Hollywood is worried, although they have not yet had a full-blown panic attack. Their bedrock market - the one they have always taken for granted - is eroding beneath their feet. Generation X, is growing up and their tastes have changed. The once captive audience that grew up on the "Star Wars" movies that their parents took them to is finding that their own children are not nearly as impressed as the Gen-X parents once were with special effects.

But that is not the only place we are seeing changes.

Video games are capturing a bigger piece of the pie.

"If I had some time in the afternoon, and it was a choice between watching a movie or playing a game, I'd rather play a game," said Marlon Castro, 35, of Foster City.

Already, the gate is down not only at theaters, but also at Blockbuster Video - once the powerhouse of video has taken yet another hit as reported on PBS, Marketplace. The reports says,

Blockbuster is expected to report a third quarter loss today. Efforts to adjust its brick-and-mortar business model to compete with on-line DVD distribution don't appear to be working. Jeff Tyler reports

In short, the market in going through a shakeout - one which Laura and I have watched closely.

It is no secret that I take much of what Clayton Christensen says, to heart. Christensen is a professor at the Harvard Business School. His specialty is the evolution of technology.

I have a few observations of my own which square with Christensen's observations.

New technologies are often force-fit to solve existing problems - and that makes sense. We have today's problems that need to be solved. Disruptive technologies are those that unseat the market leader, the dominant player, the king of the hill. In film, Polaroid, the instant picture people, did not survive. Wedded to emulsion technology, Polaroid did not take the grasp the realities of the emerging videotape market. Polaroid plunged millions into its Polavision. The product is now a curio.

What seems to be the case is that new technology creates new markets and disrupts old channels of distribution. Revenue and distribution models change - as do tastes and forms and even cost structures. Can emulsion film compete with digital? The business model Polaroid had was to provide cameras at cost and sell the film to make the revenue. The digital camera turned that model on its head.

Both radio and television evolved over time into what they are today, but first they experimented with older forms - such as vaudeville - before settling into their current content.

2006

The silent revolution hasn't been so silent - computer generated graphics, but the interesting thing is that film makers are not the only ones who have benefited. To be sure, the barriers to entry for a film company are substantial - high-cost equipment, pricey actors, and technical issues having to do with real-world filming.

More and more, blue screens and animation have crept into the movie process. And the directors are fascinated with their toys. As an aficionado, I enjoy listening to the director's commentary - sometimes good, sometimes really bad - and the interesting thing I am hearing is how they used some special effects gimmick to accomplish something. It wasn't a commentary about the story; the commentary was about how they managed to make some effect happen. I suppose there is nothing wrong with that, but it does suggest that the movie making mind-set is currently driven by technology.

And yet, the "Revenge of the Sith" has not ignited the popular culture the way very first "Star Wars" movie did. Re-releasing the original one, with current special effects technology inserted into it, had little tangible impact.

The trend has been for films to be turned into video games, yet there is a countertrend where video games, such as "Tomb Raider," are turned into movies.

Content

I suppose this all reminds me of the first Apple computers - when people collected fonts, just like some people collect baseball trading cards. Memos appeared with a variety of font. (Guilty, your Honor). But soon people got back to the content and were not quite as mesmerized at the fonts as they once had been.

The basic difference between video game and movies is the level of involvement in the outcome.

This is the dark horse, yet always the front runner. Technologies come and go - but involving the reader-viewer in the story and giving the person a say in the outcome, is a powerful thing which sall too often gets forgotten.

This is where interactive will change the landscape and the time is much closer than people think.

The gating step is how much data can be delivered how fast over what system to the destination.

I look back ten years ago and Netscape was the rage. My customers changed markedly from 1990 to 1996. In 1990, they were mostly software oriented people who could pop the top of a computer and fix stuff as fast as Gyro Gearloose, could.

Ten years before that, most computers with any power were the size of a refrigerator and word processing was something that required a special set of hardware - and Wang was its name. Color laser printers, digital cameras, flat panel monitors, search engines, web cafes - the concepts ranged from Buck Rogers to the incomprehensible.

The other day a news reporter told how some students were tapping out text messages on their cellular phone - while in their pockets, no less - and sending schoolmates answers to questions during a test. This has led to some schools to contemplate a policy of banning all cellular communication - especially, phones.

The generation that has taken the place of Gen-X, young boys with money (allowances) for whom movies are targeted, have stopped going to films. Passive watching of programming is hardly in peril, but the trend is unmistakable and spiraling.

Interactivity in games might be a large market, but it is hardly the largest. The revenue models are still taking shape, but what is clear is the firms that find ways to interact electronically will have a competitive edge over those that are still door-to-door - in the way of the Fuller Brush Company.

Something I have noticed is the "standard" looking web site and design. Like a newspaper, having a standard format is not altogether bad. There is the content, and the ads, and the various sections, and even when we're in another town, we know how to look through the paper.

Today, this is where Web 2.0 seems to be. Borrowing largely from the Sears catalog and the Yellow Pages model, web pages present products on the "TV screen" or give information on how to locate the establishment. Frequently asked questions are addressed, but the infrequently asked ones take some time - and sometimes a competitor or alternative solution is found before the question gets answered.

Take an example of what might be in store. Suppose I would like to own a sports car such as a Ferrari.

Nice brochures and pictures, but let's say they really wanted to get my attention. What about sitting inside - somewhat virtually - and taking a spin? Does any dealership take its customers out for a 185 mile per hour ride? Not likely you'll be allowed to sit inside one of the ones in the showroom (they're locked) let along roar down the open road.

And if Ferrari decides they don't have the budget, maybe Corvette does.

Interactivity that is thrilling is not limited just to games.