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Hollywood Follows the Eyeballs

11 Aug, 2006 By: Thomas K. Arnold

It's long been said that the home entertainment business is driven by content. That's still true, and always will be. But there's something else Hollywood is buzzing about these days: eyeballs. Studios have the content, and the future course of home entertainment will be charted by consumer eyeballs.It's always been that way, really. In the early days of home video, when rental was the primary business model, the indie retailer was king. Why? He brought in the eyeballs.

Later, as the business evolved into the sellthrough model, the mass merchants ruled. Again, it was about eyeballs — consumers wanted to buy, not rent, and the Wal-Marts and Targets of the world had all the DVDs one could possibly want to own, at affordable prices.

Now we're seeing a sea change in where the eyeballs are going. A study found that 50% of young people prefer their computer to their TV for entertainment. Is it any wonder that at our recent Home Entertainment Summit in Los Angeles, video-division presidents said up to 50% of their jobs are spent exploring new delivery methods, primarily ones involving the Web?

The one constant during the industry's transitions from rental to sellthrough, from VHS to DVD, was that the majority of the nation's consumer eyeballs remained focused on the TV set. That paradigm has shifted. Eyeballs are migrating to the Internet. The trend-setting youth are watching videos on YouTube and Revver, making friends on MySpace and Facebook, and downloading music from iTunes.

TV industry executives are ahead of the curve: They're actively exploring a business model in which their shows are broadcast both on TV and online, and then charging advertisers one price for commercials.

Studios, too, are cutting deals with social networking and viral video Web sites, figuring — and correctly so — that if they can't combat the eyeball migration to the Web, they might at least harness it in some fashion. Today, studios are using these Web sites primarily to promote new theatrical films and DVD.

In the future, expect a flood of content — and we're talking way beyond a trickle of downloads through Movielink and CinemaNow. Wherever the eyeballs go, content is sure to follow.

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