By : Erik Gruenwedel | Posted: 26 Jun 2008
Seeking a foothold in the nascent digital distribution channel, the Entertainment Merchants Association's (EMA) Home Media Expo June 26 held its first Digital Media Day where industry executives addressed issues ranging from consumer adoption to terminology.
The trade organization in the past year established a digital media council that Bo Andersen, CEO of EMA, said reflected an economic reality for home entertainment.
“Our expectations for the future of the industry need and want a significant involvement from digital companies and digital enterprises,” Andersen said.
Curt Marvis, former CEO of CinemaNow before becoming president of Lionsgate's digital media division, said when launching CinemaNow in 1999, digital media was considered a revolution that was going to eliminate packaged media.
“That perspective has shifted pretty dramatically since then,” Marvis said. “At Lionsgate, we don't view digital distribution as a new thing that is going to cause the existing business of home entertainment to disappear. We view it not as a revolution but an evolution.”
He said digital media generated about $250 million in revenue in 2007 compared to DVD, which generated about $25 billion.
“Everyone recognizes that digital media is an unstoppable business,” Marvis said. “But at the same time it is a business people have to be patient with and have to understand that it is not defined yet.”
He said Apple just announced it was renting and selling about 50,000 movies and TV programs a day, or 1.5 million transactions per month on iTunes. By comparison, Marvis said feature films that grossed less than $50 million at the box office sold more DVDs than that in the first weekend.
“It gives you a perspective of the infancy of the digital distribution business, and it also shows you the incredible growth that is going to take place in the coming years.”
Citing proprietary and third-party data, Chris Roberts, SVP of home entertainment and digital media with Rentrak Corp., said consumers in 2006 spent about $184 million on Internet delivered movies.
Tom Adams with Adams Media Research and Screen Digest said the tally was $117 million in 2007.
In the first quarter of 2007, Roberts said 2% of Web-based homes purchased video content, primarily TV programming.
“We're starting to see growth,” Roberts said.
In December 2007, 141 million people watched 3.4 hours of online video, which Roberts said meant consumers appreciated the instant access to content.
In March 2008, Internet users watched 11.5 billion online videos, up 64% from the prior year period.
“By 2012, ad-supported video content will be the dominant form of online video,” he said.
David Klein, EVP with Centris, said video-on-demand (VOD) in March reached 28 million households compared to DVD, which topped 98 million households.
He said VOD, which has been around for 20 years, hasn't had the same affect that DVD had on VCR. Klein said VOD represents a different experience to consumers.
He said 46% of consumers view VOD as a way to catch up on their favorite TV shows. Another 44% view VOD as a means to watch new shows.
“This shows us that on-demand is a really great substitute for linear TV,” Klein said. He said broadband penetration reached 57 million homes in March.
Klein said the transition from analog to digital over-the-air broadcasts next February would result in the loss of about 7 million TV-viewing households.
Finally, Mitch Mallon with Image Entertainment's Egami Media said the terminology used in digital distribution was so fragmented throughout the industry that “electronic sellthrough” had five different acronyms.
“It's too much,” Mallon said. “We got a group together and said let's get all of our terms and see what we can define.”
He said the EMA's digital council had adopted 75 common terms and would announce about 25 terms reached by consensus in the coming weeks.
“The goal is to make it as simple and easy as possible,” Mallon said.
Also during Digital Media Day, the EMA bestowed its 2008 Digital Awards to recognize achievement in digital retailing, content and innovation.
The winners are:
Digital Retailer of the Year: iTunes
Content of the Year: Cloverfield
Innovation of the Year: YouTube
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