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Digital Delivery Hot and Developing, Panelists Say

25 Oct, 2006 By: Jessica Wolf

SANTA MONICA, Calif. — The market for Internet video has arrived, bringing with it all kinds of questions about content creation and profit potential, panelists at the Digital Hollywood Conference said.

It would seem some business models are working, such as the closed-network universe of Apple's iPod and iTunes, said Ira Rubenstein, EVP, Sony Pictures Digital, who moderated a panel titled “Hollywood and the Digital Consumer.”

“iTunes is selling 125,000 movies a week,” he said. “If CinemaNow, Guba or Movielink sold that much, there would be press releases about it. Does having a dedicated device make it work?”

It is very handy to have a controlled, closed system, said Joe Michaels, director of business development for Microsoft Corp.'s MSN Entertainment.

“But if you are a company that has content to sell, you want it to be everywhere,” he said.

It's not just the device that makes the digital download attractive, said Albie Hecht, founder & CEO of Worldwide Biggies Inc., a content-creation company that is working on multiplatform properties and characters for the digital world. Hecht was previously with Nickelodeon where he helped create shows such as “SpongeBob SquarePants.”

“I think the beauty of iTunes is the software and store as much as the hardware,” he said.

Positioning and delivery of aren't the only issues at hand, said John Penney, SVP of new media business planning for HBO. The kind of content is also in question, he said.

“What kind of content works on a 3.5 inch screen?” he said.

HBO is putting together a media lab to come up with the answer to that question, he said.

“Over time, we hope to create new content that is platform appropriate,” he said.

You have to take consumer behavior into account, Michaels said.

“One of the realities of creating content for the Internet is realizing that people are multitasking while they watch,” he said.

MSN just licensed the TV show “Arrested Development” from 20th Century Fox and plans to launch it on the service in the “next few weeks” with a video player that was purposely designed not to take up the whole computer screen, Michaels said.

MSN also is marrying the user-generated content craze with a Myspace-like social networking mentality. MSN's upcoming user-generated service Soapbox will allow users to post content and keep it exclusive to their own network of Internet friends should they choose, he said.

Internet video sites offer immediacy, Hecht said.

His company, Worldwide Biggies, is working on creating an animation production arm that would allow the site to create animated shorts centering on the news of a given day and post them the same day.

What's for sure is there's no one way to dive into the sea of content available for Internet viewers, which encompasses everything from user-generated videos to legal streams of the hottest TV shows, panelists said.

“I think virtually any content has value on the Internet as long as it's interesting,” said Alan Citron, GM of TMZ.com, which he said recently had a surprise hit with a short clip featuring footage of notorious Hollywood party girl Tara Reid simply waiting in line to get in a club.

Still, popularity alone doesn't bring in the bucks.

The prevailing theory is that advertising potential on Internet sites far outstrips incremental revenue from paid downloads, panelists said.

But there are plenty of kinks to work out there, too. Internet ads have to be organic, creative, short and not too pervasive on a site, panelists said.

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