Show of hands, how many of you ever owned a minidisc player? There was about three months there when it just seemed reasonable that minidiscs were the next big thing. Smaller package, held more music, great quality sound, didn't skip. Yep, the music industry was all set to be taken by storm by the minidisc revolution... except that MP3s just made so much more sense. Digital downloads (mostly illegal at the time), portability between computer and other personal devices, and the ease of managing/maintaining vast libraries -- all these MP3 benefits made certain that I wasted whatever it was I spent on my minidisc player. But for three months, it was great.
I feel like it's déjà vu all over again when it comes to Blu-Ray DVDs. Smaller package, better quality and already outdated. The Economist certainly seems to agree with me. In a truly insightful piece on "Hollywood and the Internet," The Economist lays out the major studios' hesitations to taking the plunge into online distribution -- and the overwhelming inevitability that they will have to anyway. Besides, as the piece points out, most of the major studios fought DVDs for fear of what they would do to the studios' VHS rental margins.
Besides the obvious arguments for the studios to get into digital distribution (e.g., if they don't, illegal sites will), there were two areas highlighted by the piece I wanted to explore a bit more. The article referenced the ability of digital distribution to actually increase the studios' abilities to leverage their vast content libraries and content production capabilities. The Internet has the ability to identify affinity groups previously too small for major studios to green-light film production for because of traditional promotion and distribution systems -- but because the Internet enables efficient promotion and distribution to specific groups of people, a new model will emerge governing what will generate positive ROI for studios. Combine this with people's desire to consume long-tail content, creating more impulse buys and rentals; these factors add to the positive outlook for studios' online revenue future.
The other area I'd highlight is an area discussed on this Spin before: the Internet's ability to involve the audience earlier in the production process. The Economist piece referenced online communities assisting in casting or plot development specifically. Imagine what this could do for building audiences ahead of feature releases, not to mention the interest in the final product.
There are many reasons why Hollywood will be turning online sooner rather than later, not the least of which is that Hollywood seems to be hoarding some of the best talent in digital marketing. So who better to facilitate the transition? Hopefully the change won't happen before I get to use my new Blu-Ray player a bit...