Digital Video Downloads 2010: Format War in the Cloud or a Perfect Storm?

Monday January 25, 2010 – Antonette Goroch

With VHS, DVD and Blu-ray formats now battles of the past, are digital video downloads set to be the next big format war in the ongoing evolution of digital entertainment? Maybe not.

This month’s announcement at CES from the Digital Entertainment Content Ecosystem (DECE) consortium of both new members and some vendor selections for DRM/content management again puts a spotlight on the necessary infrastructure for mainstream digital video delivery over the Internet. DECE, backed by 48 members including notables such as Sony, Warner Bros, Cisco, Motorola, Widevine and DivX offers a competing ecosystem to Disney’s recently announced Keychest. Both efforts are cloud-based digital ecosystems meant to support the notion of “buy once, play everywhere” digital video delivery. Will this set the stage for an ecosystem war? If so, the stakes are high as content owners are trying to hit the right chord for electronic distribution to combat a gradual decline in DVD sales.

Source: Digital Tech Consulting

But a crippling format/ecosystem war may not necessarily be a foregone conclusion.. Though some degree of standardization is necessary for the broad industry support needed to “buy once play everywhere”, there is an increasing tolerance for multiplatform solutions in the marketplace. Theoretically, two ecosystems could coexist peacefully and grow the market for everyone, provided content providers don’t restrict their access to one format or another, thus lessening the value of both.

Recent activity by content providers suggests this may be the case, since they have adopted a strategy of offering programming to many different outlets via differing business models and technologies, rather than locking into just one. Should this tendency continue, the coming year could trigger a radically different landscape for digital entertainment content and its delivery, as these cloud based ecosystems significantly up the value proposition (on the part of both consumers and content providers) for digital downloads.