I found what I think was an excellent post over at Fred Wilson's blog today. 

In it he uses his children's behavior to try to ferret out trends in media.  I think there are some really interesting observations in it and am seriously considering coming back to it in the next week or so to tackle one or two more of them.  But for this post I wanted to look at one in particular. 

In his first point he says...

1) When they walk into a DVD store, they rarely walk out with a movie. It’s almost always the first season of a TV show they’ve heard is good. They’ll go see a movie in the theater but don’t really enjoy watching movies at home or on their computers. They feel that TV shows are better written and more interesting.  And the entertainment value is certainly more compelling. For roughly $40US, they got something like 25 episodes of Brothers and Sisters. That's almost 17 hours of entertainment for $40. That's hard to beat. And they get the bonus of being able to stat watching the show on TV once they've caught up.

It makes me wonder where this is headed. I don’t know enough about the economics of TV shows versus fims, but it may be that digital technology is changing the way the younger generation will consume filmed entertainment in some important ways.

I really think that is starting to be the case.  One show to watch in the coming weeks is Fox's "The Sarah Connor Chronicles" which is a continuation of the blockbuster Terminator 2 film from 1991.  I am told from people who have seen previews that the graphics in that show dwarf those in any of the previous terminator movies. 

I bring this up for two reasons: (1) because sci-fi is the most dependent on expensive special effects and (2) because I think the Terminator movies hold up well and could (in theory) be released today and still make a decent profit in the theatres. 

What I think that points to is the line between Movies and TV getting very, very thin.  I often think back to a three-part story on a show that just recently went off the air called "The West Wing".  The three parts consisted of the episode entitled "What kind of day it has been" as well as part 1 and 2 of an episode entitled "In the shadow of two gunmen".  In regards to these episodes I'm willing to say right now that they are as good if not better than any movie I've ever seen.

(All are also available on iTunes or Amazon's Unbox by the way and I'd strongly suggest everyone pick them up even if you don't agree with the show's politics)

Plus, they were produced at a fraction of the cost.  The average hour of scripted network TV costs about $2 million vs the average movie which costs $100 million (at least in 2006).  That disparity is just too much. 

Which brings me to my final point and the thing I think is going to turn this industry on its head and that is the rise of original programming on cable.  As DVD sales of "Full Season Packs" go up the majority of the profit in creating a TV show is going to shift from the original airing to the DVD sales afterwards and as that happens you'll start to see the quality of cable shows rise to that of their network counterparts (its already pretty close).

Many creators see the world of cable as the ultimate experience for them because they can create what they want with a lot more freedom and a lot less studio interference.  So as the monetary compensation gets closer and closer to what you see in film more and more creators will be enticed to move to cable TV instead.

So now you have a confluence of factors working in TV's favor including better and better home theatre systems, rising sales of TV on DVD, cable networks wanting original programming, rising pay on that original programming, falling cost of digital production, and creators who are getting more and more annoyed by studio interference.  Given all that how could there not be a shift in the coming years?

If Mr. Wilson's above observations are even a little correct I suspect the smart money will be in TV for the next few years.