Every day your hard drive gets a little slower; a little more portly from gorging itself on the buffet of images, films, and songs available to us all digitally. Change is coming though, and the sages of Silicon Valley are moving away from localised, physical media, and towards online storage with the lofty name, cloud computing.
The idea is simple; with the ubiquity of internet access we're approaching a point where it will make more sense to have your data backed up redundantly in the cloud, rather than on your computer's hard drive. Google has embraced the concept internally, and released an Android-based net book for Google employees that has no internal storage; everything is saved to the cloud.
But the cloud phenomenon isn't just about spreadsheets and presentations, and a time may come when physical media, whether it's your external hard drive full of MP3s or that stack of DVDs you keep on a shelf, will largely be a thing of the past.
Cloud cover
With typical savvy, Amazon is plotting from amid the evergreens in Seattle and plans to take the concept into the entertainment realm. The company recently launched Cloud Drive and Cloud Player, which offer US-based Amazon customers 5GB of online storage for music, books, movies, or anything they like, with the ability to stream that content to their Android phone or web appliance. Buy one album from the online behemoth, and Amazon quadruples the amount of storage.
Unfortunately for UAE consumers, the future of streaming premium content is, er, cloudy at best. For one thing the licensing involved in making this happen is an extremely complicated business, and those companies who compete in the on-demand content arena in the US face steep competition and potential conflict with the studios, who have an interest in protecting more conventional distribution channels.
And yet, the current crop of offerings in the US, where subscription and a la carte models are offered by companies like Netflix, Amazon, and Apple, give consumers with a broadband connection almost immediate access to new release movies, TV programmes, and a variety of older content.
Look to the US
On a visit to the US in 2009, I was both amazed and slightly jealous when I watched a friend order and view a new-release film in HD, streaming the content from Netflix to his TV with the push of a button. While it's unclear when this level of direct access to content will arrive in the UAE, one thing is certain; the US sets the precedent for sweeping changes in content distribution.
One might conclude, and rightly so, that the DVD will eventually follow its cousin the CD into oblivion. CD sales have slumped over the last decade as MP3 has largely replaced the physical CD format. But predicting the timeline is another matter, and DVDs are still an important type of physical media, in fact DVD sales are alive and well, and play a crucial role in Hollywood's most prestigious popularity contests, the Oscars and the Emmys.
"I'm a member of the Producer's Guild," explains Filmmaker and Supervising Producer at the History Channel, Aaron Goldman. "I receive awards screeners on DVD from November to January. This is awesome because we get all the award-bait films that are still in theatres, and with kids, it's much easier than finding and paying for a babysitter."
Goldman, whose own film Dreaming in America is available on DVD, doesn't actually buy the discs himself any longer. "I stream netflix through my xbox," he explains. "I love it. I also have cable TV," he adds, perhaps in a nod to his employer.
‘Still worth billions'
To find out whether Goldman's usage patterns might typify a growing movement away from DVD rental and purchase, I spoke to another Hollywood insider, this time on the distribution side of the business. Andy Reimer, founding partner at Inception Media Group, and former Senior VP of distribution at HBO Video.
"The DVD market, although certainly not likely to ever be as important and as meaningful as it once was, is not likely to go away for the foreseeable future," he insisted. "Aside from the fact that the DVD marketplace is still generating billions of dollars of annual revenue - something that most alternative digital delivery methods have yet to attain - the penetration of DVD players themselves remains greater than virtually all alternative methods of delivery across the majority of households."
But while DVD itself retains a robust place in the market, its physical successor, Blu-Ray, hasn't enjoyed a high rate of adoption, and that bodes poorly for physical media in the long run. "It feels as if the wide scale penetration that the industry had hoped for will likely be eclipsed by non-disc delivery methods," offers Reimer.
"One would have expected that consumer resistance would have been overcome at a point when the price for [Blu-Ray compatible] DVD players fell to a sub-Dh360 price point, which was something that was achieved in late 2010."
But as Reimer went on to explain, that never happened. And while Blu-ray has seen growth, "it isn't at anywhere near the level as DVD distributors might have hoped." Reimer suggests that, if distributors had faith in Blu-Ray as a format, they'd force the issue by releasing popular new releases exclusively in the dominant HD format, particularly now that it's one time rival, HD DVD, is extinct. "The fact that several years after the introduction of Blu-Ray, we aren't likely to see such an occurrence on any kind of regular basis, if at all, speaks to the fact that the newer disc technology hasn't taken hold on the larger scale."
What about the pirates?
With the DVD's physical successor struggling to find its legs, it can only be so long before TV and movies, like music before them, are decoupled from the limitations of physical media. Clearly, this has broad implications for piracy, and Reimer concedes that the economic landscape of filmed entertainment may be greatly altered by the growing threat of piracy. But there may be reason for hope. "I think that there is a much greater level of consumer awareness and understanding regarding IP [Intellectual Property] and the notion that the content that is downloaded for free is illegal and, ultimately, bad for the business as a whole.
"That said, I think it's unlikely that distributors and broadcasters will be able to stay entirely ahead of piracy."
Good luck Hollywood, we're pulling for you.
Full Q&A: Andy Reimer
Making an educated guess, how much longer do you think DVD will be around and, will Blu-Ray really ever take off on a large scale? Why?
The DVD market, although certainly not likely to ever be as important and as meaningful as it once was, is not likely to go away for the foreseeable future. Aside from the fact that the DVD marketplace is still generating billions of dollars of annual revenue - something that most alternative digital delivery methods have yet to attain - the penetration of DVD players themselves remains greater than virtually all alternative methods of delivery across the majority of households.
As for Blu-Ray, it feels as if the wide scale penetration that the industry had hoped for will likely be eclipsed by non-disc delivery methods. One would have expected that consumer resistance would have been overcome at a point when the price for (Blu-Ray compatible) DVD players fell to a sub-$100 price point, which was something that was achieved in late 2010. That did not happen. Although Blu-Ray penetration has grown considerably, it isn't at anywhere near the level as DVD distributors might have hoped. In fact, a telling, benchmark moment would occur if distributors were to choose to release bigger titles on Blu-Ray exclusively and forego traditional DVD. The fact that several years after the introduction of Blu-Ray, we aren't likely to see such an occurrence on any kind of regular basis, if at all, speaks to the fact that the newer disc technology hasn't taken hold on the larger scale.
Do you personally purchase/rent video content online and if so what service do you prefer and why?
I utilize different online services for different things. I purchase a lot of content from the iTunes store. I appreciate the breadth of content and the high technical quality of the content I buy. There is also simplicity and ease of use in terms of the consumer experience. I use the Netflix's streaming service. It is easy and intuitive although, as a service that competes with other players in the subscription arena, the content offerings, particularly for newer content doesn't compare favorably with some of their competitors. That said, as a satellite customer and pay TV subscriber, I'd like to see the faster rollout of services like HBO GO. There seems to be no timetable that's been shared with satellite customers in terms of when they'll be able to take advantage of the newer, online Pay-TV offerings. I will also, on occasion, use Hulu. I think that the advertising insertions are presented at a tolerable level and, for the current episodic programming I might have missed or forgot to record on my DVR, they provide a satisfactory alternative outlet.
Do you think a subscription based model with broad access to au currant, quality content would help stem piracy? Can you see an argument for or against one license for a large basket of content?
I think it all comes down to easy accessibility and price. iTunes became the largest audio retailer by focusing intently on these two things. If you want to buy individual songs, there is a 'one price fits all' model (a model that has subsequently evolved). Same with full albums. If you've already bought songs and, later, want to buy the full album, there is an easy, automatic transaction that will deduct the cost of what you've already purchased.
Time will tell as to whether that large basket of video content will be offered in a bundled way or on an a la carte basis. Again, it's price and accessibility. Some consumers may not care. Most, however, will bridle if they feel that they have to pay an excessive price for that large basket containing many things they're not interested in viewing or subsidizing.
How important is timeliness for streaming content? Netflix seems to be struggling to license premium cable content for release on a timely basis is this to protect the subscriber basis of those premium networks, or are there other factors at play?
I believe that the timing and availability issue are significantly important to many consumers, as evidenced by the criticism leveled at Netflix, despite the fact that they have millions of customers who are really enthusiastic about the ability to easily stream content under an attractive pricing model. The general consensus seems to be one where customers say, "I like this product. I enjoy being able to subscribe and see content when I want, on the device that I want. I just want more of it." I suspect that this is an unsolvable problem within the current price structures that the business operates under.
Pay TV services have paid billions of dollars for the rights to show premium content within their 'post DVD/VOD' window. Those companies have no intention of relinquishing their position in the food chain. And in the same way that cable/satellite subscribers must subscribe to an expensive Premium Pay TV tier that delivers multiplexed Pay TV channels in order to be able to get all of the content that is available in that window, so too will they have to subscribe to multiple streaming services in order to be able to watch HBO or Showtime content on a 'Netflix-like' streaming basis. The studios and the Pay TV services have made a huge investment in this content and have been moving in the direction of a subscription that allows for On Demand viewing for years. The success of Netflix's streaming service will likely only accelerate this process.
What lessons can film and TV learn from the music industry now that bandwidth increases, cyber lockers, and torrents seem to be increasing the piracy of film and TV?
Music piracy has changed the economics of the music business such that bands that used to tour to support their albums, now tour to support themselves. There may well be a different economic structure in the world of filmed entertainment in the wake of continued proliferation of piracy. I think that there is a much greater level of consumer awareness and understanding regarding IP [Intellectual Property] and the notion that the content that is downloaded for free is illegal and, ultimately, bad for the business as a whole. That said, I think it's unlikely that distributors and broadcasters will be able to stay entirely ahead of piracy.
If not, there will likely be a day of reckoning when it becomes less and less feasible to invest in filmed entertainment should it be impossible to adequately monetize that investment. How this plays out in the long term, I don't think anyone knows for certain but I believe that changes in viewing/purchasing habits come gradually and, certainly, over a many year time span.
I think that the best thing that distributors can do is to make sure that content is available through a wide variety of outlets that provide a wide number of pricing options. The world of theatrical exhibition is doing all they can to forestall the ever encroaching collapse of traditional windows but I believe that day and date availability across platforms will help to stem the use of piracy as well. I think that the time has come and the technology has grown to the point whereby consumers are savvy enough, wired enough and desirous enough that they want to be able to watch what they want, on the screen that they want. If that means going to the theatre and paying $10 or $12 or $14 dollars for a movie ticket, fine. If that means that, on the very same night, I can pay $30 or $40 or $70 to watch it in my living room that ought to be fine as well. At the end of the day, however, it all comes down to availability and price.
At 20 gigs (with mp3 purchase) Amazon’s recently announced cloud player service seems targeted at music only, at least for now. Looking forward, assuming storage and connectivity continue to improve, could a similar model work for films and TV? Google and Amazon seem to betting on the cloud, with Apple trailing behind.
It seems entirely conceivable that, with enough storage and speed, a cloud-based player could be utilized for filmed entertainment. It seems to be more a question of when, not if, all screens in homes are wired with internet access. A cloud player would be one alternative that will certainly appeal to consumers, as will the ability to view video content via the many millions of consumer iTunes libraries, the premium subscription services (HBO Go, Netflix, etc.), and early window VOD. In a business where DVD retail is mature and DVD rental is very mature, EST models are being looked upon as the next iteration that can generate substantial revenues. Those revenues won't, in my opinion, be realizable until they are as instantly and easily viewable on a 50-inch screen as they are on a computer monitor or a smart phone.
Do you think ISP’s benefit unfairly from IP theft?
No. The bigger ISP's are, in most cases, part of big, multi-tentacled companies. Whether they are telcos or cable MSO's, they are often in some measure already in business with content producers and/or distributors. Additionally, in almost every case, they also are content retailers themselves, intent on selling (and sometimes re-selling) their programming to their subscribers via numerous different platforms. IP theft hurts everyone along the distribution pipeline, ISP's included. Lastly, to suggest that ISP's might benefit unfairly from IP theft implies that they are somehow able to monetize that illegal activity. My guess is that the number of internet subscribers who (a) subscribe primarily to take advantage of illegal downloading opportunity and (b) who wouldn't otherwise subscribe if they couldn't take advantage of that illegal opportunity, is extraordinarily small.
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