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Report: Interoperable DRM Key to Digital Profitability

11 Mar, 2009 By: Erik Gruenwedel

In an effort to generate incremental revenue, IPTV, video-on-demand services and digital distribution companies are slowly adopting unifying format standards and digital rights management (DRM), according to a new report.

MultiMedia Intelligence, a Scottsdale, Ariz.-based research firm, said by 2012 interoperable DRM would encompass more than 8% of worldwide pay-TV, including cable, Internet and portable devices.

DRM compatible content across multiple channels currently affects just 1% to 3% of pay-TV, said Rick Sizemore, president of MultiMedia.

“Companies are still trying to [produce] the distribution platform of choice,” Sizemore said. “The market hasn’t shaken out a winner yet.”

As an example, Sizemore cited Apple, with its proprietary iPod music player and DRM, as a major company unwilling to share its format with third parties. He said Apple CEO Steve Jobs’ recent sentiment to do away with DRM was predicated more on his desire to sell the iPod than promote digital distribution.

Sizemore said a unified multiplatform service and DRM are contingent on the growth and profitability of a large number of mobile video and online video distribution systems — not just one. 

The analyst said compatibility between Microsoft’s Xbox 360 Live network, Sony’s PlayStation Network, the Roku set-top box, Netflix and Blockbuster underscored market attempts to establish a new entertainment retail channel.

“As better pipes get connected into the home, you have the ability to distribute a beautiful piece of video that also has to be controlled,” Sizemore said.

He said cooperation between rights holders is increasing, fueled in large part by the economy and a desire to monetize content online in the face of a shrinking retail landscape.

“This is the way [content holders] are going to make money moving forward,” Sizemore said.” If nobody is getting paid, everybody disappears. It’s all about money — and survival.”

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