February 28, 2007, 12:00 AM

More Turmoil

(Page 2 of 2)

It’s got legs

Even Wal-Mart doesn’t expect to take over the market with its new offering. “This is our first step in a long-term roadmap to a multi-format, multi-channel offering. Downloads are compelling today, but DVDs, HD-DVDs and Blu-ray discs will have long legs,” says Cameron Janes, Wal-Mart’s director of digital media. “So in part we’ll be focusing on integrating the digital format with the physical form through special promotions.”

A recent survey by technology research company ABI Research supports Janes’s observations. 48% of 1,800 consumers over age 18 interviewed for the survey said they would never purchase a movie online for download because they are satisfied with their current providers and the rental market.

“Despite the growing interest in the pay market for Internet-delivered video, perhaps the biggest remaining hurdle to widespread adoption is that the status quo usually gives consumers a vastly superior and often less expensive experience than Internet-delivered content,” says ABI research director Michael Wolf. “The industry needs to develop reasons and business models that increase overall consumer interest in Internet-delivered video, including allowing for easy transfer and better viewing on the large screen.”

More blurring

The future of video consumption is further blurred by the entrance into the market of non-traditional viewing services and devices. In September, Apple Inc. introduced iTunes 7, expanding the popular digital music store to offer downloads of films and TV shows. In November, Microsoft Corp. began offering Internet downloads of movies and TV shows through its Xbox 360 online gaming console.

“With all of that in flux, what is the effective definition of VOD in the future?” says Forrester’s McQuivey. “If it means watching what you want when you want it, even iTunes is part of VOD. There are still several years of confusion ahead.”


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