Marketing - The Diffusion and Adoption of Electronic Video Download - Essay Example

The Diffusion and Adoption of Electronic Video Download Until recently, videos come in the form of CD, DVD and analog videotapes. The advent of the internet technology did not immediately seize the fancy of the video industry. In fact, the market for the digital media has been relatively small in size that in 2003, this industry posted a market size ranging from $800 million to $2 billion only.1 Apparently, there were concerns over the legal aspect of video downloading, that the decision makers in the industry see the digitalization technology with wary eyes. The cases of Napster and Kazaa were still fresh in our mind, as media files are illegally downloaded with such abandon. Market forecasts for the digital media industry over the past four years are said to be inaccurate and reflected a longer span of time before a major market segment is established. This scenario, however, was altered when Apple iTunes Music Store and Ipod Video was introduced by Apple. The success of these products had been phenomenal and is poised to change the landscape of the entertainment world. It was Apple who introduced and pushed for the concepts of video on demand (VOD), along with novel ideas such as pod casting, which is becoming a major factor in video marketing. Sales of the Ipod Video had been surprisingly brisk since Christmas and Apple is likely to raise its sales to 30% for the first quarter of 2006 alone. Steve Jobs, Apple CEO, announced in an Apple press release that they have sold one million videos in less than 20 days of Ipod Video’s release. (Apple) Meanwhile, the traffic on Apple iTunes online store was reported to have jumped 50% in the latter part of last year. (Siglin) A week after its launch, Apple iTunes Music Store boasted to have reached a 2 million-dollar mark, with the store selling music for $0.99 a song. A video clip, music or any media file, can be downloaded and stored to an Ipod or via streaming media. This has become possible due to the wonders of digital data and high-speed broadband internet. Digital Mix The staggering demand for the Apple portable media has not gone unnoticed by the video industry. Last October, Ipod Video’s launch was sent off by a historical deal between Apple and ABC with the sale of the latter’s television series “Lost” episodes through Apple iTunes Music Store. Apple is currently in strategic partnership with Walt Disney Co., ABC’s parent company, which involves similar sale of popular ABC shows like “Desperate Housewives,” “Night Stalker,” and “That’s So Raven.” Siglin quoted the NBC Universal chairman, Bob Wright, being interviewed by the Los Angeles Times: “Apple’s success certainly reinforces the view that there is a demand out there… It’s for real, and it’s going to be with us for a long time.” Recently, Warner Bros. film studio also reorganized its home video division, in an effort to cover the market which uses the Internet, wireless and other digital technologies.2 So what do we have here? Apple has opened the door for an almost limitless opportunity for the next generation sale of videos. It was proven that video contents are no longer confined to traditional viewing media. It was proven that, today, the market hungers for portability. And, as Siglin noted, the entertainment industry executives are increasingly recognizing the consumers’ need for simple and easy personalization of their video content. Several non-financial or market measures assessing the popularity of the digital media is being undertaken left and right. And their results are all pointing to one positive trend - upward. This is not at all surprising since “nearly 98 percent of home consumer use a media player on a regular basis to play music and watch video clips.” (Rayburn) Of course, it is not only the TV moguls and film studios who are taking advantage of the Apple bandwagon. Software and chipset manufacturers, for one, are also capitalizing on the Apple influx, introducing softwares and low-powered Ipod encoding hardwares for transforming unsupported media formats. These companies mushroomed like lilies in the pond, in effect, maximizing the consumer experience for portable entertainment. Other Platforms The growth of the digital media is not confined to Apple or the portable media alone. There is a wealth of portable and non-portable media that will shape the landscape of video purchasing in the future. PocketDISH is one such device, which functions as a portable digital video recorder. It is distinguished from Ipod since it is connected to the DISH network TV service. If one is DIRECTV or Dish Network subscriber, one will not pay for the downloaded content. (Park) Concerning non-portable devices or those pc-centric ones, we have the two of the leading web-based movie services, Movielink and CinemaNow, as examples. Both of these web outfits were previously offering movie rentals, letting customers download movies for a limited rental period. But this April, as reported by the PC World, they introduced new services in which digital movies can already be purchased. (Perenson) Both of these online movie services are backed by powerhouse studios, which offer catalog titles and recent releases. Another interesting platform that is gaining interest to date is the mobile phone. A recent survey undertaken by Jupiter Research found that 41% of mobile phone users are interested in some form of video service in their mobile phone. The same study predicted that by 2010 this sector would generate up to $501 million revenues. Julie Ask, Research Director at Jupiter Research, stressed that, “The challenge is not interest but rather finding the correct mix of premium content and price point." According to Al Lieberman, the entertainment product shares some attributes with products and services in other industries – licensing, merchandising and sponsorship. However, he said that it has some unique properties that affect the use and distribution of the entertainment brand. Lieberman explained that the structure that defines the entertainment industry could be described in terms of four Cs: content, conduit, consumption and convergence. Content refers to the product itself, conduit being its delivery, while consumption refers to the utilization of the product by the consumer and, finally, convergence is how various media come together to affect the product. The emergence of high speed broadband internet and the trail left by the creativity that was Apple touched the three factors in the structure – conduit, consumption and convergence –at an amazing speed and convenience. The idea that a TV show or a movie – albeit paid content - could be watched while commuting on mass transit, traveling, sitting in waiting rooms or working out on a treadmill, illustrates why the purchase of videos would be revolutionized fast. Bibliography "iTunes Music Store Sells One Million Videos in Less Than 20 Days, Apple, Oct. 2005, 27 Apr. 2006 http://www.apple.com/pr/library/2005/oct/31itms.html “Jupiter Research Predicts the Mobile Video Market Will Generate Revenues of Over $500 million by 2010 as a Result of Expanded Video Offerings on Mobile Phones,” Jupiter Media, Mar. 2006, 27 Apr. 2006 < http://www.jupitermedia.com/corporate/releases/06.03.28-newjupresearch.html> Leiberman, Al, & Esgate, Pat, The Entertainment Marketing Revolution: Bringing the Moguls, the Media, and the Magic to the World. 1st ed. Financial Times Prentice Hall, 2002 Park, Roger, “Mobile Video Revolution,” iMedia Connection, Nov. 2005, 27 Apr. 2006 < http://www.imediaconnection.com/content/7336.asp> Perenson, Melissa, “Download Movies Legally, For a Price,” PC World, Apr. 2006, 27 Mar. 2006 < http://www.pcworld.com/resource/printable/article/0,aid,125307,00.asp#> Rayburn, Dan, The Business of Streaming and Digital Media, Focal Press, 2005, p. 11-13. Siglin, Tim, "Video iPod Sales Growth Portends Big Things for Streaming Media in 2006," Streaming Media, Jan. 2006, 27 Apr. 2006 Tourtellotte, Bob, “Warner Bros. Adds Digital Wing,” CIOL IT Unlimited, Oct. 2005, 27 Apr. 2006 < http://www.ciol.com/content/news/2005/105102606.asp> Read More