Case study_1

youTube, the Internet and the future of movies

summary
The Internet has transformed the music industry. Sales of CDs in retail music stores have been declining while sales of songs downloaded through the Internet to iPods and other portable music players are skyrocketing. Increased levels of high-speed Internet access, powerful PCs with DVD readers and writers, portable video devices, and leading-edge file sharing services have made downloading of video content faster and easier than ever. In early 2006, major movie studios reached agreements with sites such as Cinema Now and Movie link, which has since been acquired by Blockbuster, to sell movies online via download. What remained a question was whether the studios could replicate the success of iTunes. However, even if customers were willing to pay a little extra, they were getting less for their money. Most movie downloads did not come with the extra features that are common with DVD releases.

Cont.
Right around the time that the studios were making their foray into Web distribution, a new challenge emerged. YouTube, which started up in February 2005, quickly became the most popular video-sharing Web site in the world. Even though YouTube's original mission was to provide an outlet for amateur filmmaker digital rights management issues immediately emerged. YouTube measures to discourage its users from posting illegal clips included limiting the length of videos to 10 minutes and removing videos at the request of the copyright owner. It was, however, a losing battle. Clips from popular movies and shows were often posted by multiple users, and they could be reposted as quickly as they were removed. And watching a two-hour movie in twelve 10-minutepieces proved to be a small price to pay to view the movie for free. Academics and media executives estimate ranges loss of material from 30 to 70 percent.

 A few of the electronic channels threating traditional business are: 1. Online Media Stores (iTunes, Amazon, etc.) 2. Video Streaming Services (YouTube, Vimeo, etc.) 3. Subscription based Rental Services (Netflix, Blockbuster, RedBox) 4. Bit Torrent Services 5. Hosted File Sharing Services (Hot File, Rapid Share, 4Shared)

Question- Answer
1.What competitive forces have challenged the movie industry? What problems have these forces created? What changes have these problems caused the movie and television studios to make?

The competitive forces that have challenged the movie industry are YouTube, google and other online sources where customers can download and watch movies/Television shows for free. The development of the movies and TV shows online has become a major problem for the movie/t.v industry. YouTube, which started up in February 2005 quickly made the most popular video sharing website in the world with over 100 million views daily. Soon enough, video clips of copyrighted Hollywood movies and television escalated on YouTube. The media had to go through $1.25 billion in damage and lost battle. In fact, the industry claims that 30-70% of the videos on YouTube are illegally downloaded. Since customers were now watching movies for free, this put a great impact on them. Sales of DVDs were declining while downloading and watching movies online were growing. So, to solve this problem, the movie and television studios decided to do something about this. YouTube has now negotiated with CBS, Universal Music, Lionsgate, Electronic Arts and other media companies who have the copyrights to claim their videos and start showing ads alongside them. So now, YouTube and the copyright owners share the revenue. Although even today, not many DVDs are bought because everyone started to watch movies and such online. At least today, the industry got their credit and half of the profit made.

2.Describe the impact of disruptive technology on the companies discussed in this case?
Ans: YouTube is to the motion picture industry what Napster was to the music industry. That is, its a conduit to new processes that are more customer-driven than the old ones. YouTube has become the most popular videosharing Web site because it gives users what they want when they want it. People wanted an outlet for the creative video diaries and amateur films that they created using inexpensive digital video equipment. Disruptive technologies continually displace old technologies that, while they are still good products, no longer serve a customer base. That explains what is causing the changes in how customers want to receive motion pictures

 The disruptive technology has had a significant impact on this case. The ability to quickly download material, and have it permeate the web, was extremely disruptive to the movie industry. Having the movies readily available on YouTube, or other "bootleg" resources, and cut into the revenue of the production firms. Movie firms generate their revenue from movie theaters and movie rentals. Gaining free movie access through YouTube bypassed the traditional movie revenue generators, and ate away at the potential volume and profits that they could have gained. Initially, the movie studios viewed YouTube as an enemy. Viacom sued YouTube for $1.6 billion for 150,000 copyrighted violations that they found on the YouTube site of their material.

3.How has the movie studios responded to YouTube? What is the goal of the response? What can the movie studios learn from music industrys dealings with online digital music and copyright infringement? Ans: In the studio major movie studio reached agreement with sites such as cinema now and movie link which has been acquired by blockbuster to sell movie online via download. The studio moved to build on the movement created by the success of the iTunes music store .which demonstrated that consumer were very willing to pay for legal digital download of copyright material. at the same time ,the they hoped that entering downloading sales market would enable them to preemptively confront the privacy issue in their industry to avoid the fate of the music industry.

 In the music industry dealing with online digital music and copyright music Hollywood movies and television show the soon on you tube right alongside the video diaries created by teenagers with Webcams and the amateur films created by film students .you tube measures to discourage its users. From posting illegal clips included limiting the length of videos to 10 minutes and removing videos at the request of the copyright owner.

4. Should motion picture companies continue to use you tube to promote their new films? Why or why not?
Ans: Yes ,the motion picture companies continue to use you tube to promote their new films, because the motion picture studio relationship to you tube it remain to seen whether streaming video can actually be profitable. Because, 55% of the video content watched in the bus .in 2010 will be in the form of video streams 44 billion of them. A large part of the problem is that the video that are most popular online are the least attractive to advertisers due to inappropriate or objectionable material, or because they are simply dull. For all of the players in the movie game studios.

 Video-sharing sites rental companiespartnerships and revenue sharing seems the best choice for maximizing the revenue streams made possible by new technology. The motion studios continue to seek out more partners for movie downloads. the six major studios reached an agreement with wall-mart to allow the discountshopping giant to sell movie downloads from its website wall-mart joined iTunes ,cinema now, Amazon , and others who already had such deals. All will now compete on pricing and ease-of use of their website.

5. Go to youtube and search for videos from your favourite movie or television show. What do you find on this side ? do you see any advertisements attach to the video ? do you feel this way of advertising is effective ? why or why not ?