Broadband Goes To Hollywood.

2004 Digital Hollywood conference devoted much of its focus to leveraging broadband for the entertainment industry.

The entertainment industry is evaluating and developing business models to gain revenue from broadband content. Broadband content is becoming a necessary brand extension for Hollywood, as companies realize broadband not only is a formidable delivery avenue for ancillary revenue streams, but may have a revolutionary effect on the entire entertainment industry.

Broadband enables innovative business models for the entertainment industry that extend beyond the possibilities of all traditional media — television, print and radio. Broadband internet also delivers advertisers a richer experience and enables easy, cost-effective targeting of specific demographic segments.

Hollywood marketers are just starting to embrace broadband as a delivery mechanism for a completely new and enticing form of advertising. For the marketers, utilizing broadband content is a less expensive alternative to TV or print advertising. For the content portal, the advertised broadband content is making the customer experience stickier. Most importantly for the consumer, the content harnesses the value of broadband speed.

For example, AOL Broadband recently ran clips before The WB’s launch of Jack & Bobby. Not only did AOL see tremendous viewing of the video clips, but they also obtained 6,000 immediate survey responses from AOL subscribers. These survey
forms enable both the content providers and the advertisers to quantify the impact of the ads and immediately generate specific demographics of the viewers. The interactivity of broadband content can generate more useful data in a 30-second survey than most TV programmers will have after a season of tracking viewers. For the consumers, the content added value to their broadband experience.

Many executives in the entertainment industry have viewed technological innovations — particularly internet-related innovations — as disastrous to existing business models. The record industry blamed shrinking sales on online piracy and peer-to-peer programs such as the original Napster (which is now a legal download service owned by Roxio) and KaZaA. However, the entertainment industry didn’t keep up with innovation cycles. Unfortunately, piracy will always be an evil in the entertainment industry. Although it is imperative to focus strong efforts on DRM and anti-piracy tactics, the entertainment industry must not wait until these solutions are perfected.

Broadband can enable the entertainment industry to more specifically target desired demographics, extend product lines and increase exposure.

E-mail was the strongest value proposition for the dial-up market; but with more than 90% of internet users actively checking e-mail, faster access to the user’s inbox doesn’t really provide a substantive value proposition for consumers to
upgrade to broadband. Consumers need to see how more of their daily internet-related activities will be affected by broadband speeds.

Consumers are beginning to turn more toward the internet for daily information and entertainment needs. The 2004 Yankee Group IP Entertainment Survey reported that 17% of current broadband users subscribe for a faster music download experience and 20% subscribe for an enhanced gaming experience. Downloading broadband video is on the cusp of greater adoption, with 9% of broadband subscribers citing the desire to download video as the cause for their broadband migration.

The Yankee Group predicts that by 2006, more than 50% of internet households will subscribe to broadband, providing a formidable landscape for a strong presence of entertainment-related content online.

The increase of wireless networking, multiple PCs in the home and media devices will also strengthen the possibilities of entertainment content via broadband. The Yankee Group projects that by 2006, more than 26 million households will have a home network. Of current home networking households, 39% said they would find the home network useful for PC-based music on any device, 38% would use their home network to play PC-based movies on any device and 25% would find a home network useful for multi-user games.

Although consumers are just becoming familiar with the possibilities of broadband, the entertainment industry can’t wait to begin to innovate. The music industry was damaged by P2P in part because of its inability to accept the need for innovation. If consumers can get content easier for free, they will take it. However, if consumers can easily access high-quality, intelligently priced content, they are more likely to buy the content.

Trend Impact

By utilizing broadband content, Hollywood has the potential to transform from technology laggards to technology optimizers and add to flattened revenue streams. Creating advertising using tactics such as user-generated content and strategic product placement can entertain consumers and help advertisers grasp some of the entertainment time that is shifting from the television.

For more information at http://www.yankeegroup.com