Digital Distribution of Media Issues That Arise From The Use of Digital Distribution. Ross McleodMagnus ReidSwaminathan Nandakumar Illustration by Erin Mehlos

Fields of Digital Distribution  Music  Video Games  Movies  Software  Books  Concentrating on Music, Video Games & Movies as they are the main areas of the entertainment industry seeking digital distribution.

Music  Most popular  Music industry – $31.3 bn 5% from online sales.5% from online sales. Figure to triple by 2010Figure to triple by 2010 In the U.K 10 million songs downloaded legally in 2005In the U.K 10 million songs downloaded legally in 2005 With an average of £5.52 per month.With an average of £5.52 per month.  Examples: i-Tunes, Napster

Video Games  Focused on Digital Distribution for many years.  Downloaded Games Market: $43 million for 2005$43 million for 2005 Estimated growth to $400 million by 2010Estimated growth to $400 million by 2010 Pc games will be the majority closely followed by home consoles.Pc games will be the majority closely followed by home consoles.  Examples: Steam (Valve), EA Games

Digital Movies  Hot Debate  Digital Movie Market: €10 million for 2005€10 million for 2005 Increase expected to €690 million by 2010Increase expected to €690 million by 2010  3 Types of Digital Movies Complete downloadComplete download Complete download with time restrictionComplete download with time restriction StreamingStreaming  Example: World Cinema Online

Issues For the Consumer  Convenience: Don’t need to leave the home if sufficient hardwareDon’t need to leave the home if sufficient hardware But can have problems with connectionBut can have problems with connection Memory dedicated to downloadingMemory dedicated to downloading  Price: Cheaper than high streetCheaper than high street Global pricing differencesGlobal pricing differences What happens if problem with product?What happens if problem with product? Digital lock-in for consumersDigital lock-in for consumers Hidden overheadsHidden overheads Distribution costs shiftedDistribution costs shifted Extra value lost in digital salesExtra value lost in digital sales

Issues For the Consumer Cont.  Newest Media: Media is sometimes lagging 1 to 2 days behind high street release. In the case of videos can be months as a result of waiting until released over all global territories.Media is sometimes lagging 1 to 2 days behind high street release. In the case of videos can be months as a result of waiting until released over all global territories. Although extra information is cut out, which some consumers may favour.Although extra information is cut out, which some consumers may favour.  Consumers Unwilling to Adopt Digital Distribution: MistrustMistrust Some consumers not technically inept to use itSome consumers not technically inept to use it Some countries do not have the infrastructure to support itSome countries do not have the infrastructure to support it Some consider it a passing phaseSome consider it a passing phase

Business Issues  Large Market Potential Field can be expandedField can be expanded As either “click & mortar” or independent business model e.g. Apple (i-Tunes)As either “click & mortar” or independent business model e.g. Apple (i-Tunes)  Barriers To Entry Distribution is platform specificDistribution is platform specific Difficult for new businesses to enter marketDifficult for new businesses to enter market

Business Issues Cont.  Cutting Out Middle Man: With no retailer all profit is direct income e.g. Steam (operated by valve)With no retailer all profit is direct income e.g. Steam (operated by valve) High street stores may be reluctant to deal with business in future if they do adopt digital distributionHigh street stores may be reluctant to deal with business in future if they do adopt digital distribution Traditional distribution is still dominantTraditional distribution is still dominant Move to digital distribution to be thought through carefullyMove to digital distribution to be thought through carefully  Piracy: Many companies reluctant to convertMany companies reluctant to convert Movie industry associates advances in digital media with piracy.Movie industry associates advances in digital media with piracy.

Conclusion  Many issues  Not only for consumers but for businesses  Most high tech businesses may adopt in the future  How this is handled depends on how it deals with the issues we have raised today  Move to digital distribution to be thought through carefully