As the California Law Revision Commission (CLRC) met earlier this month for another deep dive on competition issues, a newly released report has found that California’s motion picture and television industry (aka the “audiovisual industry”) is robustly competitive.
Prepared by Compass Lexecon at the behest of the Motion Picture Association, the findings repudiate a CLRC Working Group’s conclusion that the audiovisual sector is implicitly uncompetitive because it is “overly concentrated.”
Competitive Industry
In fact, the study found that:
The audiovisual industry is a dynamic and highly competitive industry with numerous participants providing an increasingly diverse array of content across new and innovative delivery platforms, benefitting consumers. Furthermore, the empirical evidence demonstrates that the audiovisual labor market is an important employer in California, is a well-functioning labor market, and pays wages above the average of other industries.
A competitive industry provides benefits to consumers through low prices, innovation, and improvements or better value of goods and services. Compass Lexecon found that the empirical evidence on outcomes in the audiovisual industry, such as streaming services, short-form video, increasing output and quality, and pricing “is consistent with a competitive industry (and) supports the conclusion that the audiovisual industry is well-functioning, dynamic, and exhibits signs of healthy competition.”
New entrants, like Apple, Netflix and Amazon have been able to significantly impact the marketplace — both critically and commercially. The study also found that the audiovisual industry is a well-functioning labor market, providing benefits to workers within the industry. Nationwide employment in production and distribution has been stable over time (except during the COVID-19 pandemic and Hollywood strikes), and wages are higher than national averages and have increased over time.
The California Law Revision Commission was directed by the Legislature to examine whether California should make major changes to its antitrust and competition laws, affecting every industry in the state, from large technology companies to media, health care, grocery and small businesses, among many others.
No Need for Radical Change
The California Chamber of Commerce has made the case at several prior hearings that California’s antitrust and competition laws do not need to be radically changed to target single firms that improve their market position through legal and naturally competitive means, and that California’s antitrust and competition laws should not be radically changed absent compelling evidence of need and rigorous analysis of economic impacts.
The October 10 hearing explored the competitive implications of artificial intelligence, and in particular, (1) algorithmic collusion, (2) unilateral conduct, and (3) consolidation. The report of the Artificial Intelligence Working Group also discusses the merits of a digital sector regulator.
The Commission will consider and debate the direction of its report to the Legislature, and any recommendations, into 2025.
