Tuesday, July 27, 2010

Personal Media Devices Are The Future of Entertainment

An article I saw last night discusses how major computer manufacturers are all chasing the iPad with similar tablet devices of their own.  You can read the article for the interesting details.  However, I wanted to quickly comment on the importance of this trend.

The iPad is truly a new class of hardware that has changed the media landscape.  It's a highly portable device optimized for obtaining and displaying robust media.  The screen is big enough and sharp enough to deliver a satisfying video experience, serve as an eBook and display the news, weather and sports.  It is connected, so you can have a constant stream of new content.  It is literally a window through which you can look at the entire world, 24-7.

Once there are a number of viable competitors, prices will come down.  India already says it can make a competitive device for as little as $10.00.  This means that the majority of consumers will eventually have the capability to grab whatever they feel like seeing on a real-time basis.  And each device will know who is using it  and where they are, and thus be able to deliver customized advertising content.  Just take one minute to think about the commercial implications of that. It is absolutely huge.

The iPad and its eventual competitors don't replace theaters or flat-screen TV's, but mobile media will quickly become an equally powerful (and eventually, the most powerful) segment of the media landscape.  If you are a content producer and you want to be ahead of the curve, start thinking about mobile media today.  That's the direction the money will flow for several years to come, and the trend has already started.

Thursday, July 22, 2010

As DVD's Die, How Will The Film Business Fare?

Here is a pretty good article that discusses the shifting trends in the in-home distribution of films.  Obviously, the trend is away from DVD's and moving towards direct delivery.  In fact, the shrinkage in the DVD numbers is pretty dramatic.  The DVD is going the way of the CD.

Blu-ray is making up some of those losses, but Blu-ray will eventually follow the same path.  Right now Blu-ray discs are popular because there is no real alternative for super-HD resolution.  But when a Blu-ray quality file can be easily and quickly downloaded right to your big screen TV, there will simply be no reason to mess around with a disc.

Discs are dead.  However, the download and video-on-demand markets are expanding pretty quickly.  None of this is news, but what does it really mean?

For disc manufacturers, it means they should already have shifted their focus to other businesses.

For distributors, the ability to warehouse and handle large amounts of physical product will not be useful much longer.  The distribution of content is still a very good business, but moving digital files is very different than moving discs. The good news for distributors is that the profit margins should increase dramatically as all of the costs of moving physical inventory evaporate.

Producers still need to produce great content.  Consumers will always want good stories that are told well.  However, production is both cheaper and trickier.  As more people use iPads, smartphones and similar devices to watch films, the productions will need to translate from very large screens with huge speakers (like IMAX) to the small screens of a smartphone with headphones.  That's challenging.

The real issue for those of us on the business side is whether the revenue from new sources such as download, streaming and mobile will replace the dwindling DVD market.  I believe the answer is "Yes" if you look at the profits.  The revenue might go down, but so will the costs of delivery.  That means that even if volume is lower,  the profits will be higher and hopefully make up the difference.

Direct delivery of content is a more efficient system than any physical media.  The benefit of those efficiencies should be apportioned in some manner among all of the stakeholders, from consumers up the chain to producers.  I think natural market forces will cause that to occur, and at the end of the day, the film business will be healthier than ever.  Higher profits means it's a better business model.