Entertainment *
Author: William Halal and Dexter Synder
Latest Update: Jun 17th, 2011
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Summary

Apple’s successful introduction of the iTunes/iPod system seems to have broken the logjam in digital music distribution. Great obstacles remain before all forms of entertainment are conveniently sold online, and the continued illegal sharing of music and video threatens the economic foundations of the industry. But the inexorable advance of IT makes this huge application almost inevitable. A Forrester analyst said, "Once customers try online entertainment, they never go back." TechCast estimates 30% adoption levels in a year or two.

Selected Adoption & Forecast Data
Online music to reach 40% in '13  The global market for digital music was $4.2 B in '09, or 25% of the total $17 B recorded music market. Jupiter Research estimates it will reach 40% by 2013. (IFPI, 2010)
Video exploding  86% of web users watched online video by '09. Online rentals were 38% of the $18 B video market in 2010, projected to grow to 51% by 2015. The steep decline in store rentals was due to dramatic increases in subscription, kiosk and on-demand rental.  (Economist, 3/17/11) Global revenue should grow from $2.3 B in '10 to $6.3 B in '15. (comScore 2/10)
Computer games about 5%  US games earned $20.2 B (5%) in 2009.  Worldwide revenue should grow from $60.4 B in '09 to $70.1 B in '15. (npd.com, 1/14/10)
Online gambling grossed $16 B in '07, about 5% of the total gambling market of $236 B, and is predicted to reach $20 B by '12.  (ABI Research)
Digital now common The Consumer Electronics Ass'n. estimates 70% of Americans have digital TV and 45% have digital video recorders.



EXPERT SURVEY RESULTS
Event Being Forecast:

30% (by value) of music, movies, games, gambling, and other entertainment is sold online.

 
Forecast Data Analysis
    Mean Std Dev N (# Experts)
Most Likely Year 2011 3 86
Market Size (1-10) 4.9 2.4
Confidence (%) 77 12.7

In addition, 1 expert predicted that this event would never occur; mean confidence: 95%; std. dev.: 0.

 
Frequency Distributions
 Most Likely Year Market Size (1-10) Confidence (%)

TREND ANALYSIS
 
PROS: Trends Driving this Event CONS: Obstacles Opposing this Event
THE INDUSTRY IS MOVING ONLINE Apple’s iTunes and iPod opened the door for online entertainment. While worldwide music sales declined 12% in 2009, digital sales increased 12%. iTunes now accounts for 70% of global digital music. (IFPI Digital Music Report 2010)
• When Apple introduced the video iPod and video stores, entertainment companies began to provide movies, Video and TV online. A computer scientist said "2006 will be remembered as the year of Internet video." (BusinessWeek, 10/13/05; Technology Review 12/15/06)
• Netflix now offers 12,000 movies on demand with no limit - a breakthrough concept being copied by TiVo, ComCast and others. CBS and Netflix have a licensing arrangement which allows CBS TV shows to be streamed from Netflix. (WSJ 3.24.11) VuDu is expected to turn TV sets into multiplex theaters viewing 5,000 movies supplied by all major studios. The system uses peer-to-peer architecture and caches the film's beginning to start playing immediately while the rest is downloaded; "it's so clever that in hindsight it seems obvious," said a Stanford IT prof. (TechnologyReview 1/13/08)
• Amazon, TiVo, Wal-Mart, and others offer movies and video to home TV sets. (TechnologyReview 2/7/07; NY Times 4/29/07)
• Korean TV maker LG Electronics is building TV sets connected directly to the Internet that allow streaming video and movies without a set-top box. (NY Times 1/5/09) 
• Experts agree that huge global markets will allow modest charges to become economically feasible, thereby discouraging pirates.
• Web-based TV is booming with sites like Hulu, TV.com, Joost, and Fancast replacing cable TV. One fan said "Once you can get TV shows on demand, you really can't go back to watching TV the old way." (Washington Post 5/17/09)
• Two major film festivals, Sundance and Tribeca, are establishing web services. like iTunes, Amazon, Hulu, and Netflix, to give indie filmmakers digital distribution.  (NYT 2/27/11)
TECHNOLOGY IS IMPROVING Better compression techniques and broadband allow movies and video to be streamed:
• The Apple iPhone is becoming the leading hand-held game machine. Sales of 35 million phones in '09 equal the number of Nintendo game machines sold. (Businessweek 5/18/09) 
• New products, like the iPad, are expanding the use of digital entertainment. Worldwide tablet sales will reach 20 million in 2010 and should exceed 200 million by 2014.  (Gartner 11/10)
• Boxee is a New York startup that hopes to revolutionize entertainment. Its free downloaded software displays movies, photos, video, music and other entertainment from websites on TVs, computer monitors, and other devices in a simple and effective interface. (New York Times 1/17/09) 
• BitTorrent is organizing the entertainment industry to deliver movies and TV shows online using a P2P architecture. 1.7 million movies are being downloaded at any time. (Fortune, 10/31/05)
• It will soon be possible to load all available music on one hard drive. All the world’s music ever recorded can be stored in approximately 100 terabytes. Two-terabyte hard-drives are available and 100 Tb versions are likely within 5-to-10 years. (Nielsen Soundscan, 6/09)
•  Digital TV, DVD players and recorders, TiVo, wireless hubs, large flat screens, and other innovations are moving toward a “digital home.” (businessweek.com)
COPYRIGHT RESTRICTIONS FADING In 2008 Sony became the last of the media giants to drop copyright restrictions on music. Digital Right Management (DRM) had been hobbling the free use of online entertainment, but with this barrier removed, the industry is now taking off. The US FCC allows first-run movies to be sold directly to homes by companies like Blockbuster and Netflix (Los Angeles Times 5/7/10).
PIRACY COUNTERMEASURES APPEARING Through digital fingerprinting and other tracking technologies, the record labels are monitoring copyrighted content and counting on two major new strategies. The first is a landmark partnership with Internet service providers to monitor file sharing and cut off service to the worst offenders. Second is a series of partnerships with universities that would incorporate music subscription fees (less than five dollars per student) into student tuition bills.  If successful, a similar ISP-based fee could be implemented for the general public. (Pew Research, June 2009)
PIRACY
•  The Institute for Policy Innovation reports that piracy cost the U.S. motion picture, sound recording, and entertainment software industries over $23 billion in lost revenuei n 2005.  The wider impact on the economy was calculated as $58 billion when lost jobs, earnings and tax revenues are factored in. The costs of providing entertainment will rise to cover lawsuits and solutions for preserving copyrights.  And entertainment providers will face more costly and complex ways of doing business, especially in the digital distribution segment. (IFPI 2007)
•  The problem is growing as personal video recorders, digital TV, and broadband make it easy to pass videos and movies on the web freely. Software has appeared (TiVoToGo, Blinkx, MythTV, BitTorrent, etc.) to permit downloading TV from other PCs, reminiscent of the Napster scandal.

PEOPLE STILL WANT THE REAL THING  US & Canada movie box office sales are relatively steady at around 1.3 billion tickets yearly, and live concert revenue grew from $3.9 billion in 2007 to $4.6 billion in 2009.  (Motion Picture Association of America; Live Nation 2009 Annual Report)
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Public Comments
(Edited and displayed in 1-2 days)
 
Art Shostak (3/26/2008 5:36:26 PM)
Thanks to Paypal and like innovations this is agood bet, especally after computers take voice dictation as well as do humans.
Elaine DuPuy (4/5/2010 3:27:10 PM)
It will only be a matter of time before television stops being something programmed by the networks and becomes something customized by the end user. It isn't important anymore what time a show is on so much as when a show is released for viewing. Ideally, I should be able to log into my TV service, pick the available programs I want to watch on Monday evening from anything that has been released, and create a virtual schedule for my home viewing. No more having to Tivo because two shows are on at the same time and then having to flip through channels when nothing of interest is showing. We can already nearly do this with Hulu; all that is missing is the scheduling component and the hook in directly to our TVs.
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