For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment
One of the problems with globalisation is the way in which
decisions taken thousands of miles away can have a direct impact on the parent
company. The decision by the Walt Disney Company to shorten the theatrical
window ahead of the DVD release of “Alice in Wonderland” is an obvious example,
but it is unusual for executives to find themselves at risk of imprisonment as
three Google executives discovered this week.
The judgement against YouTube in an Italian court means that
Google Chief Legal Officer David Drummond, Global Privacy Counsel Peter
Fleischer and former Google Italy board member George De Los Reyes, now
retired, have received suspended six month’s jail sentences. The verdict is
tough enough for the individuals concerned, one might think, but hardly worth a
mention outside of Milan. Unfortunately, it could set a precedent with
far-reaching consequences for everyone involved in the online distribution of
video.
The case revolved around a video that was filmed in Turin in 2006
(the year Google acquired YouTube) and it showed an autistic child being
bullied at school. Although it was online for two months, Google claims that
the offensive video was removed “within hours” after police notification. The
student responsible for the clip was subsequently sentenced to 10 months
community service. “In these rare but unpleasant cases, that's where our
involvement would normally end,” the company says.
The cultural divide that separates some European countries from
the US perception of the internet makes the decision all but incomprehensible
to YouTube’s parent company, as the FT noted in its report on the verdict, and
Google fears that its liability would be unlimited unless the judgement is
overturned.
“The Google employees on trial had nothing to do with the video in
question. It attacks the very principles of freedom on which the internet is
built,” the company says. Google points out that European Union law was drafted
specifically to give hosting providers a safe harbour from liability as long as
they remove illegal content once they are notified of its existence.
“Common sense dictates that only the person who films and uploads
a video to a hosting platform could take the steps necessary to protect the
privacy and obtain the consent of the people they are filming,” writes Google
VP and Deputy General Counsel Matt Sucherman in an official blog.
Google has appealed against the court’s decision, which appears to
require that every moment of the 20-plus hours of video uploaded to YouTube
each minute be monitored. If the judgement is upheld, it could mean that senior
executives of other online video operations are placed in jeopardy should they
decide to set up shop in Europe.
So perhaps Wal-mart executives should exercise due diligence to
ensure that every title in the Vudu library is legal in every jurisdiction
where it may be seen. The company announced this week that it is to acquire the
loss-making Vudu online film delivery service, which has burned through $21
million of investor’s money and so far failed to generate a return.
The entry of major retailers into the world of online digital
delivery began in earnest last November, when Best Buy mandated that all
web-connected gadgets sold in their US stores would have CinemaNow
pre-installed. This ensured that customers splashing out on new TVs, Blu-ray
players and other CE devices did not have to run complicated software to buy or
rent a film – an icon for CinemaNow appeared the moment they switched on their
new electronic toy. David Habiger, CEO of CinemaNow parent company Sonic
Solutions, estimated that up to 20 million enabled devices will be on the
market by mid-2010.
In buying Vudu, Wal-mart has acknowledged the sales and rental
opportunities offered by an onscreen icon at start-up. Past attempts by the
retailer to transfer its dominance in physical media to the online arena have
proved unsuccessful and customers were won and then lost. When the previous
project was wound up, subscribers were transferred to Netflix.
One reason for Wal-mart’s previous lack of success might have been
a reliance on third parties to acquire the content and operate the service.
This time, Wal-mart gains access to over 16,000 titles that Vudu has already
licensed, and establishes a permanent presence on its customers’ screens. In
the past, Vudu has struggled to explain to consumers exactly what it has to
offer. The new owners have the brand and the commitment to make the service a
success.
A report this week from Parks Associates forecasts that US
revenues for premium video rentals and downloads will grow from $2.3 billion in
2010 to $8.4 billion in 2014. The research company says: “This acquisition is
an opportunity for Wal-mart to become a ‘category catalyst’ in connected
consumer electronics,” since Vudu is working with many of the major CE vendors.
Wal-mart’s main online competitors for Vudu, in addition to
CinemaNow, are Amazon VOD and Apple iTunes, as well as on-line rental operators
Netflix and the struggling Blockbuster, which has just announced the closure of
yet more outlets. While Apple and Amazon are major online names, they have yet
to establish the link to the living room that CinemaNow and Wal-mart will make
their own. According to Parks Associates, “The presence of Wal-mart, with its
retail muscle now in the online video space, could mean significant growth in
the number and availability of web-enabled consumer electronics products.”
A report from new media research firm TDG this week shows that 33%
of broadband-enabled Netflix subscribers view movie streams exclusively on
their PC, 8% watch exclusively on TV and 24% use both screens. The arrival of
Wal-mart with Vudu could shift the balance decisively towards the primary
screen in the home – the living room TV.
In the UK, Tesco has probably been the most active retailer in
taking digital delivery forward. Working together with Microsoft, Category
Director for Entertainment Rob Salter has encouraged global cooperation to
ensure that major retailers will “own the title, not the format”. It parallels
the thinking behind the Wal-mart’s Vudu deal and could signify further moves by
Tesco in the not-too-distant future. If Vudu comes to the UK, might we see Asda
and Tesco go head-to-head?
Another key participant in online delivery, Apple, made an attempt
to convince content owners to halve the price of TV episodes to $1 per show
this week. The move has been interpreted as an attempt to ensure that early
adopters of the iPad have plenty of affordable video to fill their screens. The
US networks, however, view the proposal “like a bug looks at an oncoming
windscreen,” according to the New York Times.
“If you took five things at Wal-mart and sold them for a nickel,
they’d sell really well, because they’d stand out. But if you took everything
in the store and made it a nickel, nothing stands out anymore. Essentially all
you’ve done is lower the value of your content,” the paper quotes a senior
Network executive as saying.
Apple is keen for video to emulate the success of its audio
offering, as iTunes hit the 10-billion download mark just seven years after
launch. Apple claims a quarter of all music sales in the US, having supplanted
Wal-mart as the nation’s largest music retailer as long ago as 2008. Currently,
in terms of digital music sales, Apple has almost 70% of the US market with its
nearest competitor, Amazon, claiming 8%.
With 375 million TV episodes sold since video went online in 2005,
it is clear that Apple has some way to go to match Vudu’s new owners.
Wal-mart Vice Chairman, Eduardo Castro-Wright, said of the
acquisition, “The real winner here is the customer.” But the key to the
company’s thinking was in the line that followed: “Wal-mart's retail expertise
and scale will provide customers with unprecedented access to home
entertainment options as they migrate to a digital environment.”
Major corporations are going to have an affect on how we consume
entertainment in the future, and the consequences may not be restricted to one
country alone.
No comments:
Post a Comment