Continuing from Part I, where a case is made that the successor to video games, virtual reality, will draw half of all time currently spent on television viewership by 2012.
The film industry, on the other hand, has far less of a captive audience than television, and thus evolved to be much closer to a meritocracy. Independent films with low budgets can occasionally do as well as major studio productions, and substantial entrepreneurship is conducted towards such goals.
This is also a business model that continually absorbs new technology, and even has a category of films generated entirely through computer animation. A business such as Pixar could not have existed in the early 1990s, but from Toy Story (1995) onwards, Pixar has produced seven consecutive hits, and continues to generate visible increases in graphical sophistication with each film. At the same time, the tools that were once accessible only to Pixar-sized budgets are now starting to become available to small indie filmmakers.
Even while the factors in Part I will draw viewers away from mediocre films, video game development software itself can be modified and dubbed to make short films. 
Off-the-shelf software is already being used for this purpose, in an artform known as machinima. While most machinima films today appear amateurish and choppy, in just a few short years the technology will enable the creation of Toy Story calibre indie films.
By democratizing filmmaking, machina may effectively do to the film industry what blogs did to the mainstream media. In other words, a full-length feature film created by just 3 developers, at a cost of under $30,000, could be quickly distributed over the Internet and gain popularity in direct proportion to its merit. Essentially, almost anyone with the patience, skill, and creativity can aspire to become a filmmaker, with very little financing required at all. This too, just like the blogosphere before it, will become a viable form of entrepreneurship, and create a new category of self-accomplished celebrities.
At the same time, machinima will find a complementary role to play among the big filmmakers as well, just as blogs are used for a similar purpose by news organizations today. Peter Jackson or Steven Spielberg could use machinima technology to slash special-effects costs from millions to mere thousands of dollars. Furthermore, since top films have corresponding games developed alongside them, machinima fits nicely in between as an opportunity for the fan community to create 'open source' scenes or side stories of the film. This helps the promotion and branding of the original film, and thus would be encouraged by the producer and studio.
Thousands of people will partake in the creation of machinima films by 2010, and by 2012 one of these films will be in the top 10 of all films created that year, in terms of the number of Google search links it generates. These machinima films will have the same effect on the film industry that the blogosphere has had on the mainstream media.
There you have it, the two big changes that will fundamentally overturn entertainment as we know it, while making it substantially more fun and participatory, in just 6 short years.
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