Deloitte predicts the rise of the DVD vending machine

First it was crisps, chocolate and fizzy drinks, now the humble vending machine could boost revenue growth for video-on-demand (VOD) with the number of DVDs distributed this way set to double, according to Deloitte’s technology, media and telecommunications (TMT) practice.

The web has become the most efficient means of distributing short form content but drivers such as price (the cost can be as little as 60p per night) and convenience will increase the popularity of vending machine rentals.

Vending machines are also future proofed for the migration to high definition DVDs, which can reach 25 GB in size.

The only obstacle facing the vending machine is the prospect of content owners delaying supply to vending machines until after the initial release to protect their own sales revenues.

Chris Robertson, partner in Deloitte’s TMT practice in Birmingham, said: “The concept of DVD vending machines may seem unusual but they are already proving very popular, particularly as people are currently opting for cheap home entertainment instead of more pricey nights out.”

Mr Robertson said that melding web content with television programmes should also become more common this year as concurrent use of the web and TV takes off.

“Don’t expect a surge in internet-enabled television sales or an explosion in the use of television widgets – converged web and television consumption is likely to be more pragmatic,” he said.

“It will be based on existing televisions and devices, with ‘convergence’ being user-driven, given the mismatch between the swelling consumer demand for concurrent web and TV usage and the typical ten-year renewal cycle for televisions.”

Users will combine existing sets with standalone browser-enabled devices, most WiFi enabled laptops and Netbooks, smart phones, MP4 players, and portable game consoles. As simultaneous web and television use gains popularity, television producers will be encouraged to create websites that feed off viewers’ eagerness to react to what they are watching.

Many have hailed 2010 as the beginning of the end for the linear broadcast schedule but according to Deloitte the gap between linear and non-linear usage will remain substantial.

“Despite the growing range of non-linear options, most content will continue to be consumed according to broadcasters’ programming schedules, with more than 90 per cent of television and 80 per cent of audio, respectively, being consumed in this manner,” said Mr Robertson.

In terms of IT, 2010 will be the year of the NetTab, the connected portable device which is smaller than a notebook but bigger than a smartphone. According to Deloitte’s research, tens of millions of people will buy NetTabs this year.

“These devices have an advantage over smartphones, which are relatively small for watching videos or web browsing,” said Mr Robertson.

“They also have the edge over notebooks, netbooks, and ultra-thin PCs, which are heavy and expensive.”

The likes of Apple and Microsoft are likely to launch their products early this year and custom-designed tablets are also likely to be released by start-ups, existing phone and PC makers, netbook leaders, and various smaller manufacturers.

Since NetTabs are designed to connect wirelessly over WiFi, wireless carriers are likely to try to push users off cellular networks and onto WiFi as much as possible. NetTabs are also more expensive than most smartphones, and consumers are likely to demand big upfront subsidies.

However, there could be problems ahead as with nearly 600 million mobile broadband connections, 2010 could see the wireless equivalent of gridlock.

But according to Mr Robertson, this will present an opportunity for telecommunication technologies that can make existing wireless networks perform better.

“We believe hardware and software producers will benefit from addressing the congestion problem,” he said.

“Handset-makers, specifically of smartphones, that adopt technologies to reduce network usage relative to competitors will also have an advantage.” 

Article to accompany 2010 TMT predictions press release “Deloitte predicts the rise of the DVD vending machine”

28 January 2010

LIFE IN 3D

Last year, experts in Deloitte’s Technology, Media and Telecommunications (TMT) practice gazed into their crystal balls to predict what would be hot or not in the sector in 2009.

Among the many predictions made by the firm was that 2009 would be the first billion-dollar year for 3D movies at the box office.

Last year, cinemas saw a boom in 3D film sales thanks to the likes of James Cameron’s blockbuster, ‘Avatar’, and a number of other animated movies. Of the major 3D films released in 2009, four were in the top ten highest grossing movies at the global box office. The four films were, ‘Up’ (3rd), ‘Avatar’ (5th), ‘Monsters vs Aliens’ (9th) and, ‘Ice Age 3: Dawn of the Dinosaurs’ (10th).

Other 3D Films Released in 2009 (source: www.imdb.com):

1.                   My Bloody Valentine

2.                   Coraline

3.                   Bolt

4.                   G-Force

5.                   Piranha

6.                   Final Destination 4: Death Trip

7.                   Toy Story (re-released in 3D)

8.                   Astro Boy

9.                   A Christmas Carol

10.               Planet 51

As predicted by Deloitte, this year will also see the first live 3D TV sports broadcast in Europe. Rugby fans will be able to live every crunching tackle like they were on the pitch when England’s forthcoming Six Nations match against Wales is shown in selected cinemas across the UK. There are also plans to show live football and boxing in 3D.

Chris Robertson, Deloitte TMT partner in Birmingham, said: “Cinemas are facing tough trading conditions – consumer confidence is still low, despite forecasts of a recovery in the economy. To keep the box office busy, theatre owners need a reason to convince consumers to spend their hard-earned cash with them. 3D movies may well be that difference.  That said, while the supply of 3D content is likely to grow, the number of venues at which to watch movies and sport are likely to remain limited.”

Chris Robertson, continued: “With all the major TV manufacturers planning to launch 3D sets onto the market, 3D TV may well be one of this year’s most talked about gadgets. But we are not likely to see mainstream adoption of 3D televisions in the UK’s living rooms in 2010. One of the key obstacles to adoption will be the lack of a single standard. Until the industry determines a single standard to go for, consumers may be reluctant to invest, on the basis that their 3D ready television may not work with their provider’s 3D service.  

“There has been some experimentation with 3D, for example a week-long series of programmes in 3D, including rare footage of the Queen’s coronation, was aired in late 2009 on TV. BSkyB has announced it is planning to launch a 3D channel later this year and part of this year’s World Cup and the London 2012 Olympics may also be shown in 3D. Thus, 3D television appears a five year project to make it mainstream, but this is a similar time frame to that experienced by HD TV.”

However, while there have been a spate of announcements and stories about 3D in the living room, Deloitte expects only limited launches of 3D TV channels and only niche adoption of 3D televisions.  3D television’s year will come. But it will not be a mainstream success in 2010.

Deloitte’s other 2009 TMT predictions:

Decline of print media industry – The challenges facing the print media industry were well documented last year, but it was back in January when Deloitte first forecast that declining advertising revenues, increasing costs and a dismal economy would combine to place severe pressure on the industry in 2009. Indeed, according to the Audit Bureau of Circulations’ latest figures all major national newspapers recorded year on year falls in circulations during December. Unfortunately, this is a trend that has also hit regional newspapers.

Business to embrace social networking – Referred to by the uninitiated as social ‘not-working’, social networking still has a long way to go before it is considered as a genuine business tool. However, last year Deloitte tipped online social networks to break into enterprise.  The firm also predicted that governments would adopt ‘enterprise social networking’ (ESN) as a way of communicating at low cost. Suffice to say that 2009 was indeed the year that business embraced social networking. Last year LinkedIn reached 50 million members worldwide and is continuing to grow at around one new member per second. Facebook also has more than 100,000 small business pages and 300,000 total business pages, with some of the world’s biggest consumer brands all maintaining a presence on the site. Furthermore, if you want to follow what Prime Minister Gordon Brown is up to you can do so by following ‘Number 10’ on Twitter.

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