'We believe the feature film and TV content businesses are on the verge of structural changes that appear to impact the core revenue and profits of entertainment business models,' DiClemente said, Wired.com reports.
Few observers might agree that a change could happen that soon, though just about everyone thinks change is coming.
What might be more unusual is DiClemente's sense that the biggest losers are the major content companies, including Disney, CBS, News Corp., Time Warner and Viacom, for example, rather than the cable, satellite and telco distributors.
To be sure, a reasonable argument could be made that both dominant distributors and content companies have lots to lose. Content companies are right to worry that their gross revenues and profit margins will take a hit once alternate methods of digital distribution become more prevalent. The historic way of describing this dilemma is that content owners are exchanging analog dollars for digital pennies.
More recently, the phrase tends to be that content companies will exchange analog dollars for digital dimes. Either way, you get some idea of the magnitude of the potential changes.
Digital distribution, audience fragmentation and widespread file-sharing are eating into network and studios’ profits, and those profits may not come back, says DiClemente.
DiClemente thinks Apple’s iTunes and Google’s YouTube could emerge as winners in the distribution role. That would be only the latest turn in an on-going debate about whether "content" or "distribution" is king. At various times one or the other parts of the ecosystem has been seen as holding an advantage.
What might be different this time around is that both traditional "content" and "legacy distribution" parts of the ecosystem might face serious pressure, while new competitors in both content and distribution roles make headway.
Digital distribution, audience fragmentation and widespread file-sharing are eating into network and studios’ profits, and those profits may not come back, says DiClemente.
DiClemente thinks Apple’s iTunes and Google’s YouTube could emerge as winners in the distribution role. That would be only the latest turn in an on-going debate about whether "content" or "distribution" is king. At various times one or the other parts of the ecosystem has been seen as holding an advantage.
What might be different this time around is that both traditional "content" and "legacy distribution" parts of the ecosystem might face serious pressure, while new competitors in both content and distribution roles make headway.
1 comment:
I disagree that the content makers are the losers. The traditional distribution networks like satellite and cable will hurt much more. Disney, CBS, ABC, already have adapted by making their content available online. Now they can pay less to he distribution companies when putting up ads and they get paid directly by the consumer. Plus, for now, they are still paid on a per sub basis by the distribution networks. Also, they have been steadily increasing their costs to the distributors which further encourages tv viewers to find their shows via other means. It is a different model for the content makers but they still have ways to make their money. What can the cable or satellite companies do to makeup for their lost subscriber base that went direct to ABC online? Some distributors can offer Internet access but that's enough to makeup for the premium tv packages they've been selling. Cable and satellite companies are going to be really hurting in two years.
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