Edward Jay Epstein on movie downloads: the future of Hollywood
He argues that the future of Hollywood will be the small screen - not the big screen. (I still find it interesting - and probably the result of fear of this trend - that no full-length features are available on iTunes for the video iPod.)
The studios stand to gain ... from a huge audience willing to pay to download movies from their libraries. Unlike DVDs, which require manufacturing, warehousing, distribution, and disposing of returns, it costs almost nothing to download a movie or cartoon. Indeed, all the costs of transmission would be born by the cable operator (or a site like the Apple Music Store), whose cut would be less, under present arrangements, than retailers get on DVDs. So, if a movie were a huge hit, such as Shrek, and millions of orders flooded in, the marginal cost of filling them would be zero. The consumer, once he bought the download, could watch it where and when he chose to just as he once watched a DVD.
The real issue for the Hollywood studios is how they can dig into this potential gold mine without undermining their existing revenue streams.
Later, he writes:
...[W]hile the studios may find this embarrassment of [content delivery] choices somewhat paralyzing at present, as more and more consumers get digital recorders or video iPods, downloading for dollars may prove irresistible—even if it means doing away with the windowing system.
Great piece - well worth a read.