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Media Summit: Entertainment Change Coming

10 Feb, 2006 By: Anne Sherber

New York — The entire entertainment creation and delivery infrastructure is about to experience nothing less than a paradigm shift, according to attendees at the 2006 McGraw Hill Media Summit.

What media companies and movie studios might look like after this sea change? No one has a clue.

Many executives chose to put aside the very big picture issues and focus on specifics. High on the list of attendee concerns is how to distribute content digitally while managing content rights.

Even as the studios gear up for the coming war between high-definition DVD technologies, digital packaged media is on the wane, said several attendees.

“Ethereal media trumps packaged media every time,” said Adam Bain, VP, technology and production at Fox Sports Interactive. Bain said that in both quality of viewing and in the ability to access content when and where consumers want it, downloading and streaming will eventually become the delivery method of choice, particularly in the face of a packaged-media format war.

But even the technology-bullish Bain noted that Fox wades cautiously into new media. He said there is a company-wide philosophy. “We look for three pillars when deciding to invest,” he said. “Does the product or platform connect, entertain and empower both consumers and advertisers?”

Most executives agree that the entertainment industry is not helping itself by engaging in another format war.

“HD DVD consumers are going to be very confused for the next five years,” said Steve Wadsworth, president of the Walt Disney Internet Group. “It will be difficult for consumers to make decisions. So many of them won't. They won't do anything.”

But, according to Jean-Briac Perrette, SVP, new media and CFO, NBC Universal Cable, even as studios duke it out over technology, it's very possible that consumers will endorse a variety of platforms rather than selecting one. Consumers have demonstrated over and over their willingness to pay multiple times to watch the same content, Perrett said.

“The majority of people who buy the DVD have already seen the movie,” he noted.

And not everyone believes that the demise of packaged media is imminent or, even, positive. According to at least one analyst, it remains to be seen whether Hollywood can leverage new platforms into applications that provide a profitable model. Tuna Amobi, a senior equity analyst for media and entertainment with Standard & Poor's Equity Research, noted that the lightning fast development of potential technology has left content producers with whiplash and consumers scratching their heads. It's possible, Amobi said, that this rush to new technologies will so profoundly disrupt existing business models that some content providers, including studios, could be casualties.

Even with competing formats and confusing anagrams such as IPTV (internet protocol television) and DVR (digital video recorder), consumers are moving toward convergence and connectivity in spite of themselves, according to Keith Hindle, VP, interactive and marketing, for Freemantle Media, producer of “American Idol.”

“I'm amazed at how many households have their PC in the same room as the TV already,” he said.

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