We want video and we want it here and now
Listen up Hollywood, rock bands and Canadian mobile providers: the world is shifting underneath you
By Jim Harris
February 25, 2011
February 25, 2011
More than two billion YouTube videos are viewed daily, according to the company. Netflix is now a “streaming company which also offers DVDs by mail,” said CEO Reed Hastings, with a staggering 17 million U.S. subscribers streaming movies.
And manufacturers are responding to this video hunger. At the Consumer Electronics Show (CES) in Las Vegas in January, LG launched a smartphone with a dual-core chip and NVIDIA’s Tegra accelerated graphics chip. This device, and others to come, will allow users to watch and record full high-def video on their mobiles. And IDC predicts that by the end of 2011 mobile phones will sport quad-core chips.
Big implications
The trend towards streaming video is bad news for rental stores. It explains why Blockbuster went bankrupt and why independent and chain video stores will continue to struggle.
It also spells danger for Hollywood studios: physical media sales (DVD and Blu-ray) fell US$3 billion in America, from $19.3 billion in 2008 to $16.3 billion in 2010, according to a recent DEG survey.
As a subcategory, Blu-ray is up, but it still rests far below rosy industry projections. It was supposed to be “the next big thing” but consumers have been burned in the past, buying their favourite movies on VHS, then having to re-purchase the same movies on DVD, and now the industry expects us to pay again for Blu-ray copies.
As this is happening, online media has almost doubled as a percentage of overall consumer spending on home entertainment in the U.S., from 7.6 per cent in 2008 to 13.3 per cent in 2010. And digital sales are exceeding those of Blu-ray (US$2.5 billion versus US$2.3 billion).
This poses a serious challenge for movie studios: supply the younger demographic with mobile and streaming video content or lose customers. It’s that simple. And cellular companies face a similarly daunting challenge: find billions to invest in network upgrades, because video chews up much more bandwidth than text, voice or e-mail.
Demand and supply
And again, “proactive” is not a word one would apply to movie and TV studios. They seem to be holding back new releases from streaming services, wanting to receive higher revenue from physical media sales. That means Netflix, especially in Canada, is often limited to back-list movies, giving subscribers a big selection of mostly less-interesting titles.
But I am optimistic on the demand side: as the balance shifts to the point where the majority of consumers are getting their content by streaming, Hollywood studios will be forced to deal. That will mean falling fees for consumers, as the pricing models will be set by content streamers.
A bigger hurdle is the supply side, in terms of bandwidth. At CES, with hundreds of journalist packed into a single room for a press conference, we often couldn’t even tweet 140 characters because of strained cellular networks. So streaming live full high-def content from, say a rock concert, with thousands of other raving fans is fantasy.
But that concert content isn’t safe. Micro SD cards able to store 2 terabytes are coming, so smartphone wielding fans will be able to record in high def and rock bands will have to get used to their performances appearing on YouTube the day after the concert.
Business models for Hollywood studios, the entertainment, TV, cellular and cable industries will all have to evolve, and far faster than the entrenched incumbents realize. They will continue to resist the change, but eventually the new reality will simply be too much to ignore and these older industry bastions will either adapt or fall.
Jim Harris is the author of Blindsided, a number one international bestseller published in 80 countries worldwide. He speaks at 40 conferences a year around the world. You can reach him through LinkedIn or through www.jimharris.com.
And manufacturers are responding to this video hunger. At the Consumer Electronics Show (CES) in Las Vegas in January, LG launched a smartphone with a dual-core chip and NVIDIA’s Tegra accelerated graphics chip. This device, and others to come, will allow users to watch and record full high-def video on their mobiles. And IDC predicts that by the end of 2011 mobile phones will sport quad-core chips.
Big implications
The trend towards streaming video is bad news for rental stores. It explains why Blockbuster went bankrupt and why independent and chain video stores will continue to struggle.
It also spells danger for Hollywood studios: physical media sales (DVD and Blu-ray) fell US$3 billion in America, from $19.3 billion in 2008 to $16.3 billion in 2010, according to a recent DEG survey.
As a subcategory, Blu-ray is up, but it still rests far below rosy industry projections. It was supposed to be “the next big thing” but consumers have been burned in the past, buying their favourite movies on VHS, then having to re-purchase the same movies on DVD, and now the industry expects us to pay again for Blu-ray copies.
As this is happening, online media has almost doubled as a percentage of overall consumer spending on home entertainment in the U.S., from 7.6 per cent in 2008 to 13.3 per cent in 2010. And digital sales are exceeding those of Blu-ray (US$2.5 billion versus US$2.3 billion).
This poses a serious challenge for movie studios: supply the younger demographic with mobile and streaming video content or lose customers. It’s that simple. And cellular companies face a similarly daunting challenge: find billions to invest in network upgrades, because video chews up much more bandwidth than text, voice or e-mail.
Demand and supply
And again, “proactive” is not a word one would apply to movie and TV studios. They seem to be holding back new releases from streaming services, wanting to receive higher revenue from physical media sales. That means Netflix, especially in Canada, is often limited to back-list movies, giving subscribers a big selection of mostly less-interesting titles.
But I am optimistic on the demand side: as the balance shifts to the point where the majority of consumers are getting their content by streaming, Hollywood studios will be forced to deal. That will mean falling fees for consumers, as the pricing models will be set by content streamers.
A bigger hurdle is the supply side, in terms of bandwidth. At CES, with hundreds of journalist packed into a single room for a press conference, we often couldn’t even tweet 140 characters because of strained cellular networks. So streaming live full high-def content from, say a rock concert, with thousands of other raving fans is fantasy.
But that concert content isn’t safe. Micro SD cards able to store 2 terabytes are coming, so smartphone wielding fans will be able to record in high def and rock bands will have to get used to their performances appearing on YouTube the day after the concert.
Business models for Hollywood studios, the entertainment, TV, cellular and cable industries will all have to evolve, and far faster than the entrenched incumbents realize. They will continue to resist the change, but eventually the new reality will simply be too much to ignore and these older industry bastions will either adapt or fall.
