Studios still trying to manage copying

The longevity of the dvd may just depend on whether it allows its owner to copy its file from one device to another. While the concern that others will freely share titles, most consumers are more likely to see it as a benefit of ownership and prefer the simplicity of copying than searching for peer to peer transfer.

"Yet while each studio is pursuing its own second-copy strategy, as a group they haven't given up on an industry-standard approach. Yesterday, the studios in the DVD Copy Control Assn., which administers the CSS license, circulated a new proposed "managed-copy" amendment to the CSS licensing agreement, several DVD-CCA sources told Media Wonk."

The other question to ask is what the next device will be to hold audio and digital files; what will replace the cd and dvd. Will movies and music be sold on their own unique thumb drive? Will we take our iPod to the store and have the file digitally uploaded to our portable device. Will these devices limit how many copies we will be able to make? Digital rights management will remain a big issue for quite some time. And there will always be those trying to rip their own free copies.

CD sales down 11% in 2008

When is the last time you bought a cd? Besides taking up space on an already crowded shelf, most of the music I listen to is through the iPod. So I am more likely to download than purchase. At the same time, while I recently downloaded Camp Rock for my daughter, I burned the songs on a cdrom for her to play on the stereo. And once I finally upgrade the stereo to connect to the mac and play by itunes library, I'll stop burning cds altogether.

So it is not surprising to learn that my habits emulate the changes in the music business. Despite declining cd sales, download sales continue to rise at a steady pace. "Digital sales, however, continue to grow dramatically. Digital album sales are up 34% to 31.6 million units, which represent 15.5% of all album sales."

Brick and mortar stores like the once powerful Tower Records and Virgin have not adapted to change. Other stores selling physical copies of digital content, like Game Stop, should be careful with their growth plans, as games will soon be downloaded directly to devices. General merchandise stores like Target and Best Buy have already cut back shelf space in their music department, and can benefit from diversification of merchandise.

Once consumers becoming increasingly more comfortable with a digital copy of their audio video and audio content, they will no longer need to retain a physical copy in the form of a cd or dvd. That is the direction consumer purchases are taking and stores devoted to selling these copies will become part of our economic history, like HMV, Silo, Tweeter, Highland, and others that couldn't adapt to change.

Internet TV revenue could surge on VOD offerings

The battle for the viewer will likely depend on the access to and breadth of VOD content. As we become a society that requires immediacy and what we want, when we want it, companies that best handle the speed and variety of on demand, will get our business.

"VOD will account for about 13% of IPTV revenue in 2012, up from 3% last year, as telecommunications companies try to use their on-demand offerings to compete against the more established multichannel system operators, according to research firm Gartner." And the fight for content will grow as HD content becomes more commonplace and preferred. Telcos have built their plants to handle these huge streams of information; older cable systems, not yet rebuilt, may face an uphill battle as consumers, turned off by the latency and limited choice, seek alternative sources for content. And in fact Direct TV is now beginning to offer a VOD model to compete in this space, although it requires a broadband connection in addition to the satellite.

And this growth in VOD content will enable new revenue streams to grow as well. Pre roll advertising in front of free content, overlap ad messages, increased transactional business, e-commerce opportunities, etc. This surge in VOD offerings will continue to propel this model forward. "Internet-protocol TV service providers such as AT&T and Verizon could see revenue from video-on-demand jump more than tenfold in the next four years. This will come from fiber-optic TV services taking market share from cable and satellite companies, while more people watch VOD and pay-per-view titles."

VOD is growing in usage and appeal with consumers. It is where the battle is being fought among cable, telco, and satellite. As interactivity becomes more commonplace, it is the companies that best serves up and prices this content competitively that will maintain dominance.

Will Tivo Become the Link Between the Internet and TV

Successfully navigating all the online choices available and easily bringing that content to the TV screen are the challenges facing Tivo and its ability to differentiate and prosper. While the Tivo brand name is what Kleenex is to tissues, Tivo has yet to convince enough customers that it is better than a DVR. having both devices, I clearly prefer Tivo, but if you haven't driven a Mercedes, you can be satisfied with your VW.

Tom Rogers, CEO of Tivo says he has a plan to position his company "a hub for streaming video from all sources to the television set." And now that they are partnering with Comcast, this added value may be the tool that cable can use to remain the interface of choice for the consumer to access the internet on TV. In the meantime, competition will be fierce to be an alternative choice to be that navigation and interface choice. Companies like Netflix are trying to do it in the premium movie niche. Apple TV has built a box, but not a strong following.

Tivo must continue to innovate, improving the menu structure and search functions. At the moment, it is ahead of others, but competition is catching up. I believe that Tivo has a superior product, and perhaps with Comcast as a partner, it can achieve true product dominance and brand preference.

Screen Actors Guild contract expires

The question everyone in Hollywood must be asking, will there be another strike in 2008. The last strike proved that the economics needed to be changed, but the result seemed to be less work for scripted TV series, and more reality programming. So now there is less work, more anger, and what appears to be a large contingent of underemployed talent itching to strike to make it hard on everyone else.

While no strike vote has been called, the real date to watch is next week when the AFTRA vote is due. Should that union approve their deal, it will be hard for SAG to strike; but should they succeed in convincing AFTRA members to vote against their leadership, a strike vote seems destined to come. Unfortunately in today's economy, a strike would have a devastating effect. "In its statement Monday, the producers alliance warned of the damage of another walkout, saying a work stoppage would cost SAG members $2.5 million in wages every day. Other labor groups in the industry would lose $13.5 million, while the California economy would take a daily $23 million hit, it said."

An agreement needs to be made soon. Without a contract, producers have begun to delay work, fearing a stoppage in the middle of production. SO even without a strike vote, business will be hurting. Despite the July 8 AFTRA vote, SAG needs to look for a solution and not an excuse to strike; it is in no ones best interest.

Video downloading without Cable VOD

Just as cable has gotten consumers comfortable with the notion of renting a movie through their cable box, as opposed to the video store, film studios are seeking ways to bypass the cable company and talk directly to the consumer. With the rise of the XBox 360 and Playstation 3, viewers can watch movies directly from their game consoles. Economically, film studios would no longer have to split their revenue with cable; but if not them, then Microsoft is happy to take a piece. "Sony will likely unveil details about its videostore at the E3 confab in Los Angeles next month. At the same event, Microsoft is expected to announce a partnership with Netflix under which users will be able to stream movies from that company's "watch now" service onto a TV via the Xbox 360."

As customers put more external devices on their TV set, they can bypass the cable box to download content. And don't expect Apple or Amazon to sit back quietly. They are enjoying the revenue from web downloads and would sure like to participate in this big screen grab for content. Ultimately this competition of devices could make it harder to search for content, unless it creates duplication across multiple platforms. Regardless, digital distribution opens up the pipeline to more players and more competition and that tends to lead to lower prices.

Phone Giants Roll Out 'Three Screen' Strategy

"The nation's largest phone companies sell packages of wireless phone service, Internet access and pay TV to consumers. Now they're taking integration one step further, airing video programming -- and selling ads -- across all three platforms. Content and advertising deals used to be struck separately for each platform. But Verizon Communications Inc. and AT&T Inc., for instance, have cut deals with media companies that allow them to distribute programming -- from "Saturday Night Live" clips to user-generated video -- to cellphone, broadband and TV customers."

Regardless of the device, regardless of where you watch content, or when you watch, advertising can be targeted to reach you across platforms. Phone companies may have let the hard line phone business become invaded by cable, but they are clearly banking on wireless phone as their domain. Combining wireless reach with their movement into cable and hi speed, provides them with a potentially lucrative advantage, provided that they can correctly market a "quad" play - one price approach to the customer.

With access to the consumer across all potential screens, and the ability to integrate ad messages across all platforms, telcos can take serious business back from cable. It seems that cable will need a wireless strategy to continue to effectively compete.

Multi-Platform Ads Boost Effectiveness Of Campaigns

Integrated marketing campaigns that work across all platforms, TV, radio, web, etc, naturally are more effective as they use frequency and reach to break through the clutter. But how many ad budgets can afford to spend across so many platforms. The rise of internet advertising and its ability to hyper target a specific audience is proving so popular as to see it already surpassing other old media platforms in ad spending. Per a Bloomberg report, " Internet advertising spending will surpass radio this year, with about 9.5 percent of ad budgets worldwide allocated to online media, said Steve King, head of Publicis Groupe SA's ZenithOptimedia unit." And internet ad spending will shortly overtake other media as well.

The solution for these businesses is to build out content across multiple media platforms. And so we find all these content creators merchandising their content across web platforms. Digital growth requires all businesses to create content that can be consumed across multiple platforms to retain their fair share of ad budgets. "Consumers spend 15 percent of their time on the Internet, while 9 percent of advertising budgets are on the Web, leaving room for growth, King said. He said rising Internet use will also drive online ad spending, with 19 percent of the world's population having Web access in 2008, compared with 17 percent last year."

And so we see radio networks, magazines, and other old media businesses talk about their online businesses; it is where their audience is heading and they need to stay relevant in this new space. But they can also offer the opportunity to reach and target their audience across multiple platforms that their content touches.

Reading the Kindle with Your Morning Coffee

Perhaps what it will take for devices like the Kindle to truly succeed will require newspapers themselves to put their support and promotion behind them. As the pros and cons of this first generation of readers become more apparent, next generations will obviously be created to exceed all expectations. And financially, the Kindle may prove the economic preference, especially in a slower economy. "It also makes financial sense. A combined year's subscription to the Times and the Journal costs about $880. The combined purchase price of the Kindle, plus a year's worth of subscriptions to the Kindle editions—granted, not quite an equal product—amounts to a total of only $647, a savings of $233 in the first year. Assuming all the prices stay the same, the savings climbs to more than $500 in the second year. Plus, there's no delivery person to tip at the end of the year."

Its upside is convenience and ease of use, the downside, like most electronic devices is the need to keep it charged. And as we continue to hold onto so many devices that require constant charging, we need a common charger that can work with multiple devices, but thats a discussion for another day.