Skip to main content

Hollywood Strategy Hinders Net Distribution

The latest report from Screen Digest examines how the individual Hollywood Studios are adapting their businesses to online movie distribution.

Notably, the report finds that a viable business will emerge in the U.S. and Western Europe for movie downloading, but warns that the Studios are following a fragmented path to digital distribution, with each major following a different strategy.

This is likely to hamper the development of movie downloads and ultimately confuse and fragment the consumer market. The research provides detailed analysis and forecasts of the movie distribution business in the U.S. and Western Europe, and reveals that the overall winners in this market will not only be the Studios who own the content, but major device manufacturers such as Microsoft, Apple and Sony.

Unique to the report entitled "Online Movie Strategies: Competitive Review and Market Outlook" are trade level revenues and forecasts of the market for movie downloads, both rental and retail.

Screen Digest predicts the market will be worth $1.3 billion in 2011 in the U.S. and Western Europe combined. Of this, $720 million will be generated in the U.S. and $572 million in Western Europe.

The majority of the revenue in 2011 will be taken by the Studios and content owners, at $530m million in the U.S. and $405 million in Western Europe -- leaving service and solutions providers to scramble for the remaining share.

For some hardware manufacturers, selling digital movies will be used as a marketing tool to sell devices. In this highly competitive climate, the Studios are able to cash in and command high margins. The Screen Digest analysis reveals that the Studio wholesale price on movie downloads to service providers ranges from 70 percent to 105 percent of consumer price on the latest new film releases.

As such, for service providers, movie downloads will become a low-margin and potentially loss-making endeavor, and only those service providers who have a strong hardware proposition and are able to absorb the cost, such as Apple, Microsoft or Sony, are likely to succeed.

According to the Screen Digest assessment, the online digital movies segment will constitute 3 percent of all movie home entertainment revenues in the U.S. and Western Europe by 2011. This may be smaller than some observers were expecting, but is still a significant market and will bring much needed incremental revenue to the movie business as DVD growth falls away.

Arash Amel, Senior Analyst and author of the report says "At Screen Digest we have re-evaluated our 2006 forecasts of the digital movie market value in response to consumer reaction to existing services."

It is becoming increasingly apparent that people want to watch films they've downloaded on their large screen TVs and home entertainment systems. To do that, they need a new device, such as an Apple TV, an Xbox, a PS3 or another form of media extender, which can link their broadband connection to the TV set.

At present, there simply isn't adequate penetration of these devices -- and the idea that people will choose to watch a two or three-hour movie on the PC just isn't realistic. It will take time to reach a wider market penetration with these new devices, and Screen Digest believes that this will start to become more mainstream beyond 2011.

In the competitive analysis section of the report, the different strategies and tactics employed by the Studios for exploiting digital movie content are compared. Unlike the introduction of the DVD, where the Studios agreed a single format and approximate business model, digital is being handled very differently.

Every Studio has its own view and approach to this new era, resulting in the development of a fragmented market, which will undoubtedly hinder the future development of digital media. For example, some Studios are likely to adopt a 'day and date' strategy for film release, making content available across all platforms on the same day, from the physical DVD to online downloads. Others will continue with different release dates depending on the delivery medium.

As Amel concludes "How the Studios react is crucial. It's a delicate balancing act between maintaining their relationships with their highly important DVD customer base -- the powerful retailers like Wal-Mart and Tesco -- while meeting growing consumer demand for immediate online downloads."

Popular posts from this blog

Wireless Solutions Advance Work from Home Trends

Despite a challenging backdrop from the ongoing effects of the global COVID-19 pandemic, the negative impact on fifth-generation (5G) wireless supply chains has been minimal compared to the wider mobile smartphone market. This led to 5G mobile devices becoming more diverse, brought to market quickly at a variety of price points, thereby accelerating affordability and adoption. The mobile market is transitioning to 5G and many leading vendors are now exploring the low-priced 5G smartphone segment. According to the latest worldwide market study by ABI Research, 681 million 5G handsets will be shipped in 2022. Therefore, the race is on for OEMs to find that all-important level of differentiation in their flagship portfolios to help boost margins and improve market share. 5G Wireless Market Development Vendors continue to drive the adoption of new product designs, screen technology, chipsets, and camera setups -- notably within the flagship smartphone segment. Meanwhile, the leaders seek a

Software-Defined Infrastructure: The Platform of Choice

As more organizations adapt to a hybrid working model for their distributed workforce, enterprise CIOs and CTOs are tasked with delivering new productivity-enabling applications, while also seeking ways to effectively reduce IT cost, complexity, and risk. Traditional IT hardware infrastructure is evolving to more software-based solutions. The worldwide software-defined infrastructure (SDI) combined software market reached $12.17 billion during 2020 -- that's an increase of 5 percent over 2019, according to the latest market study by International Data Corporation (IDC). The market grew faster than other core IT technologies. The three technology pillars within the SDI market are: software-defined compute (53 percent of market value), software-defined storage controller (36 percent), and software-defined networking (11 percent). "Software-defined infrastructure solutions have long been popular for companies looking to eliminate cost, complexity, and risk within their data cente

Digital Identity Verification Market to Reach $16.7B

As more enterprise organizations embrace the ongoing transition to digital business transformation, CIOs and CTOs are adopting new technologies that enable the secure identification of individuals within their key stakeholder communities. A "digital identity" is a unique representation of a person. It enables individuals to prove their physical identity during transactions. Moreover, a digital identity is a set of validated digital attributes and credentials for online interactions -- similar to a person's identity within the physical world. Individuals can use a 'digital ID' to be verified through an authorized digital channel. Usually issued or regulated by a national ID scheme, a digital identity serves to identify a unique person online or offline. Digital Identity Systems Market Development Complementary to more traditional forms of identification, digital identity verification systems can enhance the authenticity, security, confidentiality, and efficiency of