June 7, 2010
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment
Ten years ago, Neil MacGregor, then Director of the National Gallery, and Pierre Rosenberg, Director of the Louvre, were debating image rights and the internet. “I will never allow my collection to be viewed online,” said Rosenberg. McGregor responded that he was happy for every internet user to see what was on display in London, “After all, these are only digital representations of the real thing. If they want to see the originals, they will have to come to the National Gallery.”
Within a year, Rosenberg had gone and the Louvre launched an ambitious new website. By 2005, the gallery’s entire collection was online. Could it now be time for the entertainment industry to accept a dramatic change in Digital Rights Management (DRM) and consider online delivery as just a representation of the real thing? Network specialist Cisco has predicted that mobile data traffic will be almost 40 times greater by 2014 than it was at the start of this year. Two thirds of that increase will be video, not just for delivery to smartphones but also for laptops and tablet devices such as the iPad. Together with fixed broadband connections, video will account for an astonishing 91% of all consumer internet traffic by 2014 according to the Cisco forecast.
The company also predicts that by the end of this year the digital demon of peer-to-peer video filesharing will account for less traffic than conventional video streamed directly over the internet.
There can be no doubt that packaged media revenue has fallen over the years and internet piracy has grown in parallel with the increase in broadband speed. The response of many rights owners has been to apply ever more secure DRM and seek draconian measures against those who try to circumvent it. It is not clear, however, that there is a direct cause and effect relationship between declining sales and internet growth.
Cisco Director of Service Provider Marketing Doug Webster says that telecom service providers need to consider how they can move into ancillary addressable markets such as advertising and finance.
“They can't just continue to bill on the amount of bits going through a pipe but on the overall value of what they are delivering,” says Webster. Most ISPs have seen the problem coming for some time and have responded by introducing IPTV services such as BT Vision, which after three and a half years has fewer than 500,000 subscribers. Apart from France, where more than 8 million homes subscribe to connected-TV, the concept of buying television programmes from the phone company has yet to take off.
In most countries, consumers are happy to pay their telecom provider for bandwidth but not for content. This leaves unanswered the question of how content providers will be compensated for creating film and television entertainment for the consumer.
Current models have much to recommend them. Packaged media has the merit of universal distribution and a retail channel that reaches every home in the developed world. The carrier (polycarbonate) is cheap and unit manufacturing costs are an almost insignificant proportion of the selling price. Online delivery is equally inexpensive although the overheads might appear in different budget lines and, if environmentalists are to be believed, there is little difference between physical and digital media when it comes to being green.
The packaged product, however, is durable, collectable and inherently offers higher sound and picture quality. ISPs are already struggling to deliver standard definition video and stereo sound over existing networks. Any attempt to offer 3D, HD and 5.1 audio at Blu-ray quality would make even Cisco’s figures look conservative. Not everyone wants to own a DVD or Blu-ray of every title ever made but the collector’s instinct drives sales immediately following an initial theatrical release.
As today’s blockbusters slip in to tomorrow’s back catalogue, there needs to be a viable route for new generations to discover and buy the classics (and the turkeys) of the past. With no opportunity for accidental discovery when casually browsing in-store, it is likely that many titles will cease to be available on disc. Although discs could still be available to order online, shoppers will need to know what to look for if they are to chance upon titles they might enjoy. Faced with this challenge, many will take the easy option of downloading the most heavily promoted titles and before long the collecting instinct will be lost.
Once a digital download becomes a consumable item, revenues shrink and in-depth catalogues decline. Signs of this self-perpetuating spiral are already with us.
Tesco Entertainment Category Director Rob Salter said as much in a recent interview with Cue Entertainment: “Our bigger challenge is getting people to buy a movie once. The industry seems to be under the illusion that people are avidly desperate to buy movies. They are not.” Salter makes the point that downloading a film doesn’t satisfy the collecting urge. “There’s a need to create experiences that allow people to review what they’ve collected and … recreate some of the physical experience one gets through the movie,” he said. But here lies the paradox. If people have never seen a film or a classic TV show, what is the likelihood that they will discover and want to download it, still less collect it?
There are many opportunities to come across an interesting but unseen title when walking the aisles of a well-stocked retail store. If the price is right, they will probably buy it, perhaps as an addition to the primary reason for their visit. Every one of these incremental sales increases store revenue and if they like what they have bought, the probability of a return visit increases.
Companies such as Netflix, Lovefilm and Rovi are investing large sums in “content discovery” to emulate this experience online; the idea that “If you liked that, you’ll love this” which is so well exploited by Amazon. Although the mathematical formulæ or “algorithms” that underpin these interactive programme guides are very sophisticated, they rely on purchasing decisions made in very different ways from the impulse that comes from picking up a disc and reading the sleeve. So why not encourage discovery by accepting that a relatively low resolution online version of a title does not have to carry the same price tag as “the real thing”?
Imagine an online world in which DRM is almost forgotten; in which film and TV entertainment is available online at a fraction of the current cost – pence not pounds – with few if any restrictions on sharing. Then add a much greater incentive to acquire the “real thing”. This would allow fans of “Carry On” films to post links on social networks, Buñuel enthusiasts to email friends about “That Obscure Object of Desire” and “Father Ted” followers to spread the word, all without investing large sums of money or resorting to piracy.
Of course, there will be some who continue to make illegal copies, but there would be little point if the film were accessible to all. So does this mean giving away the farm? Certainly not!
Watching a film in the cinema does not preclude the purchase of the DVD or Blu-ray, nor does the fact that it might be seen on TV or cable a few weeks after release. Many have already noted that the marketing spend on the theatrical release can provide a short to medium-term boost in sales of packaged media; promoting low-cost versions online could achieve a similar result.
By ensuring a wider audience for the entire film catalogue, rather than focusing on a favoured few features, many more fans could find films they love and want to own. Could it be that, by restricting access to the broad catalogue of film titles, we have created a system that reduces the sales prospects of packaged media without generating compensating income online?
Millions have been spent developing Blu-ray as a deluxe content carrier, delivering HD, 3D and multi-channel surround sound that outclasses most low bit-rate offerings. Outside of the cinema, it is the nearest approach to the theatrical experience that many people will have and if any home entertainment media deserves the accolade of “collector’s edition”, Blu-ray is it. Although many in the industry will raise their hands in horror at the idea of “giving away” content, there are others including Apple, Spotify and most recently Google TV, who have thought the unthinkable and are planning a future in which DRM plays a minor role.
Beyond Oblivion (Cue Supply Chain, May 24) will even offer to pay royalties to rights owners for every online performance, whether or not DRM has been applied. The internet research agency Comscore said recently that 80% of the global internet community claims to watch video online; surely a financially significant proportion of that group is searching for the real thing.
Within a year, Rosenberg had gone and the Louvre launched an ambitious new website. By 2005, the gallery’s entire collection was online. Could it now be time for the entertainment industry to accept a dramatic change in Digital Rights Management (DRM) and consider online delivery as just a representation of the real thing? Network specialist Cisco has predicted that mobile data traffic will be almost 40 times greater by 2014 than it was at the start of this year. Two thirds of that increase will be video, not just for delivery to smartphones but also for laptops and tablet devices such as the iPad. Together with fixed broadband connections, video will account for an astonishing 91% of all consumer internet traffic by 2014 according to the Cisco forecast.
The company also predicts that by the end of this year the digital demon of peer-to-peer video filesharing will account for less traffic than conventional video streamed directly over the internet.
There can be no doubt that packaged media revenue has fallen over the years and internet piracy has grown in parallel with the increase in broadband speed. The response of many rights owners has been to apply ever more secure DRM and seek draconian measures against those who try to circumvent it. It is not clear, however, that there is a direct cause and effect relationship between declining sales and internet growth.
Cisco Director of Service Provider Marketing Doug Webster says that telecom service providers need to consider how they can move into ancillary addressable markets such as advertising and finance.
“They can't just continue to bill on the amount of bits going through a pipe but on the overall value of what they are delivering,” says Webster. Most ISPs have seen the problem coming for some time and have responded by introducing IPTV services such as BT Vision, which after three and a half years has fewer than 500,000 subscribers. Apart from France, where more than 8 million homes subscribe to connected-TV, the concept of buying television programmes from the phone company has yet to take off.
In most countries, consumers are happy to pay their telecom provider for bandwidth but not for content. This leaves unanswered the question of how content providers will be compensated for creating film and television entertainment for the consumer.
Current models have much to recommend them. Packaged media has the merit of universal distribution and a retail channel that reaches every home in the developed world. The carrier (polycarbonate) is cheap and unit manufacturing costs are an almost insignificant proportion of the selling price. Online delivery is equally inexpensive although the overheads might appear in different budget lines and, if environmentalists are to be believed, there is little difference between physical and digital media when it comes to being green.
The packaged product, however, is durable, collectable and inherently offers higher sound and picture quality. ISPs are already struggling to deliver standard definition video and stereo sound over existing networks. Any attempt to offer 3D, HD and 5.1 audio at Blu-ray quality would make even Cisco’s figures look conservative. Not everyone wants to own a DVD or Blu-ray of every title ever made but the collector’s instinct drives sales immediately following an initial theatrical release.
As today’s blockbusters slip in to tomorrow’s back catalogue, there needs to be a viable route for new generations to discover and buy the classics (and the turkeys) of the past. With no opportunity for accidental discovery when casually browsing in-store, it is likely that many titles will cease to be available on disc. Although discs could still be available to order online, shoppers will need to know what to look for if they are to chance upon titles they might enjoy. Faced with this challenge, many will take the easy option of downloading the most heavily promoted titles and before long the collecting instinct will be lost.
Once a digital download becomes a consumable item, revenues shrink and in-depth catalogues decline. Signs of this self-perpetuating spiral are already with us.
Tesco Entertainment Category Director Rob Salter said as much in a recent interview with Cue Entertainment: “Our bigger challenge is getting people to buy a movie once. The industry seems to be under the illusion that people are avidly desperate to buy movies. They are not.” Salter makes the point that downloading a film doesn’t satisfy the collecting urge. “There’s a need to create experiences that allow people to review what they’ve collected and … recreate some of the physical experience one gets through the movie,” he said. But here lies the paradox. If people have never seen a film or a classic TV show, what is the likelihood that they will discover and want to download it, still less collect it?
There are many opportunities to come across an interesting but unseen title when walking the aisles of a well-stocked retail store. If the price is right, they will probably buy it, perhaps as an addition to the primary reason for their visit. Every one of these incremental sales increases store revenue and if they like what they have bought, the probability of a return visit increases.
Companies such as Netflix, Lovefilm and Rovi are investing large sums in “content discovery” to emulate this experience online; the idea that “If you liked that, you’ll love this” which is so well exploited by Amazon. Although the mathematical formulæ or “algorithms” that underpin these interactive programme guides are very sophisticated, they rely on purchasing decisions made in very different ways from the impulse that comes from picking up a disc and reading the sleeve. So why not encourage discovery by accepting that a relatively low resolution online version of a title does not have to carry the same price tag as “the real thing”?
Imagine an online world in which DRM is almost forgotten; in which film and TV entertainment is available online at a fraction of the current cost – pence not pounds – with few if any restrictions on sharing. Then add a much greater incentive to acquire the “real thing”. This would allow fans of “Carry On” films to post links on social networks, Buñuel enthusiasts to email friends about “That Obscure Object of Desire” and “Father Ted” followers to spread the word, all without investing large sums of money or resorting to piracy.
Of course, there will be some who continue to make illegal copies, but there would be little point if the film were accessible to all. So does this mean giving away the farm? Certainly not!
Watching a film in the cinema does not preclude the purchase of the DVD or Blu-ray, nor does the fact that it might be seen on TV or cable a few weeks after release. Many have already noted that the marketing spend on the theatrical release can provide a short to medium-term boost in sales of packaged media; promoting low-cost versions online could achieve a similar result.
By ensuring a wider audience for the entire film catalogue, rather than focusing on a favoured few features, many more fans could find films they love and want to own. Could it be that, by restricting access to the broad catalogue of film titles, we have created a system that reduces the sales prospects of packaged media without generating compensating income online?
Millions have been spent developing Blu-ray as a deluxe content carrier, delivering HD, 3D and multi-channel surround sound that outclasses most low bit-rate offerings. Outside of the cinema, it is the nearest approach to the theatrical experience that many people will have and if any home entertainment media deserves the accolade of “collector’s edition”, Blu-ray is it. Although many in the industry will raise their hands in horror at the idea of “giving away” content, there are others including Apple, Spotify and most recently Google TV, who have thought the unthinkable and are planning a future in which DRM plays a minor role.
Beyond Oblivion (Cue Supply Chain, May 24) will even offer to pay royalties to rights owners for every online performance, whether or not DRM has been applied. The internet research agency Comscore said recently that 80% of the global internet community claims to watch video online; surely a financially significant proportion of that group is searching for the real thing.
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