Top 10 Film Industry Stories of 2011: #5
Lockers Go Digital
By David Mumpower
December 28, 2011
Enter the cloud. This is a buzzword like “game changer” or “paradigm” that probably annoys you whenever you hear it due to its overuse. There is a reason why the cloud is the internet concept of the moment, though. Your computer comes with a hard drive whose size expands each time you upgrade it. In a world where 40 MB was once considered more storage than anyone would ever need, 4 TB drives are now available at reasonable prices. Still, to put the needs of the power user in perspective, I would need six of those to store all my current HD media. Yes, I am an extreme example due to my vocation, but all consumers have that same issue. The average Blu Ray requires 40 GB of space; ergo, a 4 TB hard drive could hold roughly a hundred movies. No hard drive on the market or on the immediate horizon will fit all of a digital hoarder's future media storage needs.
Compare that to the cloud.
The beauty of the concept is that there is no physical storage required for you, the customer. A content provider populates your entire library on their end. You have been using iTunes and Amazon long enough to understand the underlying mechanics for mp3s. The behavior is identical with regards to movies/television as it is with music. The difference is that due to the cash cow aspect of physical media, the cinematic digital rights owners have been reluctant to alter the nature of their marketplace.
While CD sales have steadily vanished over the past decade, DVD sales had largely remained solid until we reached a point where the back catalog of titles was largely plundered. The plan was to graduate consumers onto a new platform, Blu-Ray (or HD-DVD), just as had been the case with VHS to DVD. Netflix largely destroyed those plans when the upstart company emphatically proved that people prefer instant access to movies and television shows.
Customers simply do not want to take the additional step of either traveling to a store to purchase a disc or ordering it online then awaiting its arrival days later. A key aspect of any business is encouraging customer transactions as much as possible. What Netflix hit upon is that a generation of people trained to expect immediate gratification with musical downloads want their movies this way as well. Now is always better than later.
Simultaneously with Netflix spiking in popularity, Redbox discovered a price point that enticed consumers into renting more often. Primarily due to these two changing market conditions, movie disc sales started to decline at a precarious rate. DVD sales and rentals fell a startling 11.4% in 2010. And is always the case with the corporations calling the shots in Hollywood, declining profit forces adventurous forays into new marketplaces. This is why digital lockers have suddenly become hotbeds of activity for the major movie studios.
2011 marks the debut of Ultraviolet, an industry backed digital rights standard that may become a daily aspect of your life. Alternately, it may become a DIVX-ish punchline over the next year or so. These things are always impossible to predict. The undeniable fact of the moment is that if a consumer purchases an Ultraviolet title (you can find the list of qualifying releases at ultraviolet.flixster.com), they also attain a digital license to said title that never expires. Never.
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