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Content Providers Shift Distribution Strategy

Vendors of digital rights management (DRM) systems have spent several years directing their marketing efforts at the telcos and other service providers that have been pushing their way into the video distribution market. At one time, that seemed smart: after all, in many regions "Telco TV" was posing stiff competition to the traditional dominance of cable and satellite operators as distributors of video entertainment.

Now, according to ABI Research, the situation has changed to a potential bypass of these distribution channels. Vamsi Sistla, the firm's Director of broadband and multimedia research, says that the "next frontier" for video distribution is broadband and converged media distribution over the Internet -- including, direct to the consumer.

What has happened? The content owners � Hollywood studios and television networks � are flocking to online distribution channels. ESPN is offering a broad swath of content through online and mobile platforms; CBS and NBC are making their content available through Google Video, and ABC is doing the same through Apple's iTunes. Others are following suit. Online and portable distribution has suddenly become as important as the telco market.

This has caught many DRM vendors off balance. It's a different model. DRM vendors will find much greater competition from incumbents. For example, Microsoft could provide stiff competition for these smaller, emerging players.

"DRM vendors need to retool their marketing initiatives to target the content industry directly, instead of the service providers," says Sistla. "DRM vendors have always been at the bottom of the food chain. But the most observant of them have noticed the paradigm shift and are adapting to it."

This repositioning may be seen in companies such as Widevine and NDS. For example Widevine has recently received investment from Cisco. While Cisco is not an entertainment content owner, it in turn has invested in Disney's MovieBeam, a video-on-demand service, and has also acquired STB makers Scientific Atlanta and Kiss Technologies. Sistla points out that "Widevine can leverage that strategic relationship, as well as the investment, to compete head-on with much bigger companies such as Microsoft or Apple on the online and portable platforms."

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