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The burning issue affecting all sectors of the
entertainment and media industry is control. Gone are the
days when television and radio programmers enjoyed captive
audiences who happily sat through ad after ad or planned their
schedules around a favorite show. Consumers, especially consumers
in younger demographics, now demand more and more control
over what they watch, read and listen to. Issues related to
control include pricing of media usage (including free, illegal
downloads versus authorized, paid downloads or pay-per-view)
and portability (including the ability for a consumer to download
once, whether legally or illegally, and then use a file on
multiple platforms and devices).
Today, electronic offerings such as DVDs, personal
video recorders, video-on-demand and MP3 players have vastly
altered the way consumers enjoy entertainment. People watch
and listen according to their own desires and whims. Miss
the finale to a favorite television show? Rent or buy it on
DVD or record it to watch later. Interested in only one track
from a recording artist's new CD? Buy and download just the
one song from the Internet. Love a prime-time drama on a major
network but hate commercials? Skip over them with a personal
video recorder.
The implications of these changes are staggering.
The business models upon which most entertainment companies
have traditionally run are becoming obsolete. Revenue from
advertisers is in jeopardy while revenue from subscription-based
business models is soaring. Programming schedules are losing
relevance while electronic program guides are becoming more
and more vital. Traditional media are losing share while new
digital media are becoming the norm. Entertainment companies
are being forced to radically change to deal with new technologies
and new demands from consumers.
Rapid changes in viewing habits are already
occurring. Network TV news, radio news and newspapers all
find that they have to compete fiercely against Internet-based
news content. A large portion of sports programming has migrated
away from “free” broadcasts on TV and onto paid
cable channels and pay-per-view systems.
Meanwhile, platforms and delivery are evolving
quickly. Multipurpose cell phones will be used for more and
more entertainment purposes, including video and TV-like programming.
Game machines are going multipurpose with the ability to connect
to the Internet and to play DVDs. Broadband to the home has
reached the mass-market tipping point, while wireless broadband
systems such as 802.11g are enhancing the mobility of entertainment
and media access. A serious evolution of access and delivery
methods will continue at a rapid-fire pace, and media companies
will be forced to be more nimble than ever.
Recommendation software that learns the habits
and tastes of consumers will evolve and will do a better job
of pushing appropriate entertainment choices toward audiences.
Amazon.com has long been a leader in the use of such software.
Netflix has created an admirable package of its own. Likewise,
Apple’s iTunes software is strong on recommending content
to customers. Some interesting mergers might be driven by
the potential to use extremely powerful recommendation software
to attract and better serve consumers across multiple types
of entertainment media. How about a merger between Apple and
TiVo? Or maybe Amazon and Blockbuster?
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