Wednesday, November 29, 2006

Buy Physical, Get Digital: WalMart Extends Sales to Video Downloads

TechCrunch reports on the move by retail giant Wal-Mart to include rights to a digital download of the movie "Superman Returns" as its first foray into a sales model that includes both physical and digital product package. For USD 1.97 more than the DVDs face price a purchaser can get a low-res version in Windows Media format with PlaysForSure rights protection suitable for handheld devices with smaller screens. USD 2.97 gets you a copy of the movie with the same protection but in a hi-res version suitable for PC viewing, while USD 3.97 gets you both portable and PC versions. The rights-protected copies can be used only on one device at a time, but the license for viewing may be moved from one device to another.

TechCrunch has its doubts about this arrangement, but overall you have to give Wal-Mart credit for being the first to feel out how rights-protected content can be used to move towards a model that can allow consumers to move towards downloaded movies at a nominal fee. With retail shelving space at a premium - DVDs take up more space in our local market than lettuce - and terabyte-scaled local content storage devices becoming widely affordable, it makes sense for the Wal-Marts of the world to start encouraging the digital option. Purists will decry the lack of a digital-only option and the inability to access fair use clips, but think for a moment where we were only a year ago with digital video content. Here we have a cross-platform, rights-protected download model for Hollywood entertainment in the hands of a major retailer, where a year ago most studios were mostly squabbling about what to do with digital download distribution.

The big piece missing from this and from the recent BitTorrent deal with movie studios is a mechanism to enable viral marketing. Movie studios pour millions of dollars into major film releases to generate a little buzz that will help a movie generate theatre traffic. In the meantime services such as YouTube are out there enabling audiences to generate their own enthusiasm for digital video. With so much emphasis on locking down digital rights Hollywood is missing out on the opportunity to build up enthusiasm for a content product by enabling peer-to-peer marketing via fair use clips, mashups and other tools that enable people to create street-level credibility for content.

Instead of trying to push their content at light speed into a brief window of mass distribution that trails off into "long tail" obscurity movie producers need to experiment with reversing this model. Let content find its own audience and digital sales via online channels to the point where theatre distribution will be accelerated by an active word-of-mouth from the online leaders in downloading. Since they'll be paying for the rights-protected version of this content and clipping out pieces to send friends, extra-digital marketing could be funded to some degree out of the proceeds of these efforts and probably targeted more effectively by zeroing in on the stuff that was most popular in clippings. Think of the theatre as the culmination of a communal content sharing event, rather than the be-all and end-all. Well, we can only hope for this - and wait for aggressive distributors to give it a go.
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