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360 Degrees of Logic

23 Feb, 2007 By: Erik Gruenwedel

The rush to secure electronic sellthrough (EST) of movies and TV content continued unabated last week as Veoh Networks launched a video-syndication service allowing users to piggyback content via third-party sites such as YouTube and MySpace.

While Veoh may hope to distinguish itself from YouTube, Revver, Grouper and Brightcove, recent announcements by Wal-Mart, Netflix and Amazon to offer streams or downloadable content from the major studios suggest the larger focus on EST is more than wishful thinking.

And I'm not sure why.

One analyst reminded me that given Wal-Mart's attempts at online movie rentals and music downloads, the mere presence of the retail behemoth in the space doesn't guarantee market acceptance. The average consumer has neither the bandwidth nor gray matter to navigate the steps needed to watch Pirates of the Caribbean on a PC. Since most home theater systems orbit around a flat-screen HDTV, why spend hours downloading Pirates to watch it on a tiny screen with non-movie quality?

Sure, reports say 1.3 million of Disney's movies were downloaded from Apple's iTunes through December. To most studio bean counters, that's incremental revenue at best — not a new world order.

If studios really want to establish groundswell support for EST, they'd release major titles on cable as video-on-demand. In fact, many studios are testing that with Comcast Communications. However, enriching Comcast is probably not what the major studios see as improved shareholder value.

Then again, as that analyst said, “There is this remarkable technology that allows you watch a Hollywood movie on your TV, transport that movie through the mail to your friend's house, in your back pocket, watch it in the car, at work, on a laptop or PC — it's called the DVD.”

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