But even the motion picture industry has specifically and directly experienced this in the past.
First it was with the rise of television. Television forced the studios to contract, forced some studios to close, and resulted in the remaining studios making bigger and more lavish films, making a lot more films to compete with TV.
Then there was home video. The VHS tape resulted in a bunch of new entrants in to the film industry, and changed fundamentally the value proposition of making a film. In both cases, these things ultimately resulted in increase profits for the established players.