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Digital Hollywood; The Future's Streaming

5/4/2012 by: Roy Taylor

It's a fascinating thing to be from the tech industry and live and work in Hollywood. The gulf between 'norcal' and 'socal' is enormous in terms of culture and attitudes. This can be particularly felt with regard to attitudes over the internet and the digitization of the entertainment industry. Witness the recent debacle over SOPA/PIPA.

Now the Digital Entertainment Group reports that 'homevideo', which means everything sold/transmitted into the home, sales are up 2.5% for quarter one. Sales are up across the board but what got my attention was subscription based streaming is up 545% which generated $549m of sales in the USA. That's huge growth. At the same time Netflix saw its disc-by-mail service fall 48%.

What these numbers don't reveal is that in addition to the above-the-counter-streaming are the quite vast volumes of below-the-counter-downloads of movie and TV content. It's difficult to get numbers for these services but according to the report based on MegaUpload's servers - it's staggeringly huge. The article linked to the site states that "MegaUpload accounted for 20,405 gigabytes, compared to 17,573 for Dropbox and just 86 gigabytes for the business-focused Box.net". So, we can assume that streaming/downloaded content is enormous.

The MPAA, the organization that represents the interests of the movie and TV industry in America, reaction to this is to try and stop the flow. Clearly that didn't work out and it's unlikely that it's going to ever be possible. The fear is that what happened to the music industry is going to happen to movies/TV. In 1999 the music industry total sales in America were in excess of $14bn and today they are less than half this. There is every reason to believe that this will/could happen to movies and TV too. The impact on Hollywood would then be devastating. Yet there is hope if lessons from the music industry could be applied.

By adapting to the digital age the music industry is turning things around. Digital sales of music rose by 8% last year and passed the $5bn mark. Services such as iTunes, Pandora and last.fm streaming music to mobile devices contributed greatly. Those users illegally downloading movies and TV from the likes of MegaUpload are paying for the content - but not to the studios. These download services business models works on the basis that users have to pay for a premium, uninterrupted download. Given that few download services cover all of the desired content many users pay 2-3 different services approx. $10 a month each. That money could go to the studios if they learnt to aggressively roll out more streaming services and make premium content available faster.

Right now Netflix, Hulu, Vudu, etc. are great but the content is not always current. HBO Go is better in making available current content and is enjoying great success (HBO Go is currently available only in USA, Bosnia, Croatia, Serbia and Slovenia). But what's needed are streaming services that make available TV series and movies at the same time as they are released anywhere.

This is controversial for Hollywood where staged releases are part of the science and art of the entertainment industry. But iTunes showed that if you make it easy for people they will 'do the right thing' and pay. When a new song comes out users don't have to wait to download it until some date after the CD release, so couldn't Hollywood adapt in the same way? Pricing too may need to change given that some have said that movies should actually be cheaper than music since music has a replay value that movies don't have. Personally that seems a little extreme, not least because production costs are entirely different.

One thing is for sure, streaming and downloading is here and here to stay. To try and stop it is as pointless as asking the sea to keep still. The success of streaming and its support so far is encouraging. It's going to be an interesting few years for the entertainment business.

Tags:

Norcal, Socal, Hollyood, Tech, Tech Industry, Entertainment, Entertainment Industry, SOPA, PIPA, CISPA, ACTA, Digital Entertainment Group, MPAA, MegaUpload, Box.net, Dropbox, RIAA, Music Industry, DEG, homevideo, MegaUpload, Dropbox, Box.net, iTunes, Pandora, Lastfm, HBO Go,