The Digital Meteor

BluRay Sales Fail to Offset Decline of DVD Sales

Hollywood’s expensive bet on Blu-ray technology has failed to prevent a sharp decline in home entertainment sales, dealing a blow to the film industry as it grapples with the global economic downturn.

The industry’s revenues fell by more than $2.6bn in 2008 as sales of standard DVDs tumbled, according to a new report from Screen Digest, a research group.

BluRay Sales...

The Failure to Find Profit in Made for Web Content

But unlike other media, where larger numbers of viewers lead to higher advertising revenue, high-volume trafficon the Web hasn't necessarily translated into big money. Advertisers in short-form Internet video pay about $10 to reach every 1,000 viewers, so even a video that gets watched more than 1 million times -- a big hit by Web standards -- might not generate more than $10,000. Three- to five-minute-long "Webisodes" cost $5,000 to $25,000 to produce.

"So many of the major media companies thought they could just make a good show, put it online and sell advertising," said Jim Moloshok, a former Warner Bros. and Yahoo executive who is now chairman of online advertising company Betawave. "That's like taking a radio show and running it on television."

LA Times: Hollywood Hits the Stop Button on High Profile Web Video Efforts

Legal Web Services Like Last.fm and Pandora Appear to Contribute to Decline in Music Sales

This suggests to me that Hulu and such may not work for the big entertainment companies or for those who earn their living off of reuse:

The music industry has a new Internet problem. A decade ago, the major record labels began to worry about online piracy, in which people illegally swapped music over peer-to-peer networks like Napster (BBY) and later LimeWire. Partly in response to the piracy threat and partly due to sliding CD sales, music companies began to experiment with licensing their records to new online services.

...Researchers and industry consultants say online music sites are being used by a growing number of listeners as a substitute for purchasing music, rather than serving as a catalyst for more purchases...

Overall music sales have continued their years-long slide. Total industry sales were about $10 billion last year, down from $14 billion in 2000...Revenues from digital download services like Apple iTunes (AAPL) and Amazon MP3 (AMZN) are still growing strong, but they're not generating enough revenue to make up for the sharp decline in CD sales. Overall spending on music is forecast to shrink 4% through 2013, according to a recent report by Forrester Research (FORR).

The Music Industry's New...

How Radiohead's "Name-Your-Own-Price" Model Brought the Profits

While we're not huge fans of the pure "give it away and pray" name-your-own-price business model, it still seems pretty ridiculous to see people like The Cure's Robert Smith blasting Radiohead for its experiment, claiming "it can't work" (thanks to Chris, for sending this in). 

Smith is uninformed on a number of different fronts. First, so many people get so focused on the "name your own price" part, that they forget that wasn't the only business model at all. That was just a part of the business model. At the same time they announced the pay-what-you-want downloads, they also announced an impressive boxset that cost quite a bit. Furthermore, contrary to Smith's assertion that "it can't work," it did work. In fact, it worked phenomenally well. The band sold more albums than it had in the past and it made more money.

Cure Singer Blasts Radiohead...

What is Killing the Music Industry? Not the Pirates.

A great post by Jens Roland about how the music industry is off base and wasting its time by placing the blame of tanking music sales on the file sharers:

The fact is that the music industry’s revenues have been artificially inflated for decades because of limited consumer options. The last 15 years of innovation have lifted those limitations, effectively leaving the music industry with an obsolete, defective business model of monopolized production technology, forced album bundling, and almost nonexistent competition in the realm of home entertainment. What is happening now - the decline of music profits and the piracy witch hunt by the music industry - is merely the panicked struggle of a dying business model, a complacent industry’s refusal to accept its diminishing role in a digital world. The pirates are not the reason, and the decline is the not the disease. It is the cure.

How To Kill the Music Industry

The Decline of Broadcast News

Amid the daily obituaries for the newspaper business, where bankruptcies and layoffs have become a grim daily routine, there's been comparatively little notice that television news confronts many of the same problems: declining audiences, aging demographics, fierce competition from new digital media and a broken business model. 

''Everything needs to be deconstructed...Everything is going to be changing.'' 

Broadcast television's evening news shows have lost 27 million viewers, more than half their audience, since 1980, and the numbers get smaller each year. The drop is even more pronounced among young viewers. ''There's a paradigm shift going on as to the distribution of information,'' Spero Canton, regional director of communications for Comcast cable, warns, citing surveys that show under-30 viewers turning to the Internet for news.

TV News...

Ratings Up for Late Night Talk Shows, Down for Prime Time TV

...prime time—that post-dinner, pre-late-news stretch of the networks' glitziest offerings—may no longer be TV's prime time. 

Since the new season began last September, the top five broadcast networks' average audiences are down in the high single digits. Yet the networks' late-night shows, from Late Night with Conan O'Brien to Last Call with Carson Daly to Nightline, are up around 5%. The morning shows also are holding their viewers much better than those in the evening.

Prime-Time...

All Forms of TV Viewing Up, Including Traditional Television

From the Wall Street Journal Online:

People are watching more video than ever on every type of screen -- television, the Internet and mobile devices -- according to a report on the nation's viewing habits to be released Monday by Nielsen Co.

Nielsen found that during the fourth quarter of 2008 the number of users and the time spent watching each of the three screen media rose from the previous quarter. "If people like video, they like it wherever they can get it," said Susan Whiting, vice chair of Nielsen.

The biggest jumps came in the number of viewers watching video on mobile devices and "time shifted" television, that is, programming viewed with a digital-video recorder. Each rose about 9% in the fourth quarter from the third quarter. Roughly 11 million people used mobile viewing and 74 million people watched DVR programming. Internet video users increased 2.3% to 123 million people.

Traditional television is still the most popular by far. Roughly 285 million of the nation's 306 million people watched TV in their home in the fourth quarter, up about three million people, or 1%, from the prior quarter.

Mobile, DVR Video...

Please Watch This Interview with Marc Andreessen

Please check out this exhilarating interview with entrepreneur Marc Andreessen who once started Netscape and now works for Facebook and Google and others.  This guy is brilliant and is exactly the type our unions should have employed to guide our moves in the Digital Shift.  Without such techno visionaries, our unions will be merely reactive and ultimately left behind.

Marc Andreessen interview on Charlie Rose

Forcast for 2012: Digital Video Games- $5.4 Billion... Digitally Delivered Films; $2.8 Billion

Digitally delivered videogames will hit the mainstream before digital film, according to Futuresource Consulting research.

This year, digital game revenue will reach $2.3 billion, versus $880 million for digital film. By 2012, digital games will rise to $5.4 billion versus digital films’ $2.8 billion.

Videogame Downloads...

2008: The Year Global Revenues from Digital Media Exceeded Revenue From Movie Theaters and Home Video Combined

From Variety:

The entertainment biz will remember 2008 as the year when global revenues from digital media exceeded revenue generated by movie theaters and homevideo combined. In its "Global Media & Entertainment Market Forecast, 2004 - 2012," London research firm Strategy Analytics reported that online and mobile channels accounted for $90 billion in worldwide revenues; the global filmed entertainment market generated $83.1 billion.

"We're starting to see now that digital media is becoming a significant part of revenue for a lot of companies," says Strategy Analytics director of digital media research Martin Olausson. "A few years back, everyone was still discussing whether movies would be distributed online. That's not a discussion anymore."

Online Distribution...

Sony Renews YouTube Deal, Where Warner Walked

YouTube, the hugely popular online video site, has renewed a global licensing deal with Sony Music Entertainment which allows it to continue showing music videos..

The deal with Sony, the world's second largest music company, is important in light of a decision by Warner Music Group to walk away from similar contract renewal talks with YouTube last December in a dispute over licensing fees. Warner asked YouTube to take its music videos down.

A person familiar with Sony Music's plans said the company still sees great value in YouTube's huge numbers of users both to Sony's artists and to the artists' fans...

...Music videos, once a free promotional tool on television, have become one of the fastest growing digital revenue streams for music companies on sites like YouTube and News Corp's MySpace.

The music labels, who signed early licensing deals with YouTube in 2006, have been keen to improve the payment rates they earn from the popular video site.

YouTube Renews Music Video Deal with Sony

Warner Bros. Goes for Video Games as DVDs Falter

Warner Brothers Entertainment, the Hollywood studio owned by Time Warner, is bolstering its presence in video games with the acquisition of Snowblind Studios, a Seattle-based developer.
The deal comes as traditional home entertainment groups are moving to reposition themselves amid an industry-wide slump in DVD sales...

DVDs have been Hollywood’s most reliable cash generator for the past decade, but studios are grappling with a severe decline in sales over the past 12 months as the format matures and consumers tighten their belts.

Blu-ray, the next-generation DVD format, enjoyed healthy growth in the run up to Christmas, with Warner Bros having sold close to 2m units of the The Dark Knight. But the studio does not expect total home entertainment sales – which include Blu-ray, digital downloads and DVDs – to return to growth until 2010, although this may become difficult if conditions continue to worsen.

FT: Warner Focuses on Video Games

Disney's Iger: DVD's Sharp Declines Due To Changing Viewing Habits- Not Just Economic Downturn

Studio executives, who often rely on DVD sales to push a film into the black, quietly have been expressing concern about a 30% decline in DVD shipments to retailers in the fourth quarter. This drop in home entertainment sales hit Disney's studio hard. Disney's studio division revenue for the quarter fell 26% to $1.9 billion and operating income plunged 64% to $187 million. Consumers bought fewer new releases on DVD and there was less demand for Disney's classic titles.

Anthony J. DiClemente, an analyst with Barclays Capital, said this was the first time a studio executive had publicly acknowledged that falling DVD sales might have something to do with changes in how people watch films. The shift could rock the economics of the movie industry, which depends on home video sales for as much as 70% of a film's profit, he said.

"With the DVD business in decline, it brings to question whether or not investment in filmed content is going to generate an adequate return on capital for Disney or other media company shareholders," DiClemente said. "The industry is caught in a vortex of dramatic, structural change."

Disney Loses...

Record Digital Music's Sales Don't Make Up for Overall Downturn in Music Sales

Digital music downloads reached a milestone in 2008, exceeding 1 billion songs purchased online, according to a newly released report from Nielsen SoundScan, which tracks music sales. That represents a 27% gain over the previous year.

But the soaring popularity of the 99-cent download is not enough to offset continued declines in CD sales, which still account for the bulk of the music industry's revenue. Physical disc sales fell nearly 20% to 362.6 million, the seventh decline in eight years, according to SoundScan.

Digital Music Downloads...

Hollywood Clings To Analog $$

Hollywood is attempting to preserve an analog business model in a digital age. The result is a crazy quilt of availability in different media, in different geographies, and at different times...

The studios are caught in a web of relationships with theater operators, premium cable channels, on-demand services, and DVD and online distributors. In many cases their contracts with these parties dictate the time intervals between theatrical release and various other forms of distribution, as well as release dates in different countries. Unlike the desperate record companies, movie and TV studios are still making good money, which leaves them reluctant to mess with these tangled arrangements.

Hollywood's Digital Dawdling

Flailing Music Industry's Mixed Response to Internet

Industry members had hailed deals struck with YouTube last year as a new way of driving profits from the popularity of professional music videos and the soundtracks to amateur efforts on such user generated content sites.

However, some are now questioning whether either side has made much money from arrangements which require YouTube to share advertising revenues and, in many cases, pay a few tenths of a cent to the music company each time a video is streamed, regardless of how much advertising is sold.

Music Industry Looks to Internet for Revival

Celestial Jukeboxes Compared

I believe these music streaming/subscription services are a taste of what will be available for video in the near future-- interactive communities that allow users to build playlists of content either for a low monthly fee or "free" ad-supported.  Hulu.com is the closest and most successful video version of this step in the evolution of the business of digital content delivery.

Top 5 Music Streaming Services on the Web

Television Revenues Down 7% in 2008

Television industry revenues are expected to be down 7% this year, according to BIA Advisory Services estimates.
BIA’s Investing in Television Market Report estimates that TV station revenues will be $20.1 billion in 2008, their lowest number in seven years. The decline is attributed to the economic crisis and stagnant ad spending since 2000.

TV Revenues off 7%...

Overall U.S. Music Demand Down, Legal Downloading Up

Demand for music among U.S. Internet users fell 2% in the third quarter of 2008, a figure that includes CDs, purchased downloads, songs downloaded via file-sharing networks, and borrowing CDs to rip to computers, according to a report from market research firm NPD Group.

The proportion of consumers purchasing a CD fell from 25% in the third quarter of 2007 to 22% this year, and NPD estimated that the volume of CDs purchased overall declined 19% compared to last year. 

By contrast, the number of digital downloads purchased, and number of buyers both saw an increase.

Fifteen percent of Internet users, up 2% from last year, purchased tracks from online music stores, and legal music download volumes were up 29%. 

Report: Overall US Music Demand...

Study: The Older You Are, The More TV You Watch

...the older you get, the more you watch, according to a report due out today from Deloitte indicating that "Millennials," the generation of 14- to 25-year-olds, watches just 10.5 hours of TV a week.

That compares to 15.1 hours for those belonging to Generation X (ages 26-42), 19.2 hours for Baby Boomers (33-61) and 21.5 hours for Matures (62-75).

Lest one assume Millennials are shunning broadcast and cable in favor of watching DVDs on their TV screens -- they're not. They spend less time watching DVDs of movies and TV shows on television sets, 4.8 hours a week, than do Gen Xers.

They are, though, spending more time watching DVDs on a computer -- 1.9 hours a week -- than any other age group.

But while Millennials are watching the least amount of TV, they are spending the most time with media in general, making that up with video games, music and the Internet.

Study: Young People Watching Less TV

Broadcast Television's Historically Bad Year

Broadcast TV's fall season is going so poorly that four out of five returning programs have a smaller audience than they had in 2007.

A top TV researcher said Wednesday that it's shaping up as a historically bad season for ABC, CBS, NBC and Fox. Only eight of the 66 returning shows have gained viewers, five of them on CBS. Five shows have no change. "Heroes," "Private Practice" and "Prison Break" are among the big losers.

The Turner Networks' research chief Jack Wakshlag said there are even darker clouds on the horizon for broadcasters. The mandatory conversion to digital TV by Feb. 17, 2009, will further cut into viewing. Current estimates are about one in 10 homes would lose TV service altogether that day if they don't buy new sets or order cable or converter boxes beforehand.
Overall TV viewing is up this year because of cable station gains, especially the news networks.

Historically Bad Broadcast Television Season...

Video Games to Become UK's Top Entertainment Form

Video games are expected to outsell music and other video products this year for the first time, making them Britain's number one form of entertainment, research by retail experts said on Wednesday.

Verdict Research, which publishes studies on the retail industry, predicted that the video games market would grow by 1.37 billion pounds or 42 percent in 2008, outstripping music and video sales which were expected to stagnate.

Video Games to Become...

Thanks to the Web, Big Media May No Longer Be Recession Proof

"While Hollywood films have traditionally fared well during economic downturns, this time around may be quite different," said Bobby Tulsiani, an analyst at Forrester Research, which recently examined consumer spending on media...

Blame the Internet. With faster processors, improved technology to compress video and more than 60 million homes in the U.S. with high-speed connections, the computer seamlessly delivers full-length episodes of television shows and movies. As a result, the computer now vies with the TV and cinema as the go-to screen for entertainment...

The endless stream of free content, through legitimate services as well as pirate sites, appears to be shifting viewing habits more quickly than industry executives had anticipated -- or intended. That creates a dilemma for media companies because the Internet generates substantially lower revenue than established business models -- 30-second TV commercials and home video sales -- which have long supported the costly economics of TV shows and movies.

Hollywood May Not Be Recession Proof

Hulu Web TV Dominates with Fewer Ads- 142 Million Streams in September

While Hulu was not the first site to serve up full-length television shows or create new advertising units, it now dominates the emerging market for ad-supported TV and movie streaming. It emerged in public beta form one year ago with 10 advertisers, made its official debut in March, and now counts more than 100 sponsors, from General Motors to Old Spice.

The site has grown steadily, providing 142 million streams to 6.3 million unique viewers in September, Nielsen Online reported last week. Hulu is now the sixth-most-popular online video brand in the United States, surpassing the online video networks operated by ESPN, CNN, MTV and Disney. 

The half-hour comedies that are so popular on Hulu — “Family Guy” from Fox and “The Office” from NBC — have an average of eight minutes of commercial time on TV. On Hulu, where the sitcoms are especially popular, each show averages about two minutes of ads.

Web Site's Formula for Success: More TV Content with Fewer Ads

CBS Picks Up First Web Series for TV.com

 After just five days on YouTube,Easy to Assemble has been picked up by CBS in a deal that will have new episodes of the show running exclusively on TV.com for a week after each release, starting Monday the 29th. The IKEA-backed show created by and starring Illeana Douglas racked up over 300,000 views since its debut Monday. This will mark TV.com’s first foray into original scripted content.

CBS Picks Up First Web Series

A-List Directors Continue to Sign Video Game Deals

Snyder is the second Hollywood director to sign on with EA to make games. Steven Spielberg also agreed to a three-game contract. The first fruit of that partnership, "Boom Blox," was released in May and sold more than 450,000 units.
At 42, Snyder is among a new generation of Hollywood elite who grew up with video games. So it's inevitable that some see creative cross-fertilization between the two art forms. Another director, Gore Verbinski, said earlier this year that he was exploring an undisclosed game project. In the meantime, the "Pirates of the Caribbean" director has agreed to direct the movie adaptation of the sci-fi shooter game "BioShock."

"Watchmen" Director Zack Snyder Signs 3 Game Deal with EA

Cartoon Network and Id Ent: Ad-Supported "Free" Browser-Based MMORP Gaming

...more and more developers see browsers as a route to reach new audiences and a way to give old games a second life.

At least two AAA browser-based titles are due before the end of the year. Id Software will launch "Quake Live" and the Cartoon Network will roll out "FusionFall.

Xbox Vs. Firefox

Music Industry Considering Ad-Supported Streaming

The idea of combining ad-supported streaming with paid downloads is very similar to the upcoming MySpace Music (due to launch next month), except that it will be available to other sites.  In that sense, it is closer to what Rhapsody has done, powering music streams for Yahoo Music, iLike, and MTV.com, and trying to up-sell full subscriptions or paid music downloads.

Full-track, on-demand, advertising-supported music streaming (as opposed to randomly-sequenced Internet radio) is gaining steam as a business model. The music labels have licensed their catalogs for uninhibited streaming to imeem and MySpace Music. And a number of other sites, including Lala and Last.fm, have signed more limited deals that still provide access to a broad range of artists. For example, Rhapsody offers a limited version of free streams (25 songs a month) to their songs.

Tech Crunch:  The Record Industry's Digital Distribution Plan...

Warner Music Complains The Rockband and Guitar Hero Need to Pay More for Music

Despite the fact that the games Guitar Hero and Rock Band have breathed new life into various musical acts and helped pump up sales of certain artists, the recording industry is starting to complain. It seems unable to recognize how something that promotes its music or makes that music more valuable is beneficial -- instead freaking out that it's somehow being ripped off. Proving, once again, that they overvalue contentRock Band and Guitar Hero aren't paying enough for music... and undervalue the service that makes that content valuable, Warner Music's Edgar Bronfman is bitching and complaining that

Techdirt: Warner Music Complains...

Wired: Warner Threatens to Pull Music...