In this multi-part article on Digital Distribution, we will explore various aspects of the digital distribution model along with successes, failures and speculate on the future of this model based on current and past trends. This series will be primarily aimed at video gaming and media such as film and television.
In our last article we discussed what Digital Distribution is, how you have been living with it for decades and how it has affected the major areas of entertainment. In this article, we will look at the positive side of Digital Distribution from the point of views of both the content providers and consumers.
It is important to note that much of what we discuss here appears on BOTH the positive and negative lists. Before saying “you can’t have it both ways”, just remember there are two parties involved here – the provider and the consumer. Buying a $10 hot dog at a ball game certainly benefits the vendor but since you could make the same snack at home for about $.25 it really has a negative effect on the consumer. Keep that in mind.
Content Providers cannot wait for Digital Distribution. In fact, most of them are on the edge of a bloody coup to make it happen. The advantages of Digital Distribution are so slanted in their favor that it boggles the mind.
Content Providers want one thing at the end of the day; control. Control is what affords them all the other luxuries – from profits to protection; if you have complete control – you have the keys to the kingdom.
Control isn’t just about setting prices and earning profits. That is the end result of control. Who, what, where, when and how … this is the end goal of Digital Distribution for Content Providers. Let’s look at an example.
Sony Pictures has complete ownership the God of War franchise. This ownership allows them to control the who, what, where, when and how:
- Who – Who is allowed to use this intellectual property.
- What – WHAT the “who” is allowed to DO with the intellectual property.
- Where – The gaming platforms you can play it on (that would be PlayStation and PSP).
- When – How long will they produce the game? When can you get it in the USA vice Europe? Of course, how LONG you can play the game (online or even offline).
- How – All the rights of the consumer fall into this.
You can apply this to any Content Provider about any content they own: Control is the end game.
The concept of control might be a bit too vague for this particular discussion. Let’s get into specifics and touch on some of the more low-level considerations.
Thwarting Piracy. Oh yes, Digital Distribution is the “savior” of Content Providers. Keep your content off a physical medium that can be analyzed, deprotected and liberated – and you have a damn effective means of combatting piracy and unauthorized use. It isn’t full-proof, but nothing is – however, the closer they can get the better.
Preventing Aftermarket Resale. Possibly the biggest buzz on the planet right now – used game sales. Content Providers are doing everything they can to put GameStop out of business – and they see Digital Distribution as the Magic Bullet to assassinate it.
Price Control. If you can only buy something in one place (don’t think Hulu and Netflix don’t share sources – it isn’t really competition), the person selling it has a distinct advantage over the consumer. Despite the fact that most of the content we’re talking about is completely elective (the last time I checked you really only need food, water and shelter to survive – not Justin Bieber’s latest album or another buddy cop movie) – price gouging can and will be more possible with Digital Distribution. Content Providers are very excited about that level of control.
Flow Control. If you release your content on a physical medium, you’ve lost what can be done with it. It can be loaned to a family member or friend. It can be resold. It can be reverse engineered. A CD can be played “royalty free” at a downtown eatery. Movies can be “borrowed” from, remixed or otherwise edited. If you control HOW your content moves into the ecosystem, you can make more money and eliminate the budget you’ve allocated trying to KEEP people from flowing your content in other ways. Plus, you have the opportunity to sell the same content over and over on different platforms. Brilliant.
Reduction in Cost. Inevitably, Digital Distribution is cheaper than ANY manufacturing means. While this might look like it belongs under “Price Control”, it really isn’t. This is about increasing profit margins on a sale. No physical media really changes things; no manufacturing costs, no delivery/transport costs. No retailer skimming their percentage off the top of a sale. Plus, the silver-lining reductions in costs – like not having to handle returns or exchanges – no replacing defective media. All this goes away with Digital Distribution. There isn’t a Content Provider on the planet that wouldn’t like to see this happen.
There are other advantages to Content Providers, but those are the big ones.
So, the “CPs” get theirs – what about the consumers? Do they get to benefit?
Reduced Cost. Presumably, service-based content should be cheaper than their physical equivalent. “Passing the savings on to you” will be the beat of the Content Provider’s drum.
Ease of Accessibility. Digital Distribution content delivery comes TO YOU. No more trips to the video store. No more going to Wal-Mart to buy CDs. Getting it WHEN and WHERE you want it will be the mainstay of Digital Distribution.
No More Media. For some people, not storing CDs or DVD or Blu ray media in their home is a huge plus. Ownership is a burden to many “casual” media consumers that never watch a movie more than once or listen to the same song twice. We are ever growing into a disposable society – and Digital Distribution is perfect for this demographic.
Ubiquitous Access. Now HERE is the promise that consumers will buy into (but – as we see in the next article – will never get) – all your stuff, anytime and on any device you want. No longer will you be restricted to consuming your favorite content on its “default media”. Buy a movie via Digital Distribution – watch it anywhere; home, phone, tablet – TV, Xbox, Wii – it doesn’t matter. It is LIKE you actually own it (even though you don’t).
All You Can Eat Access. Buying a movie or song or TV show is SOOOOO 2010. Pay us every month and you can watch/listen to anything you want with no per-viewing charge and no additional fee.
Premium (VIP) Access. While everyone else is enduring commercial after commercial, pay “just a little extra” and you’ll get VIP access. That means MORE bandwidth, LESS commercial interruption (notice I didn’t say NO commercials) and even access special features like commentaries and behind the scenes goodies.
Sounds like a match made in heaven right? Everyone wins – Content Providers maintain absolute control and consumers aren’t bothered to leave the house and get whatever they want for one low LOW monthly price.
In the next article, we’re going to look at this pipe dream and see what is reality and what is fantasy.