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Imagine the Future of Packaged Digital Media

In-Stat reports that due to the advancements in digital content distribution and delivery, a significant question for video and music production companies looms on the horizon: What is the future of packaged media?

DVDs are the primary type of physical packaged media for video delivery, while broadcast TV, pay-TV services, downloaded video, and streaming video represent methods of electronic video delivery. In terms of audio, the CD is still the primary type of packaged media for music, and the evolution from CD to electronic distribution is well underway.

Over the last two years, the Internet has become a well established platform for delivering music electronically. Still, In-Stat does not expect electronically delivered content to displace packaged media altogether. The apparent benefits of electronically delivered music are clear. It is immediate, it is affordable, and it is convenient.

In addition, the music file sizes are small. However, In-Stat believes a certain set of consumers still finds value in the CD for collection purposes, the actual tangible qualities of the CD, and compatibility issues. In terms of video, they believe consumers still view the DVD as the easiest and most efficient method in which to obtain digital video content.

In other words, one of the critical factors in enabling electronically delivered movie downloads is Internet speed. Obviously, a fast Internet connection allows for shorter download times. In-Stat estimates that it would take approximately one hour to download a full-length movie with a 10 megabit Internet connection. In the Europe and Asia-Pacific markets, that's common.

However, here in the U.S., typical download speeds reach approximately 1.5 to 2 megabits. Therefore, the download speeds available today are too slow to efficiently download a full length, good image quality movie. Video streaming is here today for TV shows and user generated content, but don't expect movie downloading to be significant in the U.S. until 2008 or later.

Nevertheless, In-Stat expects worldwide DVD sales to peak soon, while revenue from portable DVDs, next generation DVDs and downloaded movies will drive digital video content consumption. In terms of music, the available online catalog is growing, and digital single and album sales continue to increase each year -- especially for independent labels.

In fact, In-Stat believes that the music industry is roughly three to four years ahead of video in terms of electronic distribution. They estimate that 4 percent of the worldwide music market was delivered electronically in 2006. This figure is expected to reach 18 percent in 2010 as more content becomes available electronically, and as the devices supporting the content continue to ship.

As I've stated before, I was disappointed by the lack of creativity that was applied to promoting the DualDisc format, which had so much raw potential when it was launched in the fall of 2004. It's still possible that this physical content format could see a revival in 2007, but frankly I'm not hopeful.

I imagine that the future of packaged digital media will likely incorporate more high-definition (HD) video as a point of differentiation from online delivery, since HD file sizes are such that they would require significantly greater download times. Again, we must wait and see how the market for packaged media evolves, relative to consumer interest and demand.

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