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Digital Media Event Ponders Future Business, Consumers

8 Oct, 2014 By: Stephanie Prange

The younger generation doesn’t like to commit.

They, more than others, like to rent rather than own digital entertainment, and they prefer a short relationship with content on services such as Netflix rather than the commitment of owning, according to statistics presented at the Digital Media Pipeline 2014, presented by the Entertainment Merchants Association in Los Angeles Oct. 8.

This growing trend runs counter to the studio revenue model, which favors the ownership plan. How to get consumers to collect digital content is a burning question in the industry.

Mitch Singer, president of the Digital Entertainment Content Ecosystem (DECE), the cross-industry consortium behind UltraViolet, thinks human nature favors collecting.

“I think it’s in everyone’s DNA,” Singer said. “Look. They have a TV program on hoarders.”

Making the digital experience match the value of the physical is a key challenge, said the former Sony executive, who said his new role allows him to take a wider view from every studio perspective. Digital collections need to be more easily shared “if we are going to re-create that ability to collect,” he said.

“Maybe UltraViolet ultimately becomes that platform,” Singer said.

UltraViolet’s common file format at first concentrated on downloads, but now is also focusing on streaming.  He told the audience that creating disruptive technology is “very challenging.”

“Instead of trying to force it [the service is now aiming to] organically grow,” said Singer. “I think it’s the right thing to do.”

The concept of walled gardens, in which consumers lose their content when they leave a service, is in trouble, he said.

“How do you win if you ask the consumer to buy everything again from you?” Singer asked. “I think the consumer will have to have the confidence that the things they buy, the things they own, they can take it with them when they go.”

He also said 4K, despite its detractors, is “unavoidable,” as TVs sold in stores will upgrade, pushing out other models. Still, making consumers pay more for 4K content may be difficult.

“We will have 4K discs and 4K players,” he said. “I’ve seen some 4K streaming technologies. I think it’s going to be a combination of them all, but I think it’s going to be a question if consumers will pay a premium.”

On the subscription rental front, Netflix is concentrating on service.

“The big growth is making services more convenient,” said Tracy Wright, director of global content operations at Netflix. “It’s always about making our service easy, convenient, simple.”

“Streaming and the subscription model is much more easy for the consumer to understand,” added fellow panelist Duncan Wain, COO of ZOO Digital. With digital downloads, he said, “Where do you put it? Where do you store it?”

Still, having great content sooner is important, as evidenced by the fact that Netflix’s access to “Breaking Bad” in the United Kingdom a day after its broadcast was a real success, Wright noted. Licensing in the U.S. prevented domestic Netflix subscribers from streaming that content immediately after broadcast.

“Consumers have a shortened patience,” Wright noted, adding Netflix executives ask themselves, “How can we get great content into the market sooner?”

Wright also discussed Netflix’s move into international markets, saying the recent push into France, Germany and other European countries was very challenging in terms of size.

Another big challenge in international markets is “trying to get the content delivered,” said Wain, whose company helps with processing content for digital services. “There’s also the challenge of finding enough German translators to make subtitles in time.”

Subtitles are important in ways other than bridging the language gap, panelists noted. For instance, Wright said young people, based on anecdotal online evidence, are obviously using subtitles to watch Netflix in class.

A digital hurdle in all markets is non-standardized metadata, the file information required to deliver content to various services, Wain said. The EMA and DEG: The Digital Entertainment Group are working to standardize that information delivery, and executives from Netflix and other companies outlined the metadata working groups’ progress at the conference.

Panelists also discussed video and audio quality, as well as special features, in the digital environment. Veteran analyst Russ Crupnik, managing partner, MusicWatch, said access, rather than extras, was most important to digital consumers. Still, he noted that more than a third of the top albums sold on iTunes in a select week were deluxe editions, indicating that, if music is an indicator, consumers may gravitate toward premium content “even though we haven’t unlocked the code yet [on video].”

Panelists noted that extras-laden titles on iTunes are attracting sales and that Sony and Warner are adding extras to EST titles on Vudu.

“What we are trying to do is make the ownership experience the premium experience [in the digital realm],” said Rich Berger, SVP of worldwide digital strategy and advanced platforms for Sony Pictures Home Entertainment.

Extras in the digital world must ultimately answer the question “how does that content live a breath with the consumer?” said panelist Paul Davidson, SVP of film and TV at The Orchard, who previously worked on Xbox online content. “Consumers must feel that they can return to the content and have a new experience,” he said.

Interactive elements are key, but it all still comes down to content and finding it, said Erik St. Anthony Pence, president and founder of Inception Digital Services.

“You simply can’t find things,” he said. “There’s a lot of great content out there — the movies themselves — that you simply can’t find.”

Social media may be one way to discover and disseminate content, panelists noted. Berger noted that the “clip and share” feature on Vudu Extras Plus allows friends to share favorite scenes and discover content.

Extras in the digital realm are a work in progress, noted panelists.

“There will be another panel here in five years talking about the same thing,” Berger said.

As evidenced by comments on a digital consumer panel at the conference, branding and marketing of premium digital ownership itself is also a work in progress.

When asked what Digital HD, the industry supported brand for EST, represented, one consumer answered “greater quality” but another thought it had something to do with the PlayStation 3 game console.

Asked what UltraViolet was, the panelists were puzzled. One gingerly offered, “My favorite color?”


About the Author: Stephanie Prange

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