Next-Gen Media: The “Display Daily Thirty”

There’s been so much happening in the worlds of packaged media and media distribution over the past week that I’m just going to provide quick recaps and analysis today, a la ESPN’s “The Thirty” program. See if you can spot the trends!

inmotion-0510News item: NCR announces it will install digital download kiosks at 35 airports. NCR and MOD Systems have been experimenting over the past year with movie and TV show downloads to secure SD memory cards and flash drives via kiosks in select retail locations. Now, the program is rolling out nationally in a partnership with InMotion Entertainment, with kiosks to be spotted in 57 locations in 35 airports across the US.

Remember InMotion? Their original business model, circa 2000, was to rent DVDs and portable DVD players to air travelers. The discs and player were picked up in one city and dropped off in another, or returned to the city of origin. But cheap laptops with built-in DVD drives and portable media players like the iPod put a big dent in that revenue stream.
Now, customers use InMotion kiosks to download feature films, TV programs, and music for playback on Windows-based laptops, netbooks, and tablet devices. Download times are fast — NCR and Mod Systems claim two minutes for a typical movie — and prices are competitive with online and in-store rental and purchase charges. Rental customers have 30 days to start a movie, and 48 hours to watch it once they begin.

hulu-logo-0510News Item: Hulu will start charging subscription fees. A story in the Los Angeles Times says that on May 24, Hulu will start testing a business model that would provide the five most recent episodes of programs on Fox, ABC, and NBC for free, but charge $9.95 per month to access older content.

According to the story, Hulu has generated over $100M in advertising revenue during its two-year existence, but that number pales in comparison to conventional TV advertising income. One reason for that is the smaller commercial load carried by Hulu programs, which is expected to eventually rise to the same level of TV programs. (Comcast, which is trying to acquire NBC Universal, has been a vocal proponent of moving Hulu to an all-subscription model.)

seagate_logo-0510News Item: Seagate adds video streaming to media players. Seagate, a long-time manufacturer of hard disk drives, has added Netflix streaming functionality to its FreeAgent Media+ HD media players (Are there any products left that don’t stream Netflix?). In addition, users will be able to access YouTube, vTuner, and Mediafly sites to watch Internet videos.

Earlier this month, Seagate announced it would ship their FreeAgent Go 500GB portable backup drives with 21 pre-loaded movies from Paramount, including Star Trek (a free viewing after online registration). The remaining 20 movies can be unlocked at prices ranging from $9.99 to $14.99.

The idea is to kick-start a customer’s home media library by simplifying the purchase of additional titles, although you may not care for Seagate’s pre-loaded selection, which includes such ‘can’t miss’ gems like Jackass 2.5, The Love Guru, and Nacho Libre.

Avatar-0510News Item: Avatar sets the new record for first-day Blu-ray sales. According toThe Washington Post, four-day sales of James Cameron’s 3D epic on Blu-ray and red laser DVDs exceeded 6.5 million copies (rental and retail) — that’s 6.5 million 2Dcopies, by the way. The article stated that 2.7 million BD copies were sold in North America. For comparison, Warner Brothers’ The Dark Knight sold a total of 2.5 million BDs over 1.5 years.

The Hollywood Reporter stated last Friday that retailers had already sold out 60 percent of their Blu-ray inventory in one day. The disc is widely available at stores ranging from Best Buy and Wal-Mart to Target, grocery stores, and even drugstore chains, and it has been sold at a discount ($19.99) over the usual BD pricing.

These unprecedented numbers beg a few questions: First, if 2.7 million Blu-ray 2D versions of Avatar have already been sold, how will the ’special edition’ Blu-ray release do later this year? And what about the 3D version that is expected to hit stores early in 2011? Why not just wait until Christmas and release the 3D version, skipping the ‘enhanced’ 2D roll-out? Three BD editions of this movie in less than a year seem excessive, and I don’t expect the demand for these secondary releases to be anywhere near as strong.

As for the rest of the market, how will Netflix 2D streaming revenue for Avatar compare to traditional DVD rental income? (Netflix customers will gain access to the Na’vi pic in late May.) And how long before digital downloads are made available to services such as InMotion? Consumers are clearly moving towards streaming and digital downloads and away from optical media, based on industry trends for the past five years. What impact will this trend have on the enhanced 2D and 3D releases?

That’s it for now. Back to your regularly-scheduled work day…

Peter Putnam is president of Roam Consulting. Reach him at pete@hdtvexpert.com