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Viodi View Newsletter - September 28, 2005

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Some Wisdom from Digital Hollywood

By Ken Pyle, [email protected], Managing Editor, Viodi View

Download to own is becoming real, where consumers can purchase content via the Internet. In this scenario, customers can burn the content to a DVD or, in the case of Akimbo, store the content remotely on servers in what Akimbo terms, “virtual shelves.” That aggregators are talking directly to the groups who are responsible for Home Video (e.g. DVD sales, not PPV or VOD), indicates that the studios are truly taking an interest in this approach.

Allan Citron, Senior Vice President of Marketing for Movielink suggested that, ‘the real winner will be sell-through [download to own].” He went on to say that studios have always been good at monetizing content. He believes that the more interesting thing is the dramatic change in the attitude of the TV networks as they are realizing that they can monetize their assets. This started with the DVDs and, since they don’t have the same window restrictions as the studios could quickly move into the online world. Thus, the Google/UPN streaming deal could be a foretaste of what is to come with television.

Curt Mavis, CEO of CinemaNow said the technology is too restrictive to provide customers with the utility that they want with downloaded content. That is, downloaded movies today will only play on the device that it has been downloaded to; there is no portability. Customers want to be able to view on screens other than the PC and to be able to take to other devices. Mavis also suggested that the studios have a classic channel management problem as they have to balance their online sales efforts with their retail sales channel represented by Walmart.

Hilmi Qzguc, CEO Maven Networks, which is a company that powers branded Internet TV networks (streaming, back-office, etc.), suggests that the big driver for Television over the Internet will be advertising. He cited how Pepisco is producing and licensing content. Qzguc warned that if the networks do not move, then the advertisers will create their own channels. Maven is doing some interesting things with controlled broadband Internet networks, where they create channel line-ups that can be delivered to the PC or to a IP enabled set-top box.

Rights Management:

I did not have a chance to go to any of the panels on Rights Management at Digital Hollywood, but I did have a chance to interview Russell Reader, CEO of Rightsline. Rightsline is a company that provides the back-office infrastructure to give media companies the ability to manage rights associated with their assets. To some extent, any company that has any intellectual property or has rights to another entity’s intellectual company is a media company.

Rightsline primary customers have been film, music and content aggregators, such as EMI Music, Universal Studios, Sprint and National Geographic Film Television Library. Cable operators and telcos could be prime candidates for their software solution. Rightsline believes their software is mandatory as content aggregators increase the number of platforms in which their content is available (e.g. wireless, retail, IPTV, etc.), the volume of purchases increases and as the average dollar amount of each purchase decreases (e.g ringtone purchases).

They state their biggest competitor is the internal I.T. departments. With Angel investment from Hollywood executives and management from Oracle, they have been honing the requirements for what media companies require since late 1999. From my DemandVideo days, I remember wishing for a product like this to manage the various rights provided by content providers. Available as an ASP [Application Service Provider], MSP [Managed Service Provider] or licensed basis and starting at $3,000 per month, this could definitely have application with any telco with numerous content contracts to manage.

Once the content is in the home, moving and distributing it is a real challenge. Ron Pait, Director, Global Consumer Storage Marketing for Seagate, stated that just over 1 bilion CES devices will be sold this year. Hard-drive attachment will be part of 9% of those going to 14% by 2008, so the market for storage is going to continue to explode. He went on to say that consumers are looking for unlimited ways to store content and don’t want to worry about having to manage that content.

Savvis’ Darcy Lorincz suggested that many customers will want to outsource their content storage. Clearly, there are some compelling arguments for this and some independent telcos have tried offering this service, but the verdict is out on how to make consumer grade storage a profitable offering.

Jordan Greenhall, Founder and CEO of DivX, announced that DivX is launching an online video service that will simultaneously support multiple devices (cell phones, PCs, DVD players with integrated Ethernet). They are looking at launching this service in Q2 of next year. The content will include premium content and free content (e.g. user-generated). The DivX player is free and is already embedded on millions of devices, so this could be an interesting play.

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