An industry executive speaks

In a series of Q&As, frontline practitioners in all facets of the packaged media and digital delivery industry share their views of things past, present and yet to come. It's the turn of EDWARD HALL, Operations Manager of Channel 4 in the UK.

Where do you see your company's comparative advantage/uniqueness in this crowded market?

We have established relationships with some of the leading comedy agents, which enables us to gain a valuable foothold on the stand-up comedy DVD genre. We also have our own broadcast platform to see as and when programmes and series succeed in terms of audience. And finally, because of our standing in the DVD marketplace and status as a brand and label, we can carefully select which brands and titles we release during Q4.

It means we can offer more in-depth and detailed marketing and PR support during peak trading periods, therefore maximising sales opportunities and concentrating on regional advertising and support for the artist/programme in question.

Amongst the range of services you offer, which one did grow in importance over the past 2 years and which one diminished?

Digital sales has increased in importance over the past two years, on iTunes and through monthly subscription sites Lovefilm and Netflix. Value-added material has decreased - retailers prefer an increased margin in terms of cost rather than special packaging at present.

Diversification is supposed to be the best way of staying afloat in the face of market uncertainty. How do you see your company's range of services evolving over the next 2 to 5 years?

We are looking at alternatives to the retail market - we already use marketplace business online alongside Amazon, Play, eBay, etc, and we are in the process of setting up an online shop within the Channel 4 website.

One keeps hearing alarmist opinion about the rapid demise of packaged media in the face of online delivery. What is your view as to how long discs will be around? And what could become its main target market?

I believe DVD/BD will be around for at least the next 10-15 years, there are two factors holding back a sharp increase in online delivery - domestic broadband speed (and 4G mobile networks) and the consumer's confusion over the varying digital formats and lifespan of buying. This has been illustrated with hesitancy over UltraViolet and also Bruce Willis's battle with Apple over his music collection! It highlights the question of who owns the digital product.

The ever lower margins on Blu-ray discs makes the economics of BD authoring and replication very challenging. What needs to happen, what features need to be added, to make it a viable business for independents?

The cost of replication, mastering, AACS, etc, needs to fall markedly to ensure lower price points are viable at retail level. The breakeven point for BD at present is too high for indies to release more BD titles than today.

Do you see the arrival of 3D as the shot of adrenaline the Blu-ray disc format badly needed to progress in the market, or do you think consumers will eventually make a success of Blu-ray irrespective of whether 3D develops?

As previously mentioned, authoring and manufacture prices need to drop before BD is seen on the same level as DVD. I don't think 3D BD will see the necessary upturn in sales to enable the product to be seen as a success.

Given the apparently slower than expected take-up of 3D, do you thing 3D is here to stay or consumer interest in stereoscopy is temporary?

Personally, I believe 3D has yet to fully evolve into a format - limited TV and products available for consumers to buy. Until consumers can watch 3D without glasses, the format will always be limited. People don't want to put on glasses for a long period of time.

Do you think the consumer take-up of 3D depends on the arrival of glasses-free autostereoscopic solutions? If yes, how many years do you believe consumers will have to wait for a high-quality glasses-free system to rival the existing active shutter glasses 3D systems?

Yes, I do believe glasses-free systems are the way forward for 3D. I am guessing, but I believe we are at least 5 years away from consumers able to buy an affordable selection of glasses-free TVs.

Cloud-based UltraViolet digital copy is making inroads. Do you see it as potentially increasing the sales of BD discs (as the studios intended) or be the death knell of packaged media?

Cloud-based digital copy will increase as mobile devices and tablet sales increase, but I don't see UltraViolet as the death knell for packaged media. Consumers prefer the physical product for keepsake values, and there is no confusion over formats and no lifespan for playability, unlike UV, as previously mentioned.

What do you see as the opportunities, but also the pitfalls associated with Digital Copy on a disc?

Opportunities - the ability to own the product across a wide variety of formats, devices, etc, ability to sidestep the high commission levels charged by Apple, ability to control the size and compatibility of the file, protect with security codes, build an online DC library. Pitfalls - it annoys Apple customers, as seen with The Inbetweeners! There also needs to be some tidying up in terms of the consumer downloading the file from disc, it's a bit cumbersome at present, and the consumer needs to be able to control the size of the file so they can choose the level of quality.

How to you see Hollywood squaring the circle between the inexorable fall of high-revenue producing packaged media and the unstoppable rise of low-revenue generating online digital delivery?

I don't think Hollywood has a preference for packaged or digital media - it is very reliant on back-end revenue, but I don't believe it cares where the revenue comes from, so long as it is there.

How much of a revolution smart TV represents, given that consumers are already comfortable using other screens (laptops, tablets, smartphones) to access Internet-delivered content?

I use a smart TV, and it is extremely useful for watching Netflix and Lovefilm, but in my opinion, that is all it is useful for at present. I don't use it for internet as it's difficult to type in web addresses and navigate. So, no, I don't think Smart TV is that revolutionary.

4,000-line Super HDTV is pointing on the horizon. Do you anticipate this to be the next TV format? If so, could it lead to the arrival of a next-generation larger-capacity Blu-ray disc to deliver this content, given that broadband could be inadequate?

I don't think this will be a far-reaching TV format. TV pictures are already good quality through satellite. Super HD is only for hardcore tech and film buffs. I don't see people buying Super HDTV for evening viewing.

If you let your imagination run wild, what system, format, application aimed at delivering content to the home would you like to see implemented in 10 years time?

High-speed broadband on all public transport so people can watch TV and movies anywhere (not necessarily in the home!).

Contact: www.channel4.co.uk.

(30.09.2012)
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