The International Consumer Electronics Show is the first major U.S. trade show of the year that has direct implications for the communications and Internet apps industries. It is a logical place to launch a new "download-to-own" service or expanded Web video initiatives. We would expect some of that to happen. Sonic Solutions this week launched Qflix, a licensing and certification program approved by the studios, which will allow online retailers to sell movie downloads that can be burned onto DVDs.
CinemaNow currently sells a limited number of download-to-burn movies (using a different technology) and iTunes sells movies for viewing on iPods and PCs/laptops. Such services essentially use different distribution channels and are direct challenges to cable, satellite and upcoming telco video distributors of on-demand or pay-per-view fare, as well as to Netflix and Blockbuster Video. The key strategic change is the willingness of content owners to embrace the new channel. That's the single most important factor driving the new market.
It isn't clear yet how business models will shake out, but ad support already looks to be an important factor. In most media industries, advertising plays a significant role. Potential customers also indicate they prefer "free" ad-supported video as well, even though this preference coexists with a demonstrated to buy movie content in many forms (theatrical release, PPV, DVD, DVD rental).
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