The WWW and the Holy Grail

Adolph Ochs in 1896 put his slogan on a newspaper, “All the News That’s Fit to Print”. It still survives. Only just barely.

Sound arrived to movies in the late twenties, the silent-film industry and the Broadway theater industry were both broadsided. They never saw it coming. It was a running joke to them.

Radio was king for years. No one thought it would be overcome – there was a radio in every home throughout America.

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Then television started to gain traction in the late forties. Radio scrambled to adjust to the newer media – TV. Then, TV began to replace the radio in homes. Orders for TV sets were up 400 percent in 1949, many of them sold by the most popular shows of their time, (i.e. Milton Berle). Supply could not keep up with demand. Free television was for decades considered an American right, rabbit ears, ghosts and all.

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Then broadcast TV scrambled to adjust to newer media – cable TV. For a while during the reign of ‘Free TV’, “Pay TV” was a joke.   Americans now pay for 24/7 foreign news networks in their cable and satellite packages, news, weather, sports, movies, etc. That which used to be free on broadcast TV was no longer free.

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Then the hammer dropped for everyone. The Internet dawned, the digital revolution.  The Holy Grail of media. This was a change as great as the invention of electricity and the construction of transcontinental railroad. It was large, transformative and caused massively sweeping changes. No one was prescient enough to gauge even remotely how big this change was upon the whole planet.

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The recording industry became the first to fall in the digital pipeline. They thought by suing Napster in court they could stop their declining bottom line.  Movies and DVD’s became next to fall in.

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And then 2 large social media behemoths came along; Facebook (2004) the more social of the two and Twitter (2006) the most current up-to-the-minute form of news delivered to us not by a news anchor but by a neighbor.  Twitter made CNN, NBC, CBS, ABC, FOX ancient delivery mechanisms of news overnight.  We don’t select publications anymore, we select links.

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An ecosystem of “group journalism” in which consumers with a cell phone eyewitness reporting of the news submitted by ‘US’ rather than actual reporters in the field, changed everything. Witness Captain Sully on the Hudson river. The proliferation of the Internet made every publicly available source of information in the world openly available to everyone. This change in and of itself has altered the landscape for everyone forever. The NYT’s and CNN no longer have a lock on exclusive. Exclusive is old news – we are now the prevailing ‘exclusive’.

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Within all of this history of media, the largest companies, the ones we can name by brand have been caught sleeping by transformative change. From newspapers and magazines to Hollywood, aging media executives resistant to technology became overnight ostriches.  It was easier to take a paycheck, stick their heads in the sand then risk being ‘wrong’ about how future technology could transform their own business. Status quo was ‘safe’ harbor.  A herd of dinosaurs.

The decline and the fall of old media. It was inevitable and unavoidable. Casualties were and are in print, TV and soon cable channels. Yes, even cable TV will be falling (cord cutting: Aereo TV and Otoy). Old media will scramble to adjust just as before, but it will not be enough. The fall of old media is unavoidable.

And for us the consumer, the ‘hippie’ stage (freemium) of the Internet is over.  We will pay for more for media then ever before – not in print but whatever form it comes in. The trees will love us once again. However, the cost for this will be higher than it once was.  What is less talked about are the adjustments that consumers have to make. Paying for media that was free or easy to access is now the norm.

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And still only 65% of the country has broadband Internet access. What Google fiber offers is just a beginning and will become the norm. Google fiber speeds will knock cable TV off its legs.  We wont need coaxial cable – just access to the Internet.  And it won’t have to be coming from the white coaxial cable coming into your home – it will be wireless.   TV channels will be become specific apps downloaded on a phone or tablet.  Bundles will be forgotten. The ‘triple play’ of a phone, cable and the internet that we all familiar with for $ 150.-200 a month will soon be broken down.

Perhaps even the app store will disappear too. The potential disruptiveness of Otoy (http://goo.gl/aQZSl ), as a breakthrough streaming service could, in the near future, could end the need for app stores and computer upgrades.

Advertising will never ever again subsidize any old-media news organizations in the style to which they (and their audiences) have been accustomed.

News organizations used to be able to overcharge and under-deliver in their deals with advertisers; the pizza place and the car dealership had nowhere else to go, and no one knew how many people saw, or acted on, a given ad anyway.  Not anymore. Nielsen, one of the old guards struggles to stay relevant – even if they purport to have new measuring technology. There are at least the 10 other companies who are in the process of eating their lunch.

We are in for years of re-adjustment. Transformation from print and paper to digital – cable TV to Internet TV, YouTube, social apps and the like. Consumer adjustment will take time. But less than you think. Our kids are growing up ignoring cable and television, without radio and traditional print media. The norm:  downloading of apps, mobile phones, tablets and no desktop computers. It’s different and disconcerting for the parents. It’s happened before – it just happened without the Internet. How we used to do things in the seventies, eighties, and nineties is no more – change is good.  Breath in – breath out.

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Television is no longer TV, its IP!

The old generation networks: ABC, NBC, CBS and FOX. The new-generation networks?  Hulu Plus, Amazon Instant video, Netflix and YouTube.

Consider this:  Microsoft recently reported that Xbox 360 owners spend more time online watching video and listening to music than playing games. The company announced 35 new entertainment partners being added to the Xbox 360 in the next year, including the NBA, NHL, Nickelodeon, and Univision. ESPN is expanding its programming on the Xbox to include live feeds of all of its channels. Microsoft is also launching a music service to compete with iTunes.

                

The Wii U, debuting this fourth quarter, will also feature Netflix, YouTube, Hulu Plus, and Amazon Instant Video.

And, Outside of games, the PlayStation Network also now delivers access to streaming content from Hulu Plus, Cinema Now, Amazon Instant Video, Netflix, NFL Sunday Ticket, NHL Game Center Live,  MLB.TV,  ESPN and Crackle TV, while users will soon have access to YouTube from the PlayStation Vita.

You’ve got wonder, how will Nielsen ever be able to count the eyeballs watching? At this point, they can’t. They are the ‘dinosaur’ technology.

When my Mom and Dad had breakfast in the mornings, they would pass the newspaper back and forth. Back then, I looked at the classifieds for things to buy second hand and they even had a classified section in most magazines and papers for the ‘personals’. Wanted to go the movies (you know the movie we saw ‘advertised’ by trailer last night during a network show on CBS, say Ed Sullivan or Mary Tyler Moore), we checked the newspaper.  Real estate listings and needed to buy a used car? Newspapers.

               

Fast forward 15 years. Now we check our mobile phones for movie trailers and times. Dating? Not in the newspapers, on mobile or a laptop or tablet. News? Forget the paper. And for many years, the papers were in denial – they kept printing tons of papers, special sections, extra editions and even tried to launch new newspapers in certain cities to compete with the entrenched and big local guys. They lost millions of dollars and saw their stock price get hammered and many folded. The bigger ones put up paywalls (i.e. NYT’s, WSJ, etc.)

Then the music CD died and the way music was listened to and purchased changed. No one could believe that there wasn’t going to be any more music CD’s nonetheless a Tower Records or Wherehouse to close their doors. But they did. And the CD has all but disappeared.

Movies? Same thing is happening and will happen. It may take longer because of the nature of the medium. Movies are different than music in that the files are way larger and with music you listen to ‘Hotel California’ or your favorite music many times over and over. Movies? How many times can you watch the same movie over and over. However, Blockbuster and stores like them are disappearing. Replaced by iTunes, RedBox, (and RedBox I believe has a limited life span even though they are going gang-busters today), Amazon Instant Prime, YouTube, IMDB (yes you can buy movies and stream them there too) and many others.  Even Wal-Mart is in the mix (Ultraviolet and VUDU).

In my generation and others behind me, its what you owned and had that was important. Today, its how you access it. No ownership. No physical ownership that is. Its just not important. When and how you get it, is.

The final frontier is the television. And it’s a big frontier. And, there is more at stake than a plastic CD in a rectangular box that will disappear. Advertisers and the big 4 networks stand to lose the most. Including producers, writers, actors and the like. Add a DVR into the mix and the new choices that the younger generation has now and you’ve got a real problem CBS, NBC, ABC and FOX.  The upfront TV buying season which some estimate generates $19 billion fuels most everything we see on TV. About $9.5 billion for network and $ 9.9 billion for cable.

Network estimates individually for 2012-2013 season are:

  • CBS: $2.92 billion,
  • ABC: $2.65 b,
  • Fox: $2.15 b,
  • NBC: $1.78 b.

So, when Game consoles, tablet makers, mobile phones and the like are all putting mainstream content up and online for consumption, someone stands to lose. Another way of thinking about this would really be a shift of dollars from Network and Cable to third screens. It won’t disappear but in ten years it’s going to look awfully different than it does today. And the way all of this is counted and rated will actually become easier than how Nielsen has done this for decades ( a diary that you write in? Really?).

A new report from Nielsen, the TV audience ratings and measurement people, shows that the number of people who watched TV at least once per month—a pretty low bar—declined from 90 percent of the population to 83 percent last year.

Proportionately, that means TV lost 8.5 percent of its audience in 2011. As many as 17 percent of people never watch TV, the survey of 28,000 consumers in 56 countries.

That’s a huge loss of interest in a medium that in industrialized nations is regarded as a standard like electricity or hot running water.

The number of people watching video on a computer at least once per month is now higher, at 84 percent, than those watching TV.  The implications are obvious.  Some not so obvious. One is that cable affiliates pay big fees to Networks for carriage. If no one is watching, no one will be paying. And, younger kids don’t care what ‘network’ its on, they care when it will be available to see on Netflix or Hulu Plus. A real shift in economics and habits. And I don’t think the TV industry is paying attention. But they will, they will have to.

Welcome to the new world of multi-screens and time shifting. TV as we once knew it not TV, its IPTV.

Apps, Software and Video Games shortly will go the way of the DVD – they will live in a ‘cloud’.

Bandwidth is the key to the cloud. If you’ve got enough access to it, meaning if you’ve got a fast enough connection, then you don’t need any physical media or software to live in your PC, Mac or for that matter very soon your mobile phone and tablets.

We used to have giant ‘desktop’ computers that had to have HUGE hard drives in order for us to install many applications. For example, Photoshop, Dreamweaver, MS Office, CAD software, etc. all are very large installation packages. Couple this with your collection of MP3’s, photo’s, video’s and documents and most of us ran out of room on a PC that had 50-100 gigs of space for a hard drive.

The obvious to the consumer

Today, as a consumer we see convenient repositories for photo’s, music and videos and documents. Skydrive, GoogleDocs, Dropbox, Box, Amazon Cloud Drive. Now consumers are beginning to understand and use these places to store what they used to store on their home computers. Why? Several key reasons – first, once uploaded to a large mainstream cloud drive (and I mean to the likes of Google, MS or Amazon) your collection of ‘whatever’ is safe. How many of us have dropped or lost a laptop, had a hard drive fail, spilled coffee on our desks and then PC, etc. If you didn’t back it up to an external hard drive you lost it all. Worse yet, I’ve had friends who did and THAT and the hard drive failed shortly thereafter. Years of precious photos (and now videos more than ever thanks for our mobile phones) you can never get back or thousands of MP3’s gone (at $.99 each). Second, consumers now are getting familiar with storing their digital belongings off site and in a cloud. We hear about Amazon’s or Google’s cloud storage drive initiatives more and more everyday. They are fast becoming the new norm. And third – they are not expensive. Certainly not when compared to a 1.5 Terabyte hard drive that can fail without warning.

The not so obvious to us all

What’s not so obvious to consumers is what’s happening in the enterprise business realm. Years ago, you wanted to put up a business domain web site or had a business that required large databases, some required separate servers for clients that are uber security conscious, some needed to have their domain living on a separate server from others (especially the financial and health industries). Others needed production servers, staging servers and then after testing finally deployed an application or web service. Sometimes IT had to physically travel to the colo facility to apply a ‘patch’ to a newly deployed application and hoped that the patch worked as it was supposed to or else everything came to a screeching halt. Businesses lost money, time, and face sometimes. You’d pay Sun, Oracle, Cisco, EMC, etc. millions to deploy servers and DB’s for your environment. You’d spend money on hiring the right technical IT staff to deploy and sync and stitch all of this together. This WAS the norm.

Enterprise today is all moving into a cloud based environment – virtualization is the norm now.

Sun servers were all the rage in the 90’s. But they were VERY expensive. Robust, great customer service, but very costly. Today, you can run a linux box for a fraction of the cost. No more hard drives or servers (blades or otherwise). You can fire up an ‘instance’ and server through AWS in a few minutes. No going into a colo facility. Start-up’s can get to market almost instantaneously and for far less of a cost. You pay for what you use. No more buying a million dollar license for ATG, Vignette or Broadvision and installing 15 discs in a cage. You rent it now. Patches get uploaded by the cloud vendor in a virtual environment and tested before they are deployed to you.

With the rise of this ‘virtualization’, more and more apps or processes now get built into the browser. Java script was written just for this purpose and has allowed for far more sophisticated applications to run in a network environment and now on browsers. Other software will be embedded in browsers as time goes on that will mimic the functionality and hardware on your PC. You can bet on it.

Platform as a Service (PaaS)

Whereas IaaS (infrastructure as a service) providers offer bare compute cycles and SaaS (software as a service) providers offeraccess to such apps as CRM online, PaaS offerings provide turnkey services for developers to get their apps up and running quickly, no infrastructure concerns needed.

Offered as a service, PaaS runs the gamut from development tools to middleware to database software to any “application platform” functionality that developers might require to construct applications. None of these above services come without their problems. But so did everything else before them.

IaaS focuses on managing virtual machines, and the risks are little different than with other cloud types — here, the main risk is rogue or unwarranted commandeering of services. IaaS requires governance and usage monitoring. But with this comes a good degree of convenience and business ROI.

Some of the most popular cloud services running virtually are; Microsoft Windows Azure, Googles App Engine (which offer a nonSQL relational SQL database service), VMware cloud foundry, Force.com ( from salesforce.com), Heroku (also from SF), Amazon Elastic Beanstalk, Engine Ysrd Cloud (for Ruby on Rails enthusiasts), Engine Yard Orchestra (for PHP enthusiasts) and CumuLogic (for Java developers). Consumers never see or hear any of this but use web services that live on these services day in and day out.

What will be obvious to consumers in about 10 years or less

All of this bring me back around to bandwidth and apps. Once we have enough consumers that have access to real fast broadband (100mbps or more down and ideally 200mbps down), then the Apple and Android app store will disappear. Software discs will become obsolete. Video game installation discs – gone. Why, because once you have enough speed, apps can be loaded and accessed wirelessly via the web. The calls to databases, functionality and such can all be received instantly online. Its already happening, slowly. Examples of this in the entertainment space is Ultraviolet, bring your DVD’s to Wal-Mart and upload them to your digital locker – no more disc. Onlive, Livestream, Gaikai all stream video games without the need for a disc, Netflix (you know about them). Consumers are aware of these, but then you’ve also got GoogleDocs and Skydrive for documents and the creation of word and excel docs. We don’t need an install disc anymore.

Last week, it took me 4 days to upload 12,934 MP3’s to my cloud locker at Amazon Music drive. Less time than I ever thought. Available anytime for me to download if need be. That’s nearly $ 13,000 worth of music, stored for as little as $ 20.00 a year.

Mobile apps, software suites, video game discs, movies, music photos and more will still be here but will not physically be in your home forever. It’s inevitable.

The Day the Studios and Theaters Stood Still

Sometime in the near future there will be an explosion heard only in the entertainment trades and whispered and talked about between studios, marketing executives,  theater owners and DVD retailers. The FCC gave everyone permission to enter this pissing match and what a pissing match it will be.

If you ever go to the movies (and many of us do) with more than 1 person – so two people attend a film and you have a child where you needed to hire a sitter, you might not be going to the theater so quickly anymore. Well, maybe you still will. Time will tell this one. Soon, a mere 6 weeks AFTER any movie starts playing in a theater, you will be able to watch it at home in the comfort of your ‘Aunt Fay’s couch’ (nod to Steely Dan) on your nice large LCD flat panel TV.  To help you To help you visualize what this means in numbers, there are about 115 million television households in the US. Approximately 100 million of them are currently cable, satellite or IPTV subscribers. Through these cable boxes (although not every one of them, only the ‘digital’ households that have a set-top box) you will be able to purchase the very same film that was JUST in the theaters 6 weeks ago on cable for $24.99 – called premium V.O.D. – video-on-demand.  BUT, the movie studios will be able to activate a technology to prevent films sold through video-on-demand cable systems from being copied.  This is the ruling that the FCC just allowed in May 2010 after a two year battle with the studios.

Right now, theaters get an exclusive period — 120 days (4 months vs. 6 weeks), on average — to serve up new movies. Then the releases appear on television video-on-demand services at a price of about $4.99. Now the studios want to offer us new movies on video-on-demand services about 45 days after they arrive in theaters.  But, you can’t keep a copy or make a copy (your DVR, VHS or whatever won’t work). Just like a theater, once its over, its over.

So, if you are more than 2 people (+ a baby sitter), and unless you are dying to see the film on a BIG screen, I guess you might wait a few weeks.

So, what’s the big deal? For starters, the theater owners, have made it clear that releasing a movie early on video-on-demand services — thus cutting into their window — would be the equivalent of declaring war. They feel people will be more reluctant to buy movie tickets, at an average cost of almost $8, if they know they can catch the same film just a few weeks later in their living rooms, and for less money than it costs to haul the whole family to the theater. The average moviegoer spends more than $3 on popcorn and soda and the like, the cost of Friday night at the movies for a family of four can easily reach $45 – $60 — or much more in cities like New York and California.   And theater owners say this doesn’t take into account second-run and discount theaters, and that there are big exceptions: “Inception,” for instance, was still raking in millions in theaters 10 weeks after its release.

Next up, DVD retailers are fuming – Best Buy and Wal-Mart have told the studios they will retaliate against anyone who tries early-release V.O.D. because of the threat it poses to DVD sales. Huh, what DVD sales? The DVD is going the way of the CD in case anyone hasn’t noticed. Blockbuster just filed for bankruptcy. DVD sales for the year are expected to total about $9.9 billion, down 30 percent from their peak in 2004  (about $13 billion), according to Adams Media Research.

Who is the big winner here? The Studios (or so they think) because as much as 80 percent of that early V.O.D. revenue goes to them, therefore movie executives see a new way to compensate for their dwindling DVD business. And the studios are aware that consumers are growing impatient about being unable to access all movies whenever and wherever they want. An early video-on-demand option might prevent some of those frustrated customers from turning to pirated copies.

So where’s the flaw in this plan? I have a couple of thoughts. First of all, the pay-per-view business has been an anemic business since its inception on cable in 1984 when Request TV, Viewers Choice and The People’s Choice (yes, this was my company back then). Part of the problems was with the windows given to PPV movies, part was the terrible job the cable operators did to market these films to us, part was the billing mechanism (it was archaic) and part was the fact that the VHS back then and soon the DVD was simply an easier option. Not to mention you could rent the same film on VHS/DVD so much earlier than on PPV and then buy a copy to own, to watch again and again.  Second problem is that you can’t keep a copy of what you fork out $24.99 for. This just begs for pirates to hack the system (and it will happen and supposedly already has). So forget the studios argument that an early video-on-demand option might prevent some of those frustrated customers from turning to pirated copies.  Maybe at first, but I have no doubt pirated copies will turn up on the streets all the same – now just earlier and better quality DVD copies.

The fact you can’t keep a copy is just self-defeating. Instead, what the studios SHOULD be doing is giving everyone a ‘cloud’ storage locker for say, $ 10.00-20.00 a year. Once you pay $24.99, the film goes straight to your locker. Then, its kept there to be watched as many times as you want for as long as you keep the locker subscription current each year. Sure, pirated copies will still happen but there is a much better chance that people will be more willing to pay the $24.99 IF they can watch it over again, anytime, and on any ‘authorized’ device you own (i.e. mobile phone, Galaxy ‘Tab’, iPad, etc).  Apple does great job with ‘authorized’ devices and computers.

I’m sure a studio would say ‘well, then your friends can come over and see the same film without paying for it because its in your locker’. Well, its in YOUR locker, not theirs and they can come over anyway under the present scenario. And this is the same ridiculous argument studio exec’s made in the early years of the PPV business.  It didn’t stop anyone back then and only help stifle the PPV business – a misjudgment they appear are doomed to repeat once again.  Will they ever learn from past mistakes?

So, will you pay $24.99 to watch a film at home you can only see one time?  You might if it’s a title you don’t really care to much to see in the theaters. Would you have seen Avatar that way?  NOT ME!

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Steve Jobs said “They want Hollywood movies and TV shows whenever they want them,” went his description of consumers’ wants. “They don’t want amateur hour.”

DVD
Image via Wikipedia

I couldn’t agree more. Asking consumers to put out ANY cash for ‘clips’ on youtube and the like is indeed amateur hour. Not that we don’t want to watch an occasional youtube clip ( I have a laptop for that), but not while we can see ‘The Expendables’ streamed to my flat screen TV day and date with DVD. Goodbye plastic DVD via Apple TV.

Doesn’t this smell like the the death of the DVD – reminiscent of the music CD ?  It does to me.

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Hollywood to sell movies online – Monday, April 3, 2006

It is 4 years and 4 months later and look where we are now. CinemaNow, Movielink and other services have all failed.  What’s a studio to do?  Blockbuster will be filing for Bankruptcy shortly and they plan to re-emerge from Bankruptcy to do what? Put kiosks into stores next to other kiosks? I feel for the debt holders who have lost quite a bit of money. I wonder if Blockbuster ever paid attention to what happened in the music business?  Apple certainly did. Maybe Steve Jobs will have a partial answer comes September 1st.  And now Google will be offering pay-per-view movies.

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Hollywood to sell movies online
Monday, April 3, 2006; Posted: 5:38 a.m. EDT (09:38 GMT)

Brokeback Mountain” will be one of the first films available to download.

LOS ANGELES (AP) — Hollywood studios will start selling digital versions of films such as “Brokeback Mountain” and “King Kong” on the Internet this week, the first time major movies have been available online to own.The films can’t be burned onto a disc for viewing on a DVD player. Still, the move is seen as a step toward full digital distribution of movies over the Internet. Six studios said they would announce Monday that sales will begin through the download Web site Movielink. The site is jointly owned by five of the seven major studios. Warner Bros., Universal Pictures, Sony Pictures, Paramount Pictures, Twentieth Century Fox and MGM will offer some first-run and older titles on Movielink. New films will be priced similar to DVDs — between $20 and $30 — while older titles will sell for $10 to $20. In a separate announcement, Sony and Lionsgate said they will sell films through the CinemaNow site. Only films from The Walt Disney Co. will not be available, although both services say talks are ongoing.

“Digital delivery hasn’t arrived until the major studios allow home ownership, and now they have and now digital delivery is very real,” said Jim Ramo, Movielink’s chief executive.

Studios will sell some new films online the same day they become available on DVD. Most films will be made available within 45 days. Studios began renting films online several years ago as a way to combat illegal downloading. Movies have been available through the Internet 30 to 45 days after hitting video stores, with rentals lasting just 24 hours for viewing primarily on computer screens.

Digital delivery of video grew rapidly after Apple Computer Inc. began selling episodes of TV shows through its iTunes online store last October. This year, devices powered by new Intel computer chips and TV service delivered over the Internet will allow more consumers to watch Web video on their TVs instead of their computer screens, a key factor in downloading to own, analysts said. Studios are being cautious about selling films online in part because DVD sales produce more profit than box office receipts.
But studios are also preparing for the day when major retailers such as Wal-Mart and Amazon.combegin offering their own movie download services.

“The important thing is to embrace the future, respect the economics of DVD but move forward into digital delivery,” said Ben Feingold, president of Worldwide Home Entertainment at Sony Pictures. The films available on Movielink can be stored indefinitely on a computer hard drive or transferred to as many as two other computers. The movies can be played on a TV if the computer is part of a home network. A copy can be burned to a DVD as a backup. Discs can be played on up three PCs authorized by Movielink but cannot be viewed on a standard DVD player because of special security coding.

Consumers will not be able to transfer the films from a PC or laptop to a handheld portable viewing device. But that capability should be available sometime within the next year, Ramo said. Films on CinemaNow will be playable on just one computer. The company said it eventually expects studios to allow consumers to burn movies on DVD and transfer them to portable devices.

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The ‘commodization’ of the movies

Movies. We see the commercials/ spots on TV,  ads in the newspapers , posters on the bus stops and digital ‘moving’ billboards, hear them tout them on radio and of course we still discuss them at the office and home.  We still go to the theaters to see them, then we go home and wait for them to be available to us on…? well, not really DVD‘s anymore. Blockbuster is going away, we really don’t run to Best Buy or Fry’s to ‘rent’ them. Maybe RedBox in a grocery store too. Some of us now are using Netflix, iTunes and some in major metropolitan cities can find them for $5.00 on a table on a street corner (illegal copies albeit, if you know where to look). And fewer of us get them from Torrents, and even less from the newsgroups. But what has happened over the past 10 years to the DVD business has caused a major shift in perception for all of us. Its no longer the ‘event’ it used to be to wait to get a movie in DVD form to bring home and watch on a weekend night. Years ago, there weren’t 15-20 movies in the theaters at once. Movies started a run in the theaters and most lasted a few months. Now, most last a few weeks, if that. Or never see a theater at all. Back then, we could peruse Blockbuster along with our neighbors to grab a copy and return it the next day (if it was a new release).  There was a sense of pent up demand to get that movies when it came out on DVD. That no longer exists. What happened? Where did that great feeling of waiting for that movie you liked so much in the theater to come out on DVD. I miss that ‘looking forward’ to a film at home. How did Hollywood lose that edge with all of us?  They blinked.

Today, even ‘Avatar‘ released on DVD or to Netflix, iTunes, etc. is a non-event. True, Hollywood tries to make it an event. They really do advertise the DVD release. Target and Wal-Mart carry it but years ago Target and Wal-Mart were not even in the running for carrying and stocking an ‘Avatar’.  I think to some extent that the loss of the trips to the local DVD store and the swing to the Targets and Best Buy seem to lend a feeling to each movie released that there a sense of ‘mass commoditization’ of the movies.  You just don’t ‘run’ to Wal-Mart for a film. You can’t even rent them at Wal-Mart or Target – they must be purchased.  To compound this, movies are being released sooner than ever before. This gives one a reason to stop before going to a theater right away to see a movie. Given the cost of a ticket, popcorn etc., a babysitter (if you need one) and you’re into 1 movies for nearly $ 100.00 if you go with 1 other individual. Ouch!

Years back, certain theaters carried certain films. There were ‘art’ houses (for independent films) , there were theaters that carried foreign films ( Goddard, Truffaut) and there were retro houses and mainstream theaters. With costs so high these days, theater owners must give way to larger bigger well advertised releases.  When was the last time anyone saw an ad on TV, newspapers, bus stop, radio, etc for a foreign language film from a well known director. It used to be Directors could lure an audience into the theaters alone.  It didn’t matter who was in the film, what the special effects were or if there were any at all. Few directors today can do this (Cameron and a handful of others can, but not too many).

Movies are a commodity today. One released after another, not much difference between them all. And once they are out and available after the theaters, they are all but forgotten.  We have no more real teams of actors and actresses that are featured in several films  (except for Tarrantino and now Rob Zombie, who do this).

I miss all of this. Do you?

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The Death of the retail DVD. Now you see them, soon you won’t.

A lot has been written about online video and its bright the future. One thing is for certain, online video has got some maturing to do, but it is here online today. Right now you can watch nearly everything you can see on cable, online in one format for free or for a fee. For the studios that ship thousands of DVD’s of first run films to the stores (and there are less of them) they are shipping less. For the independents, they are shipping even less and to add insult to injury, must take returns back of unsold plastic with DVD’s. And then you’ve got shelf space where less is being devoted and therefore more studio titles occupy that space rather than independent titles. But overall, online is slowly nibbling into these sales. How do we know? Look at the music CD business.

When we moved from cassettes to CD, the music industry reaped those dollars. Finally now, musicians are beginning to understand how to use online to actually make more money with their music than the traditional ways. Ian Rogers, ex-head of Yahoo Music has got it right. He’s dead-on. Using Topspin, he recently pointed out two examples of how this works with two artists at Topspin.

The first example is David Byrne and Brian Eno’s new album Everything That Happens Will Happen Today. By distributing digitally and keeping most of the profits themselves, the gross revenues of the album matched what they could have expected to get as an advance from a music label within the first 50 days. The second example is a lesser-known artist in his twenties, Joe Purdy, who has sold 650,000 tracks on iTunes and was able to buy a house from the proceeds.

Ian says:  “Digital sales don’t make up for physical? From the artist perspective they certainly can, and quickly. David and Brian keep the majority of the profits, and (via Topspin at least) are paid within sixty days of the fan purchasing (no wait for recoupment and complex royalty accounting). When your costs are low your royalty rate high and your channel direct, the marginal profitability from the artist perspective can be far different than in the old model, to be sure.”

Look at Radiohead and Nine Inch Nails.

So, ultimately DVD’s will go the way of the dinosaur. Just as CD’s have. Where’s the economics of sending these in a truck across the country, including packaging and shipping costs and returns? So how will an independent movies producer/company and or studio survive?  It has to be online. The writing is clearly on the wall. DVD’s simply will not continue to be sold in stores. Take a look at ESD (electronic software disrtibution).

msft-store

Example: Microsoft. They just moved all of their software online, into a MS ‘store’. What’s this mean? The days of buying packaged software loaded onto CD’s are numbered. The online store sells all Microsoft software from Office to Xbox 360 games. Instead of shipping the software in the mail, you download it over the Web. Just like you can download apps directly to your iPhone from the iTunes App Store, the Microsoft Store takes the same approach for its own PC and server software. (It does not distribute mobile apps or software made by other companies).

The obvious fear for most users buying ESD products is not having the software on physical media to re-install the product at a later time. Microsoft Store solves this by letting you re-download the product until mainstream support for the product ends. Typically this is 5 years after the product is released. You always have the option of copying the downloaded products to physical media if you want to have it available longer than the mainstream support lifetime.

And this can also be solved with movies and TV shows. Especially when you allow consumers to ‘own’ a digital copy to watch anytime, on their TV without actually having the digital file. How is this done? That’s my next post. There is a secret stealth company coming in early 2009 that will allow consumers to ‘stream’ anything they want (new or old), with or with out commercials (you can pay for it w/o commercial or watch for free with them) and keep the tv or film forever locked away in their own media vault (not on thier own PC, but remotely).

Its the future. Stay tuned. And its real. Using this, why in the world would anyone have to buy or rent a physical DVD again?

‘The Beatles’ are finally available in a streaming format…across the universe that is.

If you are extraterrestrial in the neighborhood of Polaris, the North Star, you’ll be able to listen to ‘Across the Universe’ in 431 years for free and without any DRM. NASA on Monday will broadcast the Beatles’ song “Across the Universe” across the galaxy to mark the 50th anniversary of the agency, the 45th anniversary of NASA’s Deep Space Network, and the 40th anniversary of the song (not to mention Tuesday’s DVD release of the movie bearing the same name). The song will be broadcast as an MP3 and with the blessing of the The Beatles estate thebeatles.jpg . Polaris is 2.5 quadrillion miles away (umm, that’s why it’s 431 years away). But that seems a lot closer than downloading anything ‘Beatles’ soon from iTunes. To Polaris anyone?