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Movie Digital Distribution Via Public Internet

According to Screen Digest market research, 2006 will be a watershed year for the digital distribution of movies using open Internet video-on-demand (VoD) technology.

Screen Digest predicts that the first signs of recognizable growth in this market will appear in the 2006-2007 timeframe, with total consumer spending on European movie downloading and streaming services accelerating post-2008 to near EUR690 million by end 2010, compared to less than EUR10 million in 2005.

This growth will be driven by the arrival of mainstream movie content, notably from the Hollywood majors, which until 2005 had been reluctant to explore online distribution in a meaningful way. As revenues in the DVD market plateau, the Hollywood studios will view diversification of business models and legal digital distribution as an increasingly important component in not only the fight against piracy, but also the maintenance of profit margins typically enjoyed in the home entertainment market.

Online distribution will not only enable traditional pay-per-view (PPV) over the Internet, but also business models such as digital retail, subscription VoD (SVoD) and free ad-driven movies. This mix of distribution options will prove very important for the future profitability of Internet business models.

Moreover, home media hubs such as Microsoft's Home Media Center and Apple's Front Row have started to blur the boundaries between the PC and TV, meaning that the potential to watch downloaded content on the TV set (through PCs designed to look and behave like digital set-top boxes) is now a reality.

With continued strides in the development and popularity of portable handheld video devices, and increasing willingness from Hollywood studios to offer flexible business models such as 'download-to-burn' -- digital service propositions are becoming more consumer friendly. As such, the flexibility of moving content between devices is likely to play a significant role in attracting consumers to these platforms.

Now given this backdrop of competition for a consumer's attention, how can a telco defend a "me too" IPTV service that's centered on linear programming distribution, coupled with a traditional VOD offering? This isn't a rhetorical question, since I don't have the answer. In fact, I suspect neither do the telcos who under-estimated the potential of the public Internet as a distribution medium for all forms of video news and entertainment.

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