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Blogue From Prague: Round Two

7 Oct, 2008 By: Stephanie Prange

The supply chain has been hit again at the Entertainment Supply Chain Academy Europe conference in Prague. After several bags went missing, the morning the supply chain for hot water took a hit. Are the supply chain gods trying to prove a point?

Still, attendees were braced for some interesting panels, including one on digital delivery.

Futuresource projects digital delivery will be 14% of annual video revenue by 2012. Right now, hardware-linked services such as iTunes and Xbox Live dominate the pay business, with Sony’s PlayStation 3 poised to be a key player, said Futuresource analyst Alison Casey. On the ad-supported front, studio-backed Hulu has been surprisingly popular, she said, generating 100 million streams in July. That compares to only 7.3 million paid downloads for iTunes.

“A lot of people are willing to sit through the commercials if they can get content for free,” Casey said.

Most of the ad-supported content is TV content, she conceded, with movies more dominant in the pay arena.

One panelist noted that in talking about electronic delivery revenue growth, the industry needs to take profitability into account as well.

I couldn’t agree more. Entertainment content can’t just be a means to help Apple sell iPods or Microsoft sell Xbox 360s. It’s got to offer profit for the content suppliers and creators.

Also, electronic delivery may prove a draw for rentals, but the electronic sellthrough model seems more problematic, especially for movies. Once consumers download movies, where will they store them? On a fragile hard drive or in the Internet cloud where they’ve got no direct control?

I still think the disc is the most stable, convenient storage device for high quality video. When hard drives don’t break every couple of years, maybe I’ll change my mind.

 Editor in chief Stephanie Prange, in track suit, hosting a panel at ESCA Europe.

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