How the Cloud and Big Data Are Changing Entertainment

From Amazon to Wal-Mart, companies are carving up the fast-growing market for direct digital delivery of movies to the living room.
It’s a classic case of the disruptive entrants and a
strategic inflexion point: New technology threatens
the status quo, as streaming video propelled
through the cloud by big data takes on the DVD and
Blu-ray. Discs are a venerable golden goose egg for
studios, which last year generated some $18 billion
in sales and rentals.
The strategic technological shifts that are driving
this business change are our old friends: cloud
computing and big data.
Change is a Constant
With DVD sales declining and streaming services
growing, it’s already clear who’s going to be the
loser of this high-tech Gunfight at the O.K. Corral.
But the sub-plots are tantalizing: Hollywood studios
are hell-bent on retaining profits from movies after
they leave the theater, while technology companies
and online retailers jockey for supremacy in movie
To say that movie streaming has been a hit would
be an understatement. According to Dan Cryan,
senior director of digital media for market research
firm IHS, “We’ve hit the point this year where by
some measures, people are watching more movies
online than physical discs.”
Like the music CD before it, the DVD is under siege
—and for a similar reason. Just as iTunes lets you
download individual songs rather than entire CDs,
streaming services, cable and satellite companies
now allow customers to rent movies as well as buy
With rentals accounting for the vast majority of
streaming business, Hollywood so far doesn’t face
a direct threat to DVDs. Yet there is an indirect
threat: Every movie rented can mean one fewer
DVD bought.
And the growth of streaming has irreparably
damaged the traditional channels for DVD
distribution, driving video rental stores out of
business, and reducing shelf space for DVD sales.
(Ironically, Dish Network scooped up the failing
Blockbuster video store franchise and now streams
its movies to Dish subscribers.)
What really caused the studios to prick up their ears
was the emergence of cloud-based streaming
services from Amazon and Wal-Mart’s Vudu, which
rent and sell movies soon after they appear on
DVD. Moreover, both of those services are readily
available via online menus of newer TVs and Blu-
ray players, making it easy to find, pay for and
view a movie without getting off the couch.
The growth of movie streaming could really kick
into high gear if Apple gets into the integrated TV
game. Right now, you can buy or rent a movie from
the iTunes cloud, but not directly to your TV.
Today’s smart TV user-experience is generally
pretty poor, which is why Apple is rumored to be
developing an Apple HDTV.
But What Do I Want to Watch?
Whether a consumer is browsing the shelves of a
traditional video rental store or choosing a movie
from the cloud, discoverability is a huge user
That’s why many of the streaming services are
investing in big-data analytics, to help give
consumers suggestions of what movies they might
want to watch. Amazon has long been the poster
child for this type of feature, with its People who
bought X also bought Y schtick.
Hollywood is determined not to follow the music
industry down the path of inertia. The labels’ failure
to counter the move to digital downloads led to lost
opportunities and a race to catch up to market
realities. The big movie studios already have
created new revenue models based on licensing
agreements, and they’re taking advantage of the
competition among streaming services to get the
most lucrative deals possible.
At the same time, several big studios are trying to
beat the streamers at their own game. EPIX, the
cable channel backed by Paramount, Lionsgate and
MGM, offers streaming movies over Internet-
connected TVs. And in an attempt to steer
consumers away from movie rentals and back to
DVDs, most big studios have banded together to
support UltraViolet, which offers a cloud-based
copy of certain discs, and lets anyone move their
discs to the cloud for a couple of bucks each.
In the long run, however, you can always count on
DVDs for beverage coasters.


3 thoughts on “How the Cloud and Big Data Are Changing Entertainment

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