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Security, Convenience Key to Online Digital Entertainment

30 Nov, 2004 By: Kurt Indvik

The three-ring circus that is online and on-demand digital entertainment has plenty of balls in the air that haven't come down yet.

It's a world full of opportunity and unanswered questions as industry executives freely admitted during a recent conference in San Diego, produced by Parks Associates, an industry research firm.

Executives from the spectrum of players, including CE hardware and software, cable TV and Internet, Hollywood and many other industries focused on several key issues facing the development of on-demand digital entertainment.

Whether that entertainment is delivered into the home via the Internet, cable, satellite or phone line, the critical factors are that the industry will need to provide simple access and great content, and deliver it on a platform that provides the digital rights management (DRM) and security studios require before they jump in.

There will likely be no one clear winner when it comes to which business model dominates the landscape in the future, any more than there will be one dominant delivery platform or even DRM format. Indeed, the world of digital entertainment will be a miasma of different types of digital content coming at consumers in different windows at different prices. Three primary models — a la carte video-on-demand (VOD), digital subscription services (SVOD) and packaged media — will continue to be the basis of most offerings.

“It's not giving them more content. It's giving them what they want at the time they want it,” said Peter Lee, VP, business development new technology at Walt Disney.

And as the younger generation, who is used to “owning” content in digital form, grows into mainstream consumers, this content will reside on a media PC or some sort of set-top box device, executives said.

“Users will have a select few pieces of content saved on packaged media, and the rest will be digitally stored,” said Bob Engel, director of marketing, HP Digital Entertainment.

The industry “doesn't go anywhere” without content, panelists agreed, and one of the big issues for content providers is the development of DRM solutions that protect the content from illegal use.

“We look at this as the interchangeable solution that is missing,” Lee said.

Executives don't expect standardization as much as workable technology and practices that fit any number of different business and delivery models.

“Our vision is that there will be multiple DRM around the world,” said Bill Leszinske, Intel's director, digital home marketing and planning for desktop platforms. Intel even has a team looking into the development of concepts of digital “fair use rights” for users and suppliers. That is, what it is that users reasonably expect to be able to do with digital content they pay for, balanced by suppliers' need for fair compensation of the content they have sold to that user. These are efforts, executives said, that would be better for the industry to work out with customers rather than having the government stepping in to make that determination.

If players in the online video delivery business are looking to pick a moment when the business of digitally delivering video to the consumer hits a landmark, “the middle of 2006 is when everything lines up,” stated Jordan Greenhall, CEO of DivXNetworks in another panel. That is when he sees broadband penetration, HDTV and high-definition programming, home networking PCs to TVs and DRM issues evolving to make online a major business channel for studios and other content providers.

“The Internet is a viable channel of distribution,” said Movielink's CEO Jim Ramo. “The economics of delivery are workable. We're reducing the costs almost daily.” To move consumers to a new way of getting their entertainment, “the platform needs to be ubiquitous,” said Ramo, who points to the Internet as the one channel capable of coming close to that penetration today,

far more than high-speed cable or telco pipelines. “Hollywood gets it,” he said. “The Internet is the only architecture that can deliver all content to all users all the time,” said Steve Shannon, founder and SVP of Akimbo.

Interestingly enough, even Starz! Encore, provider of movies-on-demand on cable TV, launched in June Starz! Ticket on Real Movies, a subscription service offering some 100 films on the Internet. One key element in the online business, said Bob Greene, Starz! Encore SVP, is that the company can have a much richer interaction with its customers online, since it can obtain information about who the customer is and what he wants online, whereas with typical cable VOD, the cable operators have the relationship with the customer, and the content provider has no idea who is watching what product.

And while service providers such as cable operators and telcos hope to be able to get into the content business with content partners, Tripp Rea, chief strategy officer for Kasenna, a streaming video technology supplier, believes it's going to be a “contentious” relationship between service providers and content suppliers.

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