Panelists: Consumers Taking Advantage of Digital

3 Oct, 2012

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LOS ANGELES — “The consumer is winning.”

It was a simple enough statement, made by Logan Mulvey, CEO of VOD and digital distribution company GoDigital, but it summed up the general sentiment at the Entertainment Merchants Association’s Oct. 3 Digital Media Pipeline event perfectly.

Consumers have more digital delivery content options, more screens then they know what to do with and a new service to choose from practically every month.

“It’s about getting consumers comfortable — and it’s rapidly approaching — with digital,” said Brigit Lee, head of business development and operations for Best Buy’s CinemaNow. “Everyone in the room [at the conference] is doing their part with education. We may have [the] early adopters, but we have work to do with the general population.”

There are drawbacks to all these choices, panelists noted. On the content side, there can be too much of a good thing, Mulvey said.

“There’s so much product now, it can be inundating to the consumer,” he said. “Now we’re more selective, where it used to be about getting as much out as possible.”

And too many choices of where to watch may turn consumers off, he added.

“We can’t sustain having all these start-ups saying, ‘We are the new video star,’” Mulvey said. “There are going to be a few that stand. The consumer will pick those that they are most comfortable with.”

As for all those screens, from the living room to mobile? Other than broadband concerns, there wasn’t much panelists didn’t like.

“You have a device your consumer will commit to, and your business will grow from there,” said Mitch Mallon, SVP of digital for Image Entertainment. “Nobody thought [in 2007] that Blu-ray players would drive [digital delivery].”

Streaming has been the king of digital thus far, panelists agreed, but they also agreed that digital can provide incremental value to physical disc, instead of cannibalizing those important revenues. Best Buy proved that when it offered instant CinemaNow streaming of Fox’s Prometheus with preorders of the Oct. 9 disc release.

“They get instant gratification, but we still prop up physical,” Lee said.

For all the talk of digital delivery taking over — and the revenue for digital delivery does continue to rise while physical disc revenue falls — the numbers don’t show physical going anywhere any time soon, according to Tom Adams, director and principal analyst of U.S. media for IHS Screen Digest.

“It’s not the easy situation [for disc] that it was through 2004,” Adams conceded, but DVD penetration is at 82% and disc revenue still accounts for 73% of home entertainment spending, he added.

To grow the digital delivery pie, Mallon said content owners need to start looking to places such as India, South Korea and China.

“There will be some great business in the States … but you can only exaggerate so much,” he said. “It’s overseas, especially for independents.”

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