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ETIA 2015: Expert panel disagrees on the future of consumer ownership of content

June 18, 2015

Danny Kaye of 20th Century Fox kicked off the discussion, by showing data that over 80 million US consumers are still buying physical digital content, about the same as the 87 million that subscribe to a streaming service, and slightly less than the 105 million who have spent money on pure digital content. Even though there is a lot of overlap, over 30 million of the consumers are exclusively buyers of physical media such as DVDs and Blu-Ray discs. A core group of about 30 million consumers do all three of physical purchase, digital purchase, and streaming. Which channel they choose depends on the content. Because of the much higher sale price, physical product sales still represent a major portion of revenue, over $5 billion annually, but down from several times that last decade. Over time he sees much of the physical purchase business transitioning to digital purchase of HD content, but still sees a demand for ownership.

Albert Koval explained how Ultraviolet is a big part of making the transition from physical to digital ownership possible. With over 23 million accounts and 130 million movies owned, Ultraviolet continues to gain traction with consumers, echoed by high consumer satisfaction ratings. Even among those purchasers, many prefer to stream rather than download.

Colin Dixon returned to the stage to provide a contrarian point of view, that ownership is not just on the decline (16-21% year to year), but on the way out. His data shows that rentals are declining almost as fast, and he projects that subscription revenue (growing 25% year to year) will eclipse both of them by 2018. He sees universal device connectivity as helping drive this trend, but the bigger cause is a change in lifestyle, especially among millennials, to one where large collections of physical media are uncommon. He sees release windows as one of the few remaining motivations for acquiring content, but points out that with services like HBO Now, even its importance is eroding.

The rest of the panel questioned whether the trends that Dixon projects will last, blaming the current decline in purchase on the reluctance of the movie industry to embrace digital purchase, which is now changing -- although Disney's decision not to embrace Ultraviolet was criticized. There was definitely no consensus on the issue, other than a suggestion that attendees could come back next year and see which way the trends were moving.

Tag(s): ETIA

David Cardinal

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