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Panel: Digital Delivery Not Yet Making Impact

26 Apr, 2007 By: Jessica Wolf

BEVERLY HILLS, Calif. — Despite all the hype and attention about digital delivery, there are few methods (outside free illegal filesharing) that are truly making a huge impact either in adoption or economics, panelists at the Milken Institute Global Conference said last week.

That does stand to change drastically as the market evolves and as the digitally connected “millennial” under-30 generation continues to grow, grow up and consume digital content, panelists agreed.

“Right this minute, there's probably not a model that fully works,” said Garth Ancier, president of BBC Worldwide America. It still remains to be seen how much tolerance consumers have for all the different variables in digital downloading, he said.

“It's confusing as hell, and I think it's stopping [legal video downloading] from really taking off,” said Mitch Singer, EVP and CTO of Sony Pictures.

The best thing would be to replicate as much of the ease and transparency of the DVD market as possible, he said.

“When people purchase a DVD they are actually also choosing the MPEG 2 codec, CSS copy protection, a red-laser product, but all they really know is they are choosing the movie they want to see,” Singer said.

The digital-downloading sphere is far more convoluted with all the different providers of video content, each with its own set of rules, necessary applications and digital rights management (DRM).

Earlier in the week, at the LexisNexis/Daily Variety DRM conference, Singer compared the convoluted DRM issues surrounding digital downloads to the ludicrous idea of selling DVDs and DVD hardware that only work together when purchased from the same retail outlet.

DVD would never have taken off if a consumer who bought a DVD player at Wal-Mart couldn't play a disc they bought at Best Buy or vice versa, he said.

For the future, Sony advocates a domain-based ecosystem in which consumers can manage legally acquired digital content across a variety of the registered devices in their homes regardless of where the digital file originally comes from or is purchased from, whether that's wirelessly via a mobile phone, Internet download or off a managed-copy enabled physical disc, Singer said.

One thing the digital revolution already has wrought is a myriad of new players to mix it up with the major content owners, said Michelle Wu of MediaZone, an Internet-based TV provider that offers subscribers niche and long-tail content from around the world.

“We strongly believe there's going to be a profitable business in digital downloading,” she said. “People do consume video online, but there are quite a few hurdles. There are content owners with extremely profitable businesses to protect, and they are reluctant to experiment.”

But there is some headway there too, said Phillip Alvelda, CEO and co-founder of MobiTV Inc. With 2 million subscribers of video-on-demand and subscription video — the most popular being episodic TV content — for mobile phones, MobiTV recently became the No. 8 TV provider in the country. Of course, that's just a drop in the bucket compared to the 200 million cell phone owners in the United States.

“It's definitely the early days,” Alvelda said.

While service providers and content owners scramble to tap into the growing consumer desire for digital content all the time anywhere and everywhere, they're also scrambling to stem the tide of free, illegal, digital gluttony.

One interesting thing the major studios have quietly done in an attempt to thwart digital piracy, Ancier said, is flood the Internet with unplayable or corrupted digital files of hot theatrical hits, in hopes that it will frustrate would-be file-sharers or digital pirates to the point that they turn to a legal, paid alternative.

Sony's Singer laughed and didn't deny that was a tactic.

There will be a time and place for digital video, said Kurt Hall, chairman, president and CEO of National CineMedia, which delivers digital content to 13,000 movie screens across the country. Studios seem to be committed to preserving windows, which is important because movies, especially big-budget productions, are still often a large-screen, communal experience, and they are likely stay that way, he said.

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