发帖
雷达卡
The Future of Home
Entertainment
STRATEGIC ANALYSIS
Making Sense of It All
■
“The Beginning is the End is the Beginning.” In this report, we tackle two
intertwined topics: the state of DVD and the future of home entertainment as
digital (vs. physical) delivery becomes increasingly prevalent.
■
Is DVD Dead? DVD has been a mature medium for nearly half a decade
and this was exacerbated in 4Q08 (15% decline in spending on home video)
by the financial crisis. We believe DVD could surprise positively in 2009 – we
forecast a 2.8% decline, driven by a strong box office (which is 77%
correlated with home video spending), a stabilizing economy and easier 4Q
comparison (~40% of annual home video spend).
■
What Will Jumpstart Digital Delivery? We think the keys to tapping mass
consumer demand for digital delivery of content will be the ability to access
media over multiples devices and user interface. In our view, a missing link
that is emerging is Internet enabled mobile devices like the iPhone that solve
the UI limitations of the standard remote control and allow for out of home
consumption of media while remaining integrated with in home devices.
■
What’s the Business Model for Content Aggregators? Multiple business
models for digital content – sell through, rental, ad-supported, and
subscription – will persist as they all serve different market segments. On the
cost side, we think Hollywood content will be a loss leader, creating the need
for alternative revenue streams for aggregators such as hardware sales (a la
iPod/iTunes) or a monetization mechanism for non-professional content.
■
Who Wins in Content Aggregation? We think winners in aggregation will
share attributes such as software and hardware development skills, UI
expertise, the ability to develop for multiple devices, user data for
recommendations, and a track record of innovation.
■
What Happens to Film Studio Profitability? For studios, transitioning to
digital should be accretive to margins, given lower costs. However there are
3 risks: the pace of the transition to digital given a declining DVD market, the
mix of rental vs. sell-through, and increased competition for leisure time.
■
What Happens to TV Network Profitability? Making TV shows available
online for free on an ad-supported basis is risky for networks. While “TV
Everywhere” could be a solution to protect cable network affiliate fees, few
details on its implementation are known. On the advertising side, replacing
linear TV advertising with online video advertising is likely dilutive given
lower commercial loads.
京公网安备 11010802022788号
