Transitioning from Physical to Electronic Content Delivery
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1 Transitioning from Physical to Electronic Content Delivery Jim Taylor Chief Technologist, Rovi Corporation MEDIA-TECH Las Vegas, March 2011
2 The Evolution of Home Content Delivery
3 Video Audio From VHS tapes and vinyl LPs
4 Video Audio...to CDs, DVDs, and BDs
5 Video Audio to bits over the Internet.
6 From shelves
7 to kiosks and mail order
8 to virtual storefronts.
9 Trends
10 Consumer Spending Source: Screen Digest
11 Digital Content Spending Among US consumers spending money on mobile music or books, digital content is closing in on 50% - Music downloads: $ CDs: $ E-book downloads: $ Paperbacks: $20.23 Source: Bango TNS Omnibus Survey, January 2011
12 Mobile Video traffic Mobile video traffic will exceed 50 percent for the first time in global mobile data traffic (75 exabytes) will be equal to 19 billion DVDs. Cisco Systems
13 Web-Connected TVs Worldwide broadband-enabled TV households will grow from 130 million in 2009 to over 360 million in Active connected TV households will grow from 40 million (30%) in 2009 to 170 million (44%) in TDG
14 Streaming TV 180 million users (85% of all US Internet consumers) watch online video each month videos per person and around 13 hours per month. - Why watch TV on Internet? 70% - missed TV episode 57% - convenience 56% - watch old episodes 42% - less advertising Comscore Number of people streaming a TV program increased to 41% in Q4 2010, up 3% from the same period in 2009 Interpret
15 Streaming Movies Netflix hit 20M subscribers in Jan 2011 and is passing Comcast (23M) to become the #1 video subscription service in the US - One third of new subscribers choose $7.99/month streaming-only plan - Netflix s share of movies downloaded or streamed reached 61% between January and February 2011, followed by Comcast at 8%, and a threeway tie for third at 4% among DirecTV, Time Warner Cable, and Apple For comparison, Pandora has 75 million listeners NPD
16 Will Packaged Media Die? Yes but not nearly as soon as pundits say. Music downloading began around 1995, and it has taken 15 years for it to account for half the revenue of CDs
17 Bits on Discs Bits in Clouds CD DVD BD Online music Online movies
18 Online Video is Hot But It still represents a fraction of home video revenue Few companies are making money on it Electronic sell-through (EST) and rental (replacements for DVD and BD) lag far behind subscription - Although low subscription prices may be unsustainable
19 Barriers to Success of EST Fragmented and incompatible solutions -itunes, Xbox, PlayStation Network, CinemaNow, Vudu, etc. Reliability and ease of use vary wildly Consumer perception of high prices No disc-like experience -Menus, chapters, extras, subtitles, audio tracks, interactivity
20 Packaged media is still king. What can steal the crown?
21 The Digital Locker Buy Anywhere. Play Anywhere.
22 DECE/UltraViolet Global brand for digital content, similar to DVD and Bluray Centralized rights locker for multi-user accounts to purchase content from many retailers for download and streaming to many devices, plus physical media options Standards to facilitate participation of content providers, retailers, DSPs, DRMs, and devices 70+ member companies
23 Comparison Author Blu-ray Encode, author, AACS ($/title) Produce Replicate ($/disc) N/A UltraViolet Encode, package, encrypt ($/title) Distribute Ship, warehouse, return Files to DSPs Shelf space Shrinking Unlimited Purchase Disc in store or by mail Rights in store or online Rent Disc in store or by mail Not yet Watch instantly Not possible Stream or download Watch (offline) Blu-ray player UV player; must download first Quality HD, multichannel audio HD, multichannel audio Extras Extensive Not yet Online updates BD-Live Not yet 3D <100 titles Not yet
24 Delivery Chain Packaged Produce Distribute Sell Play
25 Delivery Chain Packaged Online Produce Distribute Sell Play
26 Delivery Chain Packaged Online Multi-format authoring DVD/DVD conversion Manufacture on demand (MOD) ecopy
27 Delivery Chain Manage Assets Replicate Distribute Packaged Encode Author Master Duplicate Package Warehouse Return Display
28 Delivery Chain Manage Assets Replicate Distribute Packaged Online Encode Author Master Manage Assets Encode Author Master Duplicate Package CDN (direct to consumer) New formats Warehouse Return Display Distribute Display Virtual storefonts
29 Conclusion It will take more than a decade to shift mainstream from physical media to online Technology transitions take much longer than most people think Consumers are crossing the same bridge -DVD and BD players won t disappear (consider in-car DVD) Online delivery is growing fast but is still a niche
30 Change Happens Embrace or be extinguished -Consider the effect of laser printers on printing business The industry will change, but content will still flow Physical and online will co-exist Plan for a tough transition -Survive at the top of old businesses -Ramp up new businesses -Become a co-dependence enabler
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