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Monday, March 26, 2007

If the Devil Wears Prada, then God uses IPTV

I found myself in a situation which I am sure is familiar to everyone. Having had a hard week – both working and socialising – I decided to stay in and watch a video. (Yes, even though the video cassette is now well and truly obsolete, I find it difficult not to refer to DVDs as videos. It’s the modern equivalent of when my grandfather persistently used to call the radio the “wireless”. )

Anyway, I found myself in a local video shop and had quickly decided upon “The Devil wears Prada” – a film recommended to us, no less, then by a male colleague who guaranteed that it wasn’t just a “chick flick”. By that, he meant he liked it. So the empty DVD box was taken to the counter and I waited while the assistant tried to locate it among the mass of boxes behind the counter. After a good deal of searching and then resorting to the computer, she finally revealed that it was actually out on “loan”. Unfortunately, she explained, someone earlier must have asked for it at the counter and so it wasn’t taken off the shelf of New Releases. I, of course, was devastated as the rest of the videos (sorry, DVDs) on offer seemed woeful, either slasher movies or kids films. So I left empty handed.

So while watching bad television later, two things struck me about this incident. One was - to paraphrase Negroponte from his seminal book, Being Digital - the over-arching value of “bits over atoms”. The analogue world of the local video shop, as well as putting me through a futile endeavour (although perhaps much needed exercise), had also robbed a studio and a producer of its potential share of €5 in revenue purely because they were held to ransom by the confines of delivery of their digital product as “atoms” i.e. in the limited physical storage format of the DVD. Had I been able to “rent” the video through a Video On Demand service over a set-top box or the internet, all would have been well. I, the customer, would have got what I wanted. The producer would have got paid too. Of course, this technology is coming down the line in a variety of forms – such as IPTV over broadband.

However, the second thing that struck me was how ill-prepared the current retailers (or middlemen) are for this ensuing technological revolution. The video shop clearly had a database on their customers that they simply were not utilising. The computer database would know every video I have rented over the past five years and, with a simple logarithm, would be able to work out my preferences and how they relate to the current and future retail stock. Why weren’t they signing me up and sending me SMS text messages or emails as to videos I might like to rent? Why weren’t they offering to post me the DVD when it did arrive in?

The writing is clearly on the wall for media retailers who have built their businesses on solely selling “atoms”. Even in the US, the Blockbuster chain is beginning to emulate the Screen Click model (or Netflix as it is known stateside) by signing up customers to a postal service for DVD delivery and utilising their chain of stores as a potential drop off point if you do not wish to post the DVD back. Ironically, they are also closing stores all across America, no doubt in anticipation of the burgeoning VOD market.

However, it seems clear that, like the video cassette, the video store is on its merry way to obsolescence as we move towards a rental model over Internet Protocol. Even now the once piratical web peer to peer applications like Bit Torrent and Napster are turning to the legal download model in order to get in on the action. There are also the new players like Babelgum.com (who have recently just headquartered in Ireland) and Joost.com (from the people who brought us Skype) who are looking toward offering television style content over the internet. Even the Xbox 360 looks set to become an IPTV player. The fight for eyeballs in the living room is warming up. With plasma screens and LCD screens becoming larger and more ubiquitous, it is now easier then ever to connect your PC (or Mac, with the upcoming Apple TV hardware) to the television and get whatever you want on demand.

posted by Neil Leyden @ 8:43 a.m. 2 comments