2007 is shaping up to be the year of ‘on demand’ entertainment. Apple will consolidate its media pedigree by adding more video to iTunes as well as bridging the gap between the computer and the home television with its ITV device. Peer-to-peer technologies like Bittorrent and The Venice Project (recently renamed "Joost") will go legit, as publishers discover bandwidth savings from decentralised distribution. Upstart aggregators like YouTube will try and toe the line on copyright infringement. And Studios, just like music labels, will wake up to the fact that consumers are starting to view channels as another form of forced consumption, like record albums.
This is where some of the massive investments in social networking platforms made in the last few years should start bearing fruit. Shared preferences in movies, television and music are at the heart of many communities like MySpace, Cyworld and QQ. If you add in the ability for social recommendations to initiate ‘on demand’ entertainment purchases, then you have the beginnings of a new kind of channel aggregator. It’s not a new idea. Using online community to generate entertainment sales is a model that is already working in China in the mobile ring tones space, where traditional CD sales are beset by piracy issues.
Linear broadcast will not go away. Niche channels are still a great way to discover that you didn’t know you were looking for. But on the whole, channels will need to rethink their aggregation model if they want to continue being valuable to consumers. Assembling material for an average consumer demographic is not enough. Packaging needs to be more personal.
There are three main hurdles that need to be overcome this year. The first two are tricky, but not insurmountable. They are rights and technology.
The issue of rights is a pragmatic one. Most channels and TV networks license third party with limited rights that rarely extend to new media platforms like mobile or internet. That makes it tough for channels to extend their linear broadcast brands into ‘on demand’ platforms. creators can usually get all the rights they need, but by going direct to consumers they will increasingly hurt their traditional distribution partners.
The second problem is technology. Protecting from piracy is always going to be a moveable feast – with enough smart kids, cola and computers, nothing is unhackable. But that’s not a complete disaster. People are still prepared to pay for even when they can get the same MP3 or video clip free from an illegal source. The important thing is, consumers are no longer just paying for entertainment. If it’s on iTunes, they are also paying for the complete experience of a quality authorised clip, with embedded data, properly organised, formatted and neatly delivered to their device. It’s the 21st century equivalent of nice packaging.
Which raises the final and toughest hurdle: money. Whether it’s pay-per-view or inserted advertising, the simple fact is, the incoming business model for ‘on demand’ entertainment does not appear to be as large or as predictable as the model it replaced. For all of its faults, the Studio system of producing television and filmed entertainment was able to mitigate production risks through pre-sales to distributors and aggregators worldwide. The end audience mattered, but not until it really didn’t. Many people are now wondering whether the new landscape will be able to continue to support high budget features.
It’s an open question. Certainly, the book hasn’t been closed on how to monetise entertainment . But one thing is certain. The instant gratification genie is out of the bottle. And there is no going back.
Mike Walsh is a commercial strategist in the media and entertainment sector. You can read his daily weblog at mike-walsh.com
