content distribution conflicting models
It is an oft-repeated mantra that while ‘content is king’ it is ‘distribution that’s the emperor’, for without good distribution the content is near-worthless. The so-called television age has seen the distribution model grow and mature into a very sophisticated beast, and recent technology developments have further boosted the potential for extra distribution revenues. Chris Forrester reports.
Will OTT kill off
hile the traditional distribution
‘windows’ enjoyed by Hollywood and TV producers are well- known and
understood, the past five years have seen those windows multiply, and expand significantly. The usual structure is theatrical release, then, after a nice time gap, this is followed by home video sales (and, generally, rental release). After retailers got a head start, next, video on demand (VoD), pay per view services, and hospitality distributors (airlines and hotels) would get a chance. A couple months later, those windows would close and then pay-cable TV channels (HBO, premium pay-TV channels, etc) would get a period of broadcast exclusivity. Finally, eventually, basic cable/satellite TV and at the very end of the cycle the network broadcasters would join in.
While the core elements remain much the same, now we have extra ‘windows’ in the shape of a Blu-ray or 3D release of a movie or concert, as well as IPTV (pay) distribution, and crucially a slew of online over-the-top services from the likes of Hulu, Vudu, Netflix, iTunes, Amazon and similar services. We have also seen a much greater awareness of flexibility from the main producers and distributors anxious to find some sort of financial replacement from the collapse of the traditional ‘packaged’ sales of videos and DVDs.
Indeed, a recent experiment from Warner Bros saw a couple of US cities (hooked up to Comcast’s cable) take part in an experiment that saw DVDs
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www.ibeweb.com
The combined effect of services like YouTube, iTunes and their like, suggests that traditional subscriptions to cable and satellite pay- TV services are under threat from so-called ‘cord cutters’.
managed distribution? W
and VoD availability of a key movie appear on the exact same day as the movie’s theatrical release. VoD ‘buy’ rates jumped by 50%, DVD sales grew 10%, although rentals fell back 2%. A year or so ago saw a similar experiment tested in the UK when Beowulf and The Assassination of Jesse James by the Coward Robert Ford both premiered on BSkyB, Virgin Mobile, British Telecom and Xbox Live outlets within 15 days of their DVD releases. But it is the new kids on the block, the iTunes and Netflix-type services, that are now calling the tune. Apple’s iTunes is a huge retailer of content and programming which is reflected in its parent company’s share price! Some argue that the success of iTunes is not simply down to the spread of material available, but the ease at which the movie, TV show or music can be accessed and downloaded. Either way, Apple’s first $20 billion quarter-year of sales was reported in October 2010, where revenues were up 67% and profit up 70%. While the bulk of those revenues are down to sales of Mac computers, iPhones themselves and iPads, the iTunes content division grew sales 22% during the quarter-year, to $1.24 billion. Add in another small fortune from sales of Apps and other music-related services and the segment brought in $4.94 billion. Those numbers cannot be ignored by any savvy content owner. Moreover, the iTunes business is hardly global! While North America, Europe and Japan are each important, Apple’s iTunes is not yet global in its reach. A clue to its future distribution clout is the fact that its four Chinese retail outlets are the company’s highest in terms of traffic-
generation and most profitable. Sadly, a would-be rival to iTunes - at least as far as game-playing was concerned - Barry Diller’s video- streaming games-on-demand service InstantAction - closed on 12 Nov 2010 during its pre-launch phase, anxious about the financing model and potential upside. While downloading games is still embryonic when compared to movies, few doubt that gaming has the potential to be an industry money-spinner. But as well as the distribution opportunities from the likes of iTunes, the traditional TV distribution industry has seen - and will continue to see - huge changes thanks to IPTV connectivity for viewers. Even though it will likely maintain its dominance in the global multi-channel TV market over the next five years, cable TV will be under constant threat from IPTV services, not least from well-heeled telcos. According to new research from Ovum, global pay-TV revenues will grow by nearly 40% by 2015, but Ovum states that this headline figure masks significant variations between markets as well as platforms. Cable TV is predicted to reach 573 million households worldwide by 2015, a sluggish CAGR of around 3%. By contrast, the strongest growth in that period will come from IPTV with a CAGR of 24% to reach 109 million households and digital terrestrial TV which is predicted to grow by an average of 18% to reach 211 million homes. In the US, cable will retain its dominance but the number of households subscribed will drop from 60 million in 2010 to 54 million in 2015 as IPTV and Internet-based alternatives
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