only be experienced if you’re connected. You have to tie the entertainment value to the server, not just try to encrypt or lock down a video file. But how would that look? What would it be like if movies were real-time?

Call it real-time story or interactive story it’s something I’ve been experimenting with for years. And for the last few months I’ve actually been building it at Visual Purple. Every day I work with Virtual Worlds, NPCs, and a story engine to create real-time story. There are others creating real-time story as well. MMO developers are creating story worlds, which are a type of interactive story. Narrative in video games are another form. However all of them are still not that similar to the movies Hollywood was built upon. At Visual Purple we’re building training simulations – they have story but when was the last time you paid $10 to watch a training movie? But the technology is there and evolving. When movies were new they were almost nothing like what we see today in theaters. Many just captured vaudeville acts. But they evolved and the same will be true with interactive story. The situation today is similar to what the early film pioneers dealt with at the turn of the century. The technology and production quality will improve as it did for video games and artists will learn how to create drama using the tools. It’s an exciting time and it might just be the next big thing in Hollywood.