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The VOD Puzzle and Retailers Piece

13 Apr, 2003 By: Kurt Indvik

The announcement last week at NAB of Disney CEO Michael Eisner's new video-on-demand venture, Videobeam (see cover story), comes close to finishing, at least for now, the VOD puzzle.

Besides Disney, other studio pieces of that puzzle include Sony/Columbia TriStar, Warner Bros., Paramount, Universal and MGM, which have joined to launch Movielink, and Fox, which is looking to CinemaNow to distribute its movies. Mini-major Lions Gate has a financial stake in CinemaNow.

No one is yet setting the world on fire with VOD, and most studio execs and analysts agree that VOD is years away from any potential of mirroring the rental market. But certainly, as public companies, the studios have to be seen as taking steps forward to the future of the business, even if it's arguable just how big a role VOD will play in the future.

So while studios search for other more short-term solutions to improving their return on the rental business, nevertheless the digital download option must be pursued.

There is another piece of the puzzle yet to be placed, however, and that's the retail element. One option that strikes me as intriguing would be to, er, echo the Echo consortium of major music retailers who have banded together to offer digital music downloads. There was a lot of excitement generated going into this year's NARM that the major music chains were going to join the digital download business and give the music publishers and their online ventures a run for their money. The thinking here is that who knows the customer better than retailers? Who has a better brand to develop an online retailing business?

The same could be argued for the video retailers. That Netflix attracted the competitive attention of Wal-Mart and Blockbuster, no less, in pursuing the online rental business, seems to me the same sort of statement. There are all sorts of competitive, legal, financial and technical issues that make a comparable VOD service run by home video retail chains a challenge, I am sure.

But, why not? I'd be interested in your thoughts.

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