january 2005 - sfu.ca › cmns › courses › 230 › body text.section › scree… · one of the...

screendigest

scre

endi

gest

January 2005Issue number 400

Global media intelligence

Film Wired media

Satellite

Production

On-line

Wireless media

Video

Interactive

E-cinema

Television

Audio

Piracy

Technology

CultureGames

Sport

Rights

Cinema

3-12 Focus3 DVD not all-time fastest take-up

Although DVD hardware does not take off as fast asgames consoles, it has much greater staying power

4 Comedy drama rules French filmTechnical costs are proportionately double for lowerbudget films

6 Cooling of football TV rights dealsThe French league has become the most expensive inEurope but elsewhere TV platform mergers haveeased competition for football rights

7 Europe leads USA on films perhead

Smaller population territories with attractive incentiveschemes come out on top

8 Germany�s television prospectsPremium services are a tough sell in Europe�s largesttelevision market

10 Foreign films make advances in USDespite a long apparent antipathy to foreign films,US audiences are becoming more accepting of them:43 per cent of the top 100 imports were released inthe past five years

11 DVD take-up equals VCRs in 1990But Europeans behave very different from 14 yearsago, buying rather than renting software

12 DVD fails to spark German interestDespite high penetration, software spending is stillrelatively low

Business: Mergers, acquisitions andinvestments; On the money markets;Content deals; Technology deals

pages 28-29

Worldview page 2Events diary page 30Databox page 31Perspective page 32

www.screendigest.com

Regulation

Censorship©

13-20 Profile13 Video on the move

The issues and the technology of delivering personalvideo

Can video become as popular a mobile entertainmentas MP3 music files? And what are the issues involvedin building the market?

17 Gaming on the moveAlready a billion-dollar industry and counting

Although downloadable applications have provedpopular with consumers, the numbers are still tinyrelative to the traditional console and handheldgaming business.

Change in audio sales since broadband adoption

GERMANY

0

5

10

15

20

25

30

200320022001200019990.0

0.5

1.0

1.5

2.0

2.5

3.0

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broad-band

One of the major issues at the Consumer Electronic Show(CES) in Las Vegas earlier this month was the line-up ofprotagonists in the battle for the next-generation of DVDtechnology (21a3). The two camps, HD DVD and Blu-rayDisc (BD), were both there in force with working prototypeplayers and recorders, and the balance of power between thetwo was not all that easy to measure, even though Blu-ray hasthe more impressive line-up of heavyweight manufacturers.Even the two companies that have developed backwardscompatible technology that will allow consumers to play highdefinition (HD) content in standard definition are in differentgroupings: Japan�s JVC supporting Blu-ray and Canada�sCinram backing HD DVD (27b2).

However, before consumers get to make that choice�if that proves to be the outcome�they are likely to consideracquiring DVD recorder technology. The world�s largestretailer, Wal-Mart, is trying to get the entry-level cost ofrecorders below the landmark $100 pricing point by leaning onTaiwanese manufacturers (27b1).

Meanwhile, the growth rate for key DVD markets,although still substantial, is slowing from the rapid accelerationof previous years, as might be expected in a maturing marketsector (26a1). Nonetheless, evidence has emerged that peoplewho rent DVDs are also regular cinemagoers (25b3).Television programming on DVD has cornered a significantshare of the rental market, suggesting that it is broadcasttelevision rather than cinema that is most in danger of losingaudiences.

More studios have adopted the Mini-DVD format thatwas introduced for children�s product but is now being usedfor mainstream product like Harry Potter and the Prisoner ofAskeban, bringing the number of titles available or imminent tonearly 100 (21a2).

Hardware shortages appear to have hampered pre-Christmas sales of games devices in both Europe and the US,although this is being interpreted as a phenomenon in thelifespan cycle of current technologies (24a3). Screen Digest�sGames Intelligence service now postulates that 128-bithardware peaked in 2003. Despite this, games software saleswere still up 28 per cent in volume and 15 per cent in value inEurope last year (26b1).

The annual haul of full-year cinema statistics has startedwith mostly positive results. Box office revenue in the UK andIreland reached an all-time high in 2004, the US majors oncemore increasing their share of takings (25a3). Irish productionalso pushed up to a new record value in 2003, according tojust-released data, but are expected to have slipped back in2004 (21a1), while French production is confirmed to havefallen last year (21b1). Ticket sales were down in theNetherlands for the first time in five years�a stark contrast toPolish returns, which were over 40 per cent higher in bothadmissions and revenue.

Russian cinema box office also soared by 40 per cent(25b1) and in China revenue was up by 50 per cent year-on-year (25a1). In both countries local films topped the charts.The Chinese film House of Flying Daggers alone accounted for 10per cent of takings, helping to give local films a 55 per centshare of the market, as well as enjoying success in exportmarkets. Russia�s big hit, Night Watch, has yet to make such aninternational impression.

Founded 1971 January 2005 Issue number 400

ISSN 1475-0171

EditorialScreen Digest Limited

Lymehouse Studios30-31 Lyme StreetLondon NW1 0EE

telephone +44/20 7424 2820fax +44/20 7424 2838

e-mail [email protected]

SubscriptionsScreen Digest Subscriptions

Lymehouse Studios30-31 Lyme StreetLondon NW1 0EE

telephone +44/20 7424 2820fax +44/20 7424 2838

e-mail [email protected]

Editor David FisherExecutive Editor Ben KeenSenior Editor Mark SmithSenior Analysts Arash Amel Guy Bisson Helen Davis JayalathDavid Hancock Tim WestcottAnalysts Paul Callaghan Charlotte Jones Tim GreenMaria Rua Aguete Daniel Schmitt David Scott Research Analysts Marie Bloomfield Rob Borgeaud Dan CryanIndex/Archive Megan EdwardsSpecial Correspondent Barry Fox

Managing Director Allan HardyDirector of Marketing Dan StevensonSales Manager Jonathan Fletcher PR and Promotions Manager Fay HamiltonElectronic Publishing Manager Natasha SmithFounder John Chittock OBE FRTS FBKS FRPS

Subscription ratesincluding annual binder£425 a year in UK (first class post)�666 or US$845 a year elsewhere (air mail)

Published monthlyPrinted by FotoDirect, Brighton BN1 8AF© Screen Digest 2005 Not to be reproduced

Screen Digest publishes a range of market research reports on screen media. Seethe insert in the centre of this issue for details of recent publications. Allcontent is available on the Internet. In addition to the news and features from thisjournal, our website provides access to the research reports, providing data andanalysis on most aspects of the global media industry.

We also undertake single-client studies, using our editorial resources andconsultants, and provide customised data services.

Screen Digest offers four Intelligence services�providing access to constantlyupdated historical and forecast data on a global basis for these industries:Video/DVD; TV & Broadband; Cinema & Digital Cinema; GamesContact [email protected] for more details.

Â References in Screen Digest comprise the year, the page number, the column(a left, b right) and the number of the item from the top of the page. Thus,2004/321b2 refers to the second item in the right-hand column on page 321of the 2004 issues, counting from the first heading.

WORLDVIEW screendigestInsi

ght

2 www.screendigest.com

NEWpleaseupdate

yourrecords

ĄĄ

NEWpleaseupdate

yourrecords

ĄĄ

Ą

Although the DVD player is generally considered to bethe fastest growing consumer electronics device, analysisof Screen Digest�s global hardware figures reveals that inthe initial take-up period gaming hardware has actuallyachieved a faster rate of adoption. Games consoles suchas the PlayStation 2 (PS2) and Game Boy Advance(GBA) have an immediate but short-term impact on thehardware market, whilst the impact of DVD players isslower but more enduring.

Released in 2000, the PS2 attained a globalinstalled base of almost 60m within four years of launch.A year later, the GBA (and its derivative GBA SP) wasexpected to exceed this figure by end 2004. ConverselyDVD�launched in 1997�failed to achieve half theinstalled base of these gaming platforms after four yearson the market, with only 25.5m equipped households by2000. An evaluation of the installed base for the threerespective hardware platforms in Europe, USA andJapan endorses the trend identified in the global market.

However, after a further two years the market

position of gaming hardware and DVD is reversed as thevideo format�s installed base overtakes that of thegaming platforms. Six years after release, the globalinstalled base of DVD reached over 100m households,compared with 86m PS2s and 78m GBAs (according toScreen Digest forecasts). This illustrates the cyclicalnature of gaming hardware, with sales declining as thehardware approaches the end of its lifespan and issuperseded by the next generation. This trend is alsoreflected in the European and American markets.

However the situation in Japan is different, asDVD hardware has taken much longer to penetrate themass market. Six years after release the installed base ofthe GBA at 19m and PS2 at 18m still eclipses that of the6m achieved by DVD.

By 2004, eight years after the launch of DVD in1997, there is little doubt that the global installed base ofDVD hardware will continue to grow, whereas thenumber of gaming households eight years after launch isexpected to remain flat as the platforms are supersededby newer models. In fact, in Western markets thenumber of DVD households is expected to be two orthree times that achieved by either gaming platform aftereight years. This highlights the fact that in the WestDVD has become much more of a mass-marketconsumer electronics device when compared with thelimited demographic appeal of gaming devices.

The presence of a highly developed video gameculture and the relatively slow adoption of DVD players(at least until the introduction of DVD recorders withbuilt-in hard disk drives) means that Japan somewhatcontradicts the pattern, with an installed base of DVDplayer/recorders in 2004 slightly lower than that of eitherof the two gaming platforms eight years after launch.

SCREEN DIGEST January 2005

Focu

s

DVD NOT ALL-TTIME FASTEST TAKE-UUPInitial take-up of gaming hardware is faster than DVD hardware

¸ Over time DVD hardware sales gain momentum and gaming hardware slows ¸ PS2 and GBA households will plateau whilst installed DVD base continues to grow ¸ Number of DVD households in the West is more than double that of any gaming platform ¸ In Japan gaming platforms continue to outperform DVD hardware

TerritoriesWorld

SectorsVideo

3www.screendigest.com

Source

Screen Digest

Europe: Hardware installed base comparison

Key

Global hardware installed base comparison

0

20

40

60

80

100

120

87654321

inst

alle

d ba

se (m

)

years from launch

0

50

100

150

200

250

87654321

inst

alle

d ba

se (m

)

years from launch

PS2

GB

A

DV

D

USA: Hardware installed base comparison

0

10

20

30

40

50

60

70

80

87654321

inst

alle

d ba

se (m

)

years from launch

Japanj: Hardware installed base comparison

0

5

10

15

20

25

87654321

inst

alle

d ba

se (m

)

years from launch

France is the leading film producer in Europe, byvolume, with strong government support of both its ownsector and all other francophone countries. France nowproduces over 200 films a year on a regular basis. Thesedata are taken from two bits of research carried out bythe CNC. ¸ The first took a sample of 156 French films producedin 2003 and studied genres. Of these films, about two-thirds have final budgets of between �1m and �7m.Overall, the average budget of the sample is �4.08m(compared with the 2004 average budget of all films of�5.92m - see French film production falls in 2004 underGeneral).¸ The second research study took a sample of 136 filmsand studied in detail the budget expenditure structure.

GenresAcross all budget ranges, one-third of the entire sampleof 156 films were dramatic comedies (32.1 per cent),while 22.4 per cent were comedies. The only other genrethat makes it into double figures is drama (13.5 percent). Documentaries made up nine per cent of thesample. All other genres can be considered marginal atbest, with horror and fantasy counting only one filmeach.

Within the lower budget level (under �1m), themajority of films are dramatic comedies or documen-taries. In fact, at this level, nearly half of all films madeare theatrical documentaries, nearly the only level atwhich these are made. At the �1m-�3m level, 33 of the52 films produced were dramas or dramatic comedies(the French genre of comédie dramatique, literallytranslating as �dramatic comedies� or �dramatic plays�, asdistinct from drame which literally translates as �drama�).However, at this level seven titles were comedies andthere was a liberal sprinkling of smaller genres, such asadventure, psychological dramas, musicals, thrillersand police dramas.

Within the mid-range budget level of �3m-�7m,32 of the 47 films made were the dramatic comedy andcomedy genres, with only one traditional drama. Therewere four animated films (these appear only at the toptwo budget levels). There were four police dramas andagain a small number of other genres (adventure, period,horror, thriller).

At the top end of the sample, above �7m, thesample was 25 films. Of these, 10 were comedies. Therewere also three dramas and three dramatic comediesmade. There were a further two animated titles, and two


Focu

s

COMEDY DRAMA RULES FRENCH FILMTechnical costs are proportionally double for lower budget films


¸ Only two action titles were produced in France, confirming that French films tend to be led by scripts anddialogue rather than effects and technology

¸ The majority of French film budgets goes on remunerating people, less than a third on the shoot itself¸ The period of the film shoot accounts for a higher proportion of expenditure as the film's budget rises

TerritoriesFrance

SectorsFilm

Source

Screen Digest from CNCand Allociné data

Typology of French films by budget and genre 2003

<�1m �1m-�3m �3m-�7m >�7m total %action 0 0 0 2 2 1.3

animation 0 0 4 2 6 3.8

adventure 0 1 1 2 4 2.6

comedy 2 7 16 10 35 22.4

comedy drama 9 22 16 3 50 32.1

documentary 13 1 0 0 14 9.0

drama 6 11 1 3 21 13.5

psychological drama 0 3 0 0 3 1.9

fantasy 0 1 0 0 1 0.6

period 0 0 2 1 3 1.9

horror 0 0 1 0 1 0.6

musical 1 2 0 0 3 1.9

police drama 0 2 4 1 7 4.5

thriller 1 2 2 1 6 3.8

total 32 52 47 25 156 100.0

Breakdown of French films by budget level 2003

based on 156 films

budgetfilms min average max

budget no % �000s �000s �000s<�1m 32 21 59 534 995

�1m-�3m 52 33 1,006 1,928 2,979

�3m-�7m 47 30 3,011 4,874 6,755

>�7m 25 16 7,059 11,590 22,176

French films by budget level 2003

>€7m(25)

€3m-€7m(47)

€1m-€3m(52)

<€1m(32)

action/adventure titles. There were only two action titlesmade in France, as films tend to be script-led rather thaneffects-led. This is in sharp contrast to the USA, whereaction titles make up a significant proportion of filmsproduced.

Breakdown of production costs by budget level The structure of a film�s budget varies by country.However, the French model is widely used, given theinfluence of the country within European and Africanfilm production communities.

Overall, remuneration accounted for 54.9 percent of a film�s budget. Technical costs accounted for15.9 per cent of the average film�s budget while theshoot itself accounted for 29.2 per cent of budgetexpenditure. On a more detailed look, One quarter of afilm�s budget goes to the crew while only 11.9 per centgoes to the cast. Artistic rights account for 7.3 per centof the budget. Within the technical sub-head, the

majority is taken by technical costs (including specialeffects) and 6.1 per cent goes on film stock and labcosts. During the shoot, the highest budget item istransport and expenses (at 10.1 per cent of budget),whilst 8.0 per cent goes on costumes and sets. Insuranceaccounts for five per cent of the average budget.

However, there are significant variations betweenthe proportions accounted for by each budget headaccording to budget levels. In general, the amount spenton remuneration increases as the film�s budget goes up.This is largely down to increased spending on the film�scast (7.3 per cent of the budget for films under �1m and13.5 per cent on films above �7m). This makes sensewhen you consider that the actors are better known andexperienced at the top end of the market.

Technical costs decrease in proportionalsignificance as budgets rise. This is mainly because thesecosts, while not being standard, are certainly consistentacross all films. You can�t make a film without film stockand a lab is also needed to produce a master print.Whilst digital video is changing this equation, severalfinance sources (especially public ones) need a lab certifi-cate to sign off on funding. For the lowest budget films,technical costs represent 29.3 per cent of total budgetaryexpenditure and this falls to 13.3 per cent of the highestbudgetary level.

The shoot itself accounts for a higher proportionof expenditure as the film�s budget rises (22.2 per centfor lowest budgets going up to 31.1 per cent for highestbudget range). This is especially down to the expenditureon sets and costumes (3.7 per cent for lowest budgetrange rising to 9.3 per cent for highest budget levels) andinsurance.



budget <�1m �1m-�3m �3m-�7m >�7m�m % �m % �m % �m %

remuneration artistic rights 0.88 7.4 6.3 6.4 15.37 7.3 20.78 7.8

labour/crew 2.67 22.6 24.32 24.5 53.02 25 61.91 23.2

cast 0.86 7.3 8.77 8.8 24.36 11.5 36.05 13.5

social charges 1.34 11.3 10.85 10.9 25.84 12.2 30.09 11.3

technical technical resources 1.76 14.9 11.06 11.2 21.09 9.9 24.16 9.1

film stock and labs 1.71 14.4 9.47 9.6 13.74 6.5 11.13 4.2

shoot sets and costumes 0.44 3.7 5.43 5.5 16.46 7.8 24.75 9.3

transportation and expenses 1.12 9.5 11.73 11.8 18.66 8.8 28.17 10.6

insurance and other 0.34 2.9 4.74 4.8 10.52 5 14.06 5.3

miscellaneous 0.73 6.1 6.45 6.5 12.91 6.1 15.63 5.9

total 11.85 99.12 211.97 266.73

Budget expenditure breakdown: averages by scale of production 2003

socialcharges

cast

labour/crew

artistic rights

miscellaneous

insuranceand other

transportation and expenses

sets andcostumes

film stockand labs

technical resources

>€7m€3m-€7m€1m-€3m

<€1m

These charts show theaverage cost breakdown bymain budget headings foreach of four budget bands.They are designed to showhow relative costs are scaledand how increases in budgetsize do not necessarily trans-late into linear increases ineach department.

REMUNERATION TECHNICAL/SHOOT

French films budget breakdown by size of budget 2003

0 20 40 60 80 100

>€7m

€3m-€7m

€1m-€3m

<€1m remuneration technical shoot

proportion of total budget (%)

The deal struck at the end of last year between the Liguefrançaise de football and pay TV operator Canal Plus forTV rights to the first division championship will makethe French league the most expensive in Europe. Thesize of the deal��600m �tops the £376m (�534m) thatthe English Football Association makes each seasonunder its current contract with BSkyB and the BBC.

The existence of two pay TV platforms inFrance means the market is�at least in the area of payTV rights�out of step with the rest of Europe. In othermajor territories there has been a cooling off in the valueof TV rights after several years of huge inflation.

In the UK, the English FA made £334m lessfrom the sale of its TV rights when it signed a newthree-year deal which kicked off this season. BSkyB paidfractionally less for the pay TV and PPV rights, thanksto the absence of other bids. The BBC paid less forhighlights than ITV, which previously held these rights.

Elsewhere, platform mergers in Italy and Spainhave dampened the football rights fever (although digitalterrestrial will act as a test bed for pay-per-view coveragein Italy), and in Germany the collapse of the Kirch grouphelped keep down the value of the current TV contract.

Canal Plus won the bidding for all four packagesof matches put up for auction by the LFP (see table),including three live matches a week to be shown on payTV, seven pay-per-view matches, and highlights. Thiswill also make France one of the few countries wherethere is no national league football at all on free TV. Thetotal value of the contract will be �600m a season. CanalPlus is currently sharing TV rights with TPS for a totalof �375m�a situation derived from the successful legalchallenge mounted by the TF1 Group-backed platformagainst a previous exclusive deal with Canal Plus.

Armed with coverage of the league, Canal Plusbelieves it will be in a strong position if TPS is finallypersuaded to come to the merger negotiating table.Therights will account for two-thirds of the programmingbudget and may, some commentators fear, provedifficult to sustain unless large numbers of subscriberscan be signed up. TPS commented that it had decidednot to compete in an �unreasonable inflation of costs�.

England: At the time the previous FA contract wasnegotiated, Sky faced opposition from the ONdigitalplatform and cable company NTL. Although NTL wasawarded pay-per-view rights, it later decided it had over-bid and gave the rights back. For the first time, Sky willshow every Premiership match live on pay TV or PPV.

Germany: Pay TV platform Premiere shows all 306matches live on pay TV and PPV for a total of �180m.Public broadcaster ARD shows two matches a season inthe clear and highlights of Saturday matches, and sportschannel DSF shows highlights on Sunday evenings.

Italy: The merger of Tele+ and Stream created a de factopay TV monopoly. Clubs sign their own TV deals ratherthan negotiatng as a league but the single DTH platform,Sky Italia, has signed up all of the clubs in the top twodivisions. But it faces a challenge on the PPV front:Mediaset and Telecom Italia have signed up digitalterrestrial, cable and ADSL rights for leading clubs andlaunched PPV coverage on 23 January. Mediaset has alsooptioned all pay TV rights for top clubs Inter, Milan andJuventus when their current agreements expire. In total,TV rights for Serie A are said to be worth �340m thisseason, with an additional �54m for DTT rights.

Spain: The merger of Canal Satelite Digital and ViaDigital and the collapse of the Quiero terrestrial platformhas stabilised the pay TV marketplace. Clubs negotiatecollectively, the overall value of the contract is �300m ayear. However, the share of individual clubs�notablyReal Madrid and Barcelona�and the terms of PPVrevenue deals vary from club to club. Audiovisual Sport,a rights agency majority owned by Sogecable, holds therights. Matches are shown on a PPV basis by digital+,one match is shown on Canal Plus and one on localstations under the Forta umbrella. The latter match issub-licensed to TVE�s second channel.


Focu

s

COOLING OF FOOTBALL TV RIGHTS DEALSCanal Plus goes for broke with new contract


¸ Except in France, pay TV platform mergers have eased competition for football TV rights¸ French league rights deal with Canal Plus raises the temperature on pay TV group's rival TPS and again

raises the prospect of a merger between the two platforms ¸ Pay TV rights in the key five European terriroties are worth a total of �1.68bn per season

TerritoriesEurope

SectorsTelevision

Source

Screen Digest

France: Canal Plus Ligue 1rights 2005-2008

�m

First choice match,

Friday or Saturday

primetime 220

Two other matches,

Saturday or Sunday pm 210

Highlights 60

Seven other matches

on PPV 110

Total 600

European pay TV football rights deals

value/league season rights holder FTA rights term

�mEngland 485 BSkyB BBC (highlights) 2004/05�06/07

France 375 Canal Plus and TPS 2004/05

Italy 340 Sky Italia Rai (highlights) 2003/04�05/06

Spain 300 Sogecable (Canal+ FORTA (one live match/week) 2003/04�05/06

España and Digital+) and TVE

Germany 180 Premiere ARD (two live matches/season, 2004/05�05/06

highlights), DSF (highlights)

Relating film output to population shows how strong aterritory�s production sector is compared with its relativenational market size�essentially its relative importancewithin a country, measurable against other territories. Weuse the indicator of the number of films produced permillion head of population.

Two of the smallest European territories havethe strongest film sectors compared with their nationalsize: Iceland and Luxembourg. Both these territorieshave attractive film incentive systems due to governmentrecognition of the economic benefits of building asustainable film industry (both domestic and attractingoutside productions). However, given the very low levelsof production in these territories and the smallpopulation, the ratio does vary widely, in the case ofLuxembourg from zero in 2001 to 6.6 in 2003.

By this measure, the Nordic territories alsoperform strongly, with stable government supportsystems and high production levels. The exception isFinland, which performs below average for its size.There are four Nordic territories in the top 10.

Territories from the east of Europe, includingseveral that have recently joined the EU, have relatively

small production sectors. They suffer from poor levels offinancial support, low budgets and little or no hope ofoutside distribution. However, becoming a full EUmember should open up each of these territories to bothwider distribution possibilities and greater ease of co-production.

In terms of growth from 2001 to 2003, there ismore positive news from the east, with the highestgrowth rates using this measure coming from the verysame territories that have a low ratio. Bulgaria tops thelist with a growth rate of 206 per cent, with Slovakia alsoin triple-digit growth (147.8 per cent)

Of the major production territories, Franceconfirms its status as a lead production territory, with arelatively high production volume compared to itspopulation and a positive (albeit small) growth rate. TheUK�s excellent production year in 2003 led to a growthrate of 110.6 per cent of the measure between 2001 and2003 from 1.38 to 2.91.

Spain and Italy are both fairly close to theaverage, with positive small growth rates while Germanyunderperforms quite markedly (ratio of 1.29 and anegative growth rate of -3.3 per cent).


Focu

s

EUROPE LEADS USA ON FILMS PER HEADProduction related to population favours smaller states

¸ Smaller population territories with an attractive film production incentive system come out on top¸ Nordic territories perform very creditably, four out of five countries outperforming the average¸ Eastern European territories display under-developed film production sectors but most have good growth

rates and are showing signs of improvement

TerritoriesEurope

SectorsFilm


Source

Screen Digest

Films per million population:Europe v USA

Film productions per million head of population

0

2

4

6

8

10

12

Ukr

aine

Croa

tia

Lith

uani

a

Rus

sian

Fed

erat

ion

Pola

nd

Rom

ania

Latv

ia

Slov

akia

Bel

gium

Ger

man

y

Bul

garia

Czec

h R

epub

lic

Port

ugal

Net

herla

nds

Finl

and

Italy

Aust

ria

Hun

gary

Esto

nia

Gre

ece

Irela

nd

Spai

n

UK

Swed

en

Slov

enia

Fran

ce

Nor

way

Den

mar

k

Switz

erla

nd

Luxe

mbo

urg

Icel

and

film

s pe

r mill

ion

popu

latio

n

0.0

0.5

1.0

1.5

2.0

2.5

USAEUEurope

film

s p

er m

illio

n p

op

ula

tio

n

Germany, the European Union's economic powerhouse,is the continent's most important television marketthanks to the number of TV households. However,Germany has proved a very difficult case for premiumtelevision. In the other top five European markets---theUK, France, Italy and Spain---the penetration ofpremium television currently ranges between 15 and 41per cent.

By contrast, Germany's only significant premiumTV operator, Premiere, has reached a penetration of only8.5 per cent as of year end 2004. Cable operators, stillhampered by regulatory issues, have just started to offerdigital and premium television but so far the take-up hasbeen disappointing. It will depend on the performance ofGermany's huge, largely undeveloped cable market

whether the television market can catch up with itsEuropean neighbours in terms of subscription revenues.

Satellite TVAbout 30 per cent of Germany's television householdsreceive TV signals through satellite, a figure higher thanin most other European markets. In France the totalpenetration of satellite television is 21 per cent, while it is19 per cent in Italy and 17 per cent in Spain. Theproblem for providers like Premiere is: the vast majorityof Germans is unwilling to pay for premium television.

Free satellite television penetration currentlystands at 26 per cent, whilst Premiere's premium satelliteservice has achieved a penetration of less than four percent since it was launched in 1996.


Focu

s

GERMANY�S TELEVISION PROSPECTSPremium services are a tough sell in Europe�s largest TV market


¸ Many Germans are content with their existing services and slow to upgrade to premium offers¸ Fragmentation of the cable infrastructure has hampered development and investment¸ The only significant premium television service, Premiere, still has a low penetration rate¸ Despite limited use of off-air reception, DTT has been making steady in-roads

TerritoriesGermany

SectorsTelevision, cable, satellite

Source

Germany: television market overview

2000 2001 2002 2003 2004population 000s 82,193 82,263 82,526 82,789 83,053

households 000s 37,853 38,061 38,428 38,793 39,163

TV households 000s 37,096 37,338 37,660 38,017 38,379

digital cable penetration % 0.00 0.02 0.02 0.06 0.15

analogue cable penetration % 59.57 59.17 58.80 58.34 57.69

total cable penetration % 59.58 59.19 58.82 58.39 57.84

analogue DTH penetration (pay) % 0.54 0.35 0.11 0.00 0.00

digital DTH penetration (pay) % 1.83 2.23 3.06 3.52 3.89

DTH penetration (pay) % 2.37 2.58 3.17 3.52 3.89

analogue DTH penetration (free) % 26.65 26.48 26.25 26.01 25.76

digital DTH penetration (free) % 0.16 0.16 0.16 0.16 0.16

DTH penetration (free) % 26.81 26.64 26.41 26.16 25.92

DTH (total) % 29.19 29.22 29.58 29.68 29.81

DTT penetration (pay) % 0.00 0.00 0.00 0.00 0.00

DTT penetration (free) % 0.08 0.53 2.72

DTT penetration (total) % 0.00 0.00 0.08 0.53 2.72

total analogue terrestrial penetration (pay) % 0.00 0.00 0.00 0.00 0.00

IPTV penetration % 0.00 0.00 0.00 0.00 0.03

total analogue pay TV penetration % 60.11 59.52 58.90 58.34 57.69

total digital pay TV penetration % 1.83 2.25 3.08 3.58 4.07

pay TV penetration % 61.95 61.77 61.99 61.92 61.76

total digital TV penetration (pay and free) % 1.99 2.41 3.32 4.26 6.95

It is easy to understand why most Germans haveso far refused to subscribe to a premium televisionservice. A large number of free channels are available viasatellite, enough to satisfy the average German's demandfor television. However, since Premiere is under newmanagement, which took over after the collapse of thecompany's former owner, the Kirch group, subscribertake-up has gone up and the future does not as bleak asa couple of years before.

Cable TVGermany is home to the most complex and troubledcable market in Europe. At 58 per cent of TVhouseholds, cable uptake is relatively high. But digitalcable penetration currently stands at 0.15 per cent, afigure that leaves Germany lagging behind all othermajor European markets. What's more, cable subscriberspay only a relatively small fee for the television service,limiting the revenues of cable operators. The latter istypical for utility television models, which for long havebeen prevalent in Germany, the Benelux and Nordiccountries. In a utility model cable operators mainly act assignal distributors, and broadcasters generally have to payfees in order to get carriage. Different cable tiers andpremium content packages were largely unknown inGermany outside of the small premium television worldof Premiere.

The largely undeveloped German cable marketand its supposed growth potential has constantlyattracted the attention of the world's most powerfulinvestors and cable companies. When Deutsche Telekomwas selling off its nine regional cable systems, LibertyMedia made an impressive bid of �5.5bn in 2002, but

withdrew after objections brought forward by theGerman Cartel Office. The sale of all cable systems hasbeen completed since, but for a much smaller price thanonce asked for by the former owner. Kabel Deutschlandis the country's biggest cable operator, owning six of theformer nine Deutsche Telekom cable systems servingabout 10m customers. The remaining three regionalcable systems are each operated by a different company.

The fragmentation of the German cable markethas certainly hampered the development of a healthycable market with a modern infrastructure andappropriate premium services. Yet the biggest problem isthe split of the German cable system into differentlevels. Whilst Level Three describes the trunk networkowned and operated by the likes of Kabel Deutschland,Level Four is the last mile that links cable customers'homes with the trunk network. The different ownershipof the Levels Three and Four�and insufficient co-operation between these parties and unresolvedquestions as to who should pay for any cable upgrades�have led to a standstill in the upgrade of cable systems.The low penetration of digital cable is the consequenceof this situation.

Meanwhile, both Level Three and Level Fouroperators have started offering digital packages, premiumpackages and cable Internet. But similar to the situationthat satellite premium television operators have to dealwith, many Germans will stick to the basic package ofpublic and commercial channels they are used to watch,and premium television is likely to remain a tough sell.

Digital terrestrial television (DTT)Free DTT launched in 2003 and has proved relativelysuccessful, considering that less than five per cent of thepopulation makes use of terrestrial transmission fortelevision reception. After encouraging results in Berlin,where the analogue signal has since been switched off,DTT is now available in a large number of regions. Withmore than one million DTT users by end 2004, thepenetration currently stands at 2.7 per cent of alltelevision households.

DTT has been subsidised by the local mediaauthorities, which helped to set up the technicalinfrastructure. With up to 28 channels available and set-top boxes retailing at ever-falling prices, DTT has nowbecome an alternative to cable and satellite television.And although under five per cent of television house-holds are using terrestrial signals, a higher proportion ofhouseholds could use their redundant rooftop antennaeto get DTT.

Internet Protocol television (IPTV)IPTV certainly has been one of the buzzwords of 2004.Although at the moment there is only one example of acommercially viable IPTV service---Italy's Fastweb---inalmost every European market, pay TV operators or/andTelcos have got involved in IPTV projects.

In contrast to Fastweb and other significantIPTV services, like France Telecom's MaLigneTV, thereis no broadcasting service via IP networks in Germany.Deutsche Telekom offers T-Online Vision, which is avideo-on-demand (VoD) service. Chiefly because of thenon-availability of affordable set-top boxes, and perhapsthe lack of television channels to complete the offer, theservice has not proved very successful. As of year end2004, IPTV penetration stood at a mere 0.03 per cent.



Europe: digital television penetration of all TV households

Europe: digital television penetration of all TV households

0

5

10

15UK

Spain

Italy

GermanyFrance

20092008200720062005200420032002200120001999199819971996

pene

trat

ion

(%)

forecast >

penetration (%)0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

2004

2003

2002

2001

2000

IPTV penetrationDTT penetration (free)digital DTH penetration (free)digital DTH penetration (pay)

In 2004, a total of 12 foreign-language films made anentry into the top 100 foreign films of all time in theUS�more than any other year since 1980. Of the top100 foreign films, those released in 2004 also achievedthe second highest annual revenue: $98.3m. The successwas mainly due to Chinese martial arts movie Hero, thetop foreign title of 2004, grossing a total $53.6m. It alsowent on to become the third most popular foreign

movie of all time and China�s top film title. China hadanother entry in the top 100 in 2004 with House of FlyingDaggers. In addition, Korea also had its first entry into thetop 100 with Spring, Summer, Fall, Winter in 2004.

However, Crouching Tiger, Hidden Dragon is stillthe top-grossing foreign movie of all time in the US witha total $128.1m�more than double that of the secondranked production, Life is Beautiful from Italy in 1998. Ofthe top 100 foreign titles, 22 per cent of films originatedfrom Asia, but these films have contributed a greater36.1 per cent of gross revenues. This compares withEuropean language films, which accounted for 64 percent of the top 100 but just 51.5 per cent of revenues.The 10 movies from Central and South America alsowent on to contribute 11.1 per cent of the box office.

France is the most successful foreign languagefilm producing nation, with a total of 35 films in the top100. Both Spain and China had eight films in the top100. In terms of average revenue per film, Taiwanesefilms were the most successful, although this was mainlydue to the phenomenal success of Crouching Tiger.

Italian films achieved the second highest averagerevenue at $15.2m ahead of Mexican films with $11.6m.However, Chinese films were fourth in terms of boxoffice performance at an average $9.3m per film.

The top 10 foreign language films of 2004 took acombined $99.5m equivalent to just 1.0 per cent of thenational box office. In comparison the top 10 filmsoverall accounted for 26.4 per cent of total revenues.

Four of the top five foreign-language films weredistributed by Miramax�also the most prolific distribu-tor with 26 films, ahead of Sony Pictures Classics with14. However, in terms of revenue per film releases, IFC(Independent Film Channel Productions) was the mostsuccessful Mexican film Y Tu Mama Tambien in 2002.


Focu

s

FOREIGN FILMS MAKE ADVANCES IN USMartial arts and European comedies lead in the charts


¸ Forty-three per cent of the top 100 foreign films were released in the past five years¸ More French films reached the US top 100 than any other language¸ Films from Asia-Pacific are the most successful in terms of average revenue per film¸ Italian films were second most successful in terms of average revenue per country of origin

TerritoriesUSA

SectorsFilm, cinema

Source

Screen Digest analysisbased on Boxofficemojo,Variety and IMDB

Top five foreign-language films in the USA

country gross box of origintitle distributor office ($) yearTaiwan Crouching Tiger, SPC 128,078,872 2000

Hidden DragonItaly Life is Beautiful Miramax 57,563,264 1998

China Hero Miramax 53,614,094 2004

France Amélie Miramax 33,225,499 2001

Italy Il Postino Miramax 21,845,977 1995

Source: © Box Office Mojo (www.boxofficemojo.com)

US: top 100 foreignlanguage films by country oforigin

number totalof films BO

$mFrance 32 168.39

Taiwan 3 142.31

Italy 7 106.95

China 8 74.74

Mexico 4 46.63

Spain 8 40.43

Germany 7 40.07

Japan 4 22.07

India 3 20.59

Argentina 2 17.92

Hong Kong 2 17.43

Sweden 2 15.13

Brazil 2 13.16

USA/Colombia 1 6.53

France/Canada 2 6.47

Demark 2 6.45

Czech Republic 1 5.77

Russia 2 5.31

Denmark/Sweden 1 4.54

Netherlands 1 4.23

Nepal 1 2.49

Korea 1 2.38

Cuba 1 2.08

Canada 1 2.00

France/Poland/Norway 1 2.00

Iran 1 1.82

Total 100 777.93

US: Release date of top 100 foreign films

0

3

6

9

12

15

0402200098969492908886

num

ber o

f rel

ease

s

US: Box office earnings of foreign films

based on top 100 titles

0

30

60

90

120

150

0402200098969492908886

reve

nue

($m

)

US: Leading foreign film distributors by number of titles

based on top 100 titles

other 44

Goldwyn 5 Orion Classics 11

Sony Pictures Classics 14

Miramax 26

At the end of 2004, Screen Digest research indicates thatDVD video player/recorder penetration had reached50.5 per cent of TV households in Western Europe. Theformat has achieved this level of penetration just sixyears after its official European launch in 1998. By com-parison, the VCR achieved a similar level of Europeanpenetration shortly before the end of 1990. Of course,uptake of both technologies was more rapid in somemarkets than others. In the UK, where DVD penetrationis expected to have hit 61 per cent by the end of 2004,VCRs reached a similar level in early 1988; in France(also 61 per cent DVD penetration this year) it took until1992. But in several markets DVD penetration this yearis expected to be close to VCR penetration at end 1990.

Screen Digest has been tracking European VCRsales since 1976 (when our data shows that 15,000 unitswere sold in the UK and 10,000 in Germany). Takingthis date as the starting point of the VCR era, it took thetechnology 14 years to reach a similar level of penetra-tion (52.2 per cent) at the European level and even in theUK it took 11 years. This analysis compares consumerDVD prices and tie ratios (annual rentals or purchasesper household) in 2004 with VHS prices and ratios at theequivalent stage of VCR penetration to illustrate howconsumer video behaviour has changed over this period.

The average price paid by consumers to rent avideo has risen in every market, with the highest pricerises seen in the stronger rental markets of Italy and theUK. At the same time the length of the standard rentalhas also increased in most places from the traditionalone night. Meanwhile, rental tie ratios have plummetedin every market analysed except Italy, and even here theyare down by 10 per cent.

There is no clear pricing trend in the retail sec-tor. The average European retail price has fallen by eightper cent since 1990. However, whilst prices in France(since 1992) and Spain are down by almost 30 per cent,in Germany and the UK (since 1987) they have risen by13 per cent and 27 per cent respectively. This reflects thefact that during the VHS era videos were priced entirelyaccording to local conditions leading to wide discre-pancies in pricing policy between different countries.

Since the launch of DVD, however, pricingacross Europe has generally been coming more closelyaligned. But irrespective of pricing trends, consumers inall these markets are buying far more DVDs�in somecases more than 10 times as many�as they were VHScassettes at the equivalent stage of VCR penetration,underlining yet again the change in behaviour the newformat has brought about.


Focu

s

DVD TAKE-UUP EQUALS VCRs IN 1990But Europeans behave very differently from 14 years ago

¸ Over 50 per cent of Western European TV households have at least one DVD video player or recorder¸ VCR penetration reached similar levels in Europe in 1990¸ Rental tie ratios have fallen by 50 per cent or more in almost all major markets since then¸ Meanwhile, retail tie ratios have increased by a factor of up to 14

TerritoriesEurope

SectorsVideo


Source

Screen Digest Video Intelli-gence. Contact ScreenDigest (details page 2) formore information aboutthis unique online service

Video hardware penetrationcompared

penetrationDVD VHS

% %UK 61.3 60.2

Germany 58.0 60.7

France 61.0 61.7

Spain 49.5 48.0

Italy 31.1 31.5

W Europe 50.5 52.2

VHS and DVD rental marketscompared: reference year

DVD VHSUK 2004 1987

Germany 2004 1990

France 2004 1992

Spain 2004 1990

Italy 2004 1990

W Europe 2004 1990

VHS and DVD rental markets compared

s/w price tie ratioDVD VHS DVD VHS

rental

UK 4.4 1.9 7.6 22.3

Germany 2.6 2.2 4.6 13.3

France 3.4 3.0 2.9 5.7

Spain 2.9 2.3 11.6 23.4

Italy 3.4 2.0 6.6 7.3

W Europe 3.5 2.5 6.5 14.8

retail

UK 17.5 13.8 12.9 0.9

Germany 13.8 12.2 4.5 0.7

France 15.5 21.6 9.6 2.2

Spain 15.5 22.2 4.8 0.4

Italy 16.2 15.8 3.6 1.4

W Europe 15.9 17.3 7.8 1.3

0 5 10 15 20 25

W Europe

UK

Spain

Italy

Germany

France

tie ratio

VHSDVD

0 3 6 9 12 15

W Europe

UK

Spain

Italy

Germany

France

tie ratio

VHSDVD

rental tie

retail tie

The German video market is the largest in Europe interms of the installed base of DVD. Screen Digestestimates that by the end of 2004, 22.3m German homes(58 per cent of all TV households) had at least onestandalone DVD video player or recorder. Althoughpenetration is slightly higher in both the UK and France,the smaller size of these countries mean they representfewer than 16m DVD homes each. However, in terms ofconsumer spending on video, Germany comes a poorthird, reflecting the fact that Germans spend relativelylittle on buying video software compared with theirEuropean neighbours.

Demand for video rental has always been low inGermany, reflecting the rental sector's historically poorreputation among German consumers. The country'sstrict classification system means that most of Germany's4,500 rental stores are closed to anyone under 18 and

much of the existing rental business (up to 40 per cent,according to local estimates) is generated bypornographic material. Between 1999 and 2004 rental'sshare of German consumer spending has fallen from 40per cent to an estimated 17 per cent.

In the late 1990s the average German VHShousehold rented around five titles a year, according toScreen Digest research. DVD rental rates reached a similarlevel in 2000 and 2001, rising to over six transactions in2002. Since then, however, DVD rental rates havestabilised at less than five transactions per household peryear. These figures are based on Screen Digest analysis ofregular consumer panel research by GfK, which does nottake into account online rental transactions, which webelieve may be attracting a new group of Germanconsumers to video rental. Any such growth, however, islikely to be counterbalanced by the popularity of illegaldownloading in Germany, which industry sources blamefor recent downturns in rental activity.

The low levels of rental spending are com-pounded by the historic lack of interest among Germansin buying videos. This is despite the fact that annualDVD purchases among the country's technologically-aware early adopters actually exceeded the Europeanmean at 11.7 per household in 1998. As penetrationincreased, buy rates plummeted and by 2003 the averagehousehold was buying fewer than four units a year.Although aggressive pricing, particularly from Germany'sdominant mass merchants such as Saturn and MediaMarkt, has actually helped raise buy-rates to around 4.5this year, according to our research, they remain wellbelow the anticipated European average of 7.8.


Focu

s

DVD FAILS TO SPARK GERMAN INTERESTDespite high penetration software spending is still relatively low


¸ Germany is Europe's largest video hardware market but trails both UK and France in software spending¸ Prevalence of pornography in many rental stores mean most are closed to under 18s¸ Illegal downloading has further reduced Germans' interest in renting videos¸ Falling retail prices and one of the lowest buy rates in Europe mean the retail sector cannot compensate

TerritoriesGermany

SectorsVideo

Source

Screen Digest's VideoIntelligence. ContactScreen Digest (details page2) for more informationabout this unique onlineservice.

German demand for video

1988 1993 1998 2003 2004rental

VHS rentals per German VCR HH 17.3 6.3 4.8 1.3 0.5

European average 18.6 7.3 6.4 2.3 1.1

DVD rentals per German DVD HH 4.7 4.6

European average 7.5 6.5

retail

VHS purchases per German VCR HH 0.0 1.3 1.7 0.8 0.5

European average 0.4 2.1 2.6 1.5 0.9

DVD purchases per German DVD HH 11.4 3.7 4.5

European average 8.4 7.4 7.8

German rental and retail market split 1998-2003

European DVD installed base by territory2004

European video software spending byterritory 2004

0

20

40

60

80

100

reta

ilre

nta

l

2004200320022001200019991998

mar

ket

shar

e (%

)

other6%

Benelux6%

Nordic6%

Italy8%

Spain8%

France19%

UK19%

Germany27%

other5%Benelux

8%

Nordic8%

Italy5%

Spain6%

France19%

UK35%

Germany14%


VIDEO ON THE MOVEThe issues and the technology of delivering personal video

download sites, offer content owners a potential newbusiness model. However, the limitations on usagebrought by the DRM may frustrate both new consu-mers and users who are used to the more flexiblepersonal media players on the market.

THE DEVICESAlthough very similar to the other portable videoplayer models available in terms of features andfunctionality, Microsoft�s range of Portable MediaCenters (PMC)�which are manufactured byhardware partners, Creative, iRiver, Samsung andSanyo�differ from the other devices in threefundamental ways.

1 No external recordingOn the current versions of the Portable Media Centerthere is no way to record from an external source.The Portable Media Center has no video input jacksso it is not physically possible to record content directfrom a TV set top box, DVD player, or other source.Instead, all video content must first be downloaded toa Windows XP-based or Windows Media Center PCand then converted into the Windows Media Videoformat before it can be transferred to the PortableMedia Center. To record TV programming, theWindows XP PC must have a TV tuner card and theappropriate software, or it must be a Windows MediaCenter PC, which has a built-in TV tuner.

Microsoft claims it has made a consciousphilosophical decision not to allow recording directfrom television for two reasons. ¸ One is the amount of technical knowledge that isneeded to set the device up for recording from theTV (although this process has been made easier onrecent portable video player models, such as theArchos V420, which comes with a cradle to take careof all the cables). ¸ The second is because Microsoft strongly believesthat the device is meant to be carried by theconsumer�not remain at home recording TV whilehe or she is out. This certainly makes some sense ifthe user�s PC has a TV card, as content can berecorded to the PC�s hard drive throughout the courseof the day and then transferred to the Portable MediaCenter the next time it is plugged into the PC. TVcontent that is recorded on to the Portable MediaCenter is limited to free to air TV that can be pickedup via the TV card.

2 Operating systemThe second fundamental area of difference is theoperating system (OS). The Portable Media Centeruses an operating system that resembles Microsoft�sWindows Media Center OS for the PC, with a verysimilar user interface. This makes it relatively simplefor consumers to copy (or �sync� in computer-speak)music, video and pictures from the PC on to the

Prof

ile

THE BACKGROUNDIn 1979 Sony revolutionised the music industry with a device that enabledconsumers to take control of when and where they listened to music. The SonyWalkman personalised the audio experience by giving the consumer the power tochoose what to listen to without having to share this experience with others.

Only three years later there was an attempt to revolutionise the wayconsumers watch video. In 1982 Seiko produced the legendary TV watch, whichquickly took the gadget world by storm and then promptly disappeared without atrace. At first glance it might seem that consumers were just not ready to embracethis space age technology (it was admittedly expensive and cumbersome), howeverits failure also hinted that maybe portable video was just not the ideal way to keepconsumers entertained.

With the success of the DVD format it was inevitable that this technologywould be adapted for people on the move. Indeed, portable DVD players havebeen around almost since the launch of the first TV based DVD players in 1997.However, the portable DVD player is still fairly large (compared to other portableconsumer electronic devices), which means that it is usually only used on longjourneys where long periods of concentration are expected�hardly the liberatingpersonal experience that the Sony Walkman represented.

Twenty years after the launch of the Sony Walkman, in 1999, a minirevolution occurred in the music industry with the launch of the first hard disk-based portable audio players (which were soon to be re-branded as MP3 players).These devices used the same concept as the Sony Walkman, but gave the useraccess to hundreds of albums on the move, rather than just the one or twocassettes or CDs that the average Walkman users would be prepared to carryaround with them.

Just three years later, in 2002, one of the manufacturers responsible forbringing the hard disk drive audio player to the mass market decided it wouldinclude a viewing screen on its device for video play back and the hard disk-basedvideo player was born. Two years later we have yet to see any signs that theportable video player will emulate the success of the MP3 player. Is it becauseconsumers just do not want to watch video on the move in the same way thatthey have embraced audio or is it because the killer application is still just aroundthe corner?

The actions of some manufacturers would certainly suggest that the latter istrue. Over the past year the number of hard disk-based portable video players onthe market has exploded and manufacturers are looking at an increasing numberof new ways to incorporate video into consumer electronics devices. With thelaunch of smaller devices with greater memory capacities and bigger viewingscreens, and the arrival of mobile phones and gaming devices that support videoplayback, the portable video phenomenon is starting to pick up speed. However,the portable video player market is still in its infancy and it remains to be seenwhich format will emerge on top.

By way of exploring the issues, in this feature we focus on the potential fora player that works in conjunction with a personal computer.


THE CONCEPTThe PC-dependent portable video player is a newcategory of device, which is being championed byMicrosoft. Content holders may well see this type ofdevice in a favourable light as it promotes the use ofprotected content, while making casual copying andfile sharing harder than the earlier portable mediaplayers did.

These PC-dependent mobile devices, which areable to read DRM encrypted content from online

Portable Media Center. Although this user interface makes it easier for

consumers to use, the downside is that some videoformats will have to be converted into the WindowsMedia Player 10 format to be viewed on the PortableMedia Center. Whilst Microsoft says this process takesless than 60 seconds for a 30 minute clip and less thanthree minutes for a two-hour movie, some reportshave indicated that this process takes much longer.

3 Digital Rights ManagementThe Portable Media Center is the first mobile videoplayer to incorporate a digital rights management(DRM) system in its operating system. Effectively thismeans that any video or audio file downloaded fromthe Internet that is encrypted according to the rules ofthe Microsoft DRM will have a number of restrictionsplaced upon it. This includes music bought fromMicrosoft�s new online music service and filmsdownloaded from online VoD partners such asCinemaNow.

These restrictions include that:¸ The content can only be played back on hardwarewhich has been approved by Microsoft and containsthe Microsoft DRM decryption key.¸ There is a limit placed on the number of devicesonto which this content can be transferred to.¸ An expiry date can be imposed on the contentmaking the content un-watchable after a certainperiod of time.

DRM ISSUESAlthough this method of content protection shouldhelp keep illegal file sharing in check, the lack of auniversal standard DRM system has the capacity topotentially confuse and alienate the consumer. This isalready apparent in the digital music distributionsector. As a result of competing DRM systems in thedigital audio market, consumers may find that thecontent they have downloaded and paid for does notwork on a new piece of hardware. For example audiofiles downloaded from the Apple iTunes service areencrypted with Apple�s Fairplay DRM will not play onMicrosoft�s Portable Media Center; audio filesdownloaded from Microsoft�s online music store willlikewise not play on Apple�s iPod.

Further problems can arise when moving anaudio/video collection from a PC to a laptop or areplacement PC. This is because DRM encrypted filescan only be copied onto a different machine a certainnumber of times. So there is the very real possibilitythat files that have been legally downloaded from aDRM protected website will not play on newlyacquired hardware.

There is also a limit to the DRM system�seffectiveness as a means of preventing unauthorisedaccess to content. As with all such devices, if you canplay the content on a PC then it is likely that this canbe converted to play on the Portable Media Center. Inother words, content that has been unencrypted andshared on a peer-to-peer network can be accessed bythe user and converted into a format that will enableit to be played back on the Portable Media Centerusing software acquired over the Internet.

TARGET MARKETIn the short term, it is likely that the Portable MediaCenter will appeal to the early adopter of new



Source: Screen Digest, IFPI


FRANCE

GERMANY

UK

0

5

10

15

20

25

30

20032002200120001999

0.0

0.5

1.0

1.5

2.0

2.5

3.0

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broadband

0

5

10

15

20

25

30

20032002200120001999

0.0

0.5

1.0

1.5

2.0

2.5

3.0

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broadband

0

5

10

15

20

25

30

20032002200120001999

0.0

0.5

1.0

1.5

2.0

2.5

3.0

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broadband

technology products. This is because to get fulladvantage of the Portable Media Center, it needs tobe connected to a PC with a TV tuner card (Microsofthas agreements with all the major TV cardmanufacturers in order to ensure compatibility).However, it could be argued that all personal videoplayers are somewhat of a niche product at themoment as they have yet to be given the kind ofexposure to the mass market that other successfulconsumer electronic devices have had (Apple�s iPodfor example).

According to Microsoft, there are similarnumbers of PC users who store digital video on theircomputers as there were PC users who stored MP3files on PCs five years ago. For this reason Microsoftbelieves that there will be a significant demand forPortable Media Centers from early digital video usersin the same way that demand was created for theportable audio player from digital audio users.

BUSINESS MODELSo far Microsoft has established two methods viawhich consumers can purchase content for thePortable Media Center. The first is its new onlinemusic store and the second is video content from theInternet. According to Microsoft, these two venturesonly represent the tip of the iceberg as far as onlinecontent goes and they are currently working with anumber of content owners in order to deliver moreonline content that is pre-recorded in the PortableMedia Center format.

Microsoft enjoys a fairly close relationship withDisney and Warner Brothers�both of which areresearch partners for the development of onlinecontent delivery systems. So there is a possibility thatthese studios may decide to provide Portable MediaCenter content at some stage in the future. Feedbackfrom studios to date indicates that any deals on thedelivery of online content for the Portable MediaCenter are still currently at the early discussion stage.

The only online video content suppliers so farare CinemaNow and Major league Baseball (MLB).CinemaNow (which has Fox, Disney, Warner andSony content) along with Movielink are the twobiggest sources on the Internet for the delivery oflegal video downloads in the US. CinemaNow has justsigned an agreement with Tiscali which will bring theservice to Germany, Italy and the UK. BothCinemaNow and MLB have content available in aformat that is ready to be transferred to a PortableMedia Center immediately upon downloading. Filmscan be downloaded from CinemaNow on a pay-per-view basis or can be purchased outright.

When a movie is rented or purchased forplayback on a PC, the Portable Media Center version,if available, will also be available to rent or buy for anadditional charge of around $1. There are currentlyaround 200 titles available in the Portable MediaCenter format. Although the selection of films onCinemaNow has been limited to mainly straight-to-video titles there are signs that this situation isbeginning to improve. CinemaNow recentlyannounced a deal with Sony Pictures TelevisionInternational to deliver first-run pay-per-view contenton its download service.

Microsoft is also looking into a number ofdifferent business models for video content in thefuture. One possibility is the combination of music



Source: Screen Digest, IFPI


DENMARK

ITALY

SPAIN

0

5

10

15

20

25

30

20032002200120001999

0.0

0.2

0.4

0.6

0.8

1.0

1.2

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broadband

0

5

10

15

20

25

30

20032002200120001999

0.0

0.1

0.2

0.3

0.4

0.5

0.6

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broadband

0

5

10

15

20

25

30

20032002200120001999

0.0

0.2

0.4

0.6

0.8

1.0

1.2

broa

dban

d pe

netr

atio

n (%

)

audi

o sa

les

valu

e (€

bn)

audio

broadband

consumers will have faster Internet connections.Download speed is essential to the success of anonline video distribution channel due to the relativelylarge size of video files. This was not such a factor forthe music market as audio files are far smaller incomparison to video files and can be downloaded in areasonable length of time using slower connectionspeeds.

However, there is evidence to suggest that theincrease in broadband penetration has had an effecton the decline in music sales. In the Europeancountries where broadband adoption has been thefastest there is a marked reduction in music sales.There is real concern among the studios that thedownward trend in retail sales experienced by themusic industry will be repeated in the home videosector as broadband speeds and penetration increases.This means that content owners are even less likely tomake their premium content available online unlessthey can ensure that this content is protected.

¸ DRM interoperability. Although many mobileaudio and video users are blissfully unaware of theproblems that can be encountered when using filesencoded with different DRM systems, as thisknowledge becomes widely available it could becomea real stumbling block to market expansion. As wehave already seen from the music industry, there isenormous potential for confusion over DRMprotected online stores. For instance, consumers maynot realise that content purchased at Napster will notplay on Apple�s iPod or that content from Apple�siTunes store will not play on a Creative player.

Microsoft is rapidly becoming a key player in theDRM market. In April 2004 Microsoft and TimeWarner bought the majority of Xerox�s stake in DRMtechnology innovator, ContentGuard and thecompany is now well positioned to continue to lead inthe DRM standards process.

However, Microsoft�s plans for domination ofDRM standards are coming under threat from DRMrivals, Intertrust, which was acquired by Sony andPhilips in January 2003. Intertrust and its two ownersPhilips and Sony have established as a cross-industrygroup to promote interoperability between digitalrights management (DRM) technologies used in theconsumer media market, called the Coral consortium.

The group was recently joined by Panasonic,Samsung, Hewlett-Packard and Fox. Although it isstill unclear how DRM interoperability will beresolved if there remains a possibility that legallypurchased content will not play on consumershardware then dissatisfied customers may look for lessreputable download sites for content.

The solution to DRM interoperability couldcome from the Advanced Access Content SystemLicensing Administration (AACS LA). The group,which consists of IBM, Intel, Microsoft, Panasonic,Sony, Toshiba, Disney and Warner, was set upprimarily to establish technology to protect contenton next-generation optical discs, such as Blu-Ray andHD-DVD. But the AACS protocols will also allowcontent to be transferred to portable and networkeddevices, and will interoperate with existing DRMschemes. Such a scheme should allow films and othercontent to move around a home network, withoutleaking out onto file-sharing networks.

and video content. For example, when a new single oralbum is downloaded, Portable Media Center ownerswill be given the option to purchase additional videofootage for an extra charge. This video footage couldinclude music videos or behind-the-scenes footageappropriate to the music content that has beendownloaded. Microsoft has also suggested an interestin renting the Portable Media Centers at airports, in asimilar way that portable DVD players are rented byairport rental specialists in the US. One company,InMotion Pictures has had considerable success withthis business model.

FUTURE PROSPECTSMicrosoft knows that the more devices and contentproviders it can get to support its DRM system, themore likely the format will be to succeed in the future.At the moment its DRM is seen as the most open ofthe DRM systems available, in that it is supported bythe greatest number of online download services andhardware manufacturers. In order to convinceconsumers to adopt the Portable Media Center,Microsoft will have to ensure that there is a constantstream of desirable content. This can only be achievedif the studios and other content providers arecomfortable with the DRM and the means ofdistribution.

Microsoft has already taken some steps to tryand achieve this goal. In February 2004 Microsoftsigned a deal with Disney under which the twocompanies have agreed to work together to developdigital media content and delivery systems. Whilst thedeal is not exclusive (meaning that Disney can workwith other DRM providers), this endorsement by amajor studio could help propel Microsoft to the statusof preferred provider of DRM protected studiocontent on the Internet.

Some Disney content has already been madeavailable on the CinemaNow service in the US.Microsoft also signed a similar deal with WarnerBrothers in May 2003. Under that arrangement thefilm studio agreed to work with Microsoft to promotethe creation and distribution of digital content.

Looking ahead, if Microsoft manages to getenough support from hardware manufacturers andcontent owners there are a number of factors that willhelp boost the device�s appeal to a wider audience.

¸ The adoption of broadband. The increase inbroadband penetration in the key markets of America,Europe and Asia will mean that more and more



DRM systems used by online music stores

service DRM devices

Apple iTunesFairplay-AAC iPod;Dell WMA DRM Creative, Dell, Samsung, iRiver and othersMusicMatch WMA DRM Creative, Dell, Samsung, iRiver and othersNapster WMA DRM Creative, Dell, Samsung, iRiver and othersReal Helix-AAC PalmWal-Mart WMA DRM Creative, Dell, Samsung, iRiver and othersSony Sony ATRAC Sony players

Source: Screen Digest

This is an edited extractfrom the report Getting

Personal: Bringing Video tothe individual, prepared by

Screen Digest for theEuropean Video

Perspectives conferencein December 2004. It is

one of three reports thatnew subscribers can

claim free of charge as anintroductory offer. Seethe centre insert in this

issue for details.


GAMING ON THE MOVEAlready a billion-dollar industry and counting

platforms. This was the strategy of Norway�s Telenor,which uses Macrospace to deliver Java games.Meanwhile the French enabling firm in-Fusio stillworks closely with the remaining European networksthat support its ExEn games engine. In the US andparts of the Far East, Qualcomm does the same withits downloadable engine BREW.

By the end of 2003 operators were able becautiously optimistic about the future of mobilegaming. The services were working well technicallyand delivering hard cash at last. The predominant pay-per-play payment model has also shown itself to berobust. But there is plenty to be done.

A �BILLION-DOLLAR� INDUSTRYAlthough downloadable applications have provedpopular with consumers, the numbers are still tinyrelative to the traditional console and handheldgaming business. The few publicly available numbersreveal that the market has so far barely touched themobile owning mainstream, except of course in Koreaand Japan. According to Screen Digest estimates, in2003 these two countries accounted for 80 per cent ofworldwide games download revenues of �380m.

But the vast majority of major operators inNorth America and Europe have now establishedgames download services on their networks. Thepenetration of Java handsets is also rising fast in thesemarkets, such that we expect games-enabled handsetsto have risen three-fold in Western Europe to 110mby the end of 2004, and more than double in NorthAmerica to 70m. As a result, we are expectingdownload spending outside the Far East to really takeoff this year.

Whilst games download spending for Japan andKorea combined is expected to grow by around 50per cent in 2004 (to �446m), Western Europe andNorth America combined is forecast to grow at 10times that rate. A 500 per cent jump will result ingames download spending in these two regions of�332m in 2004. Although seriously trimmed, Japanand Korea�s majority share of worldwide mobilegames market will remain in place for another year.We reckon that Japan and Korea will have accountedfor 51 per cent of global spending in 2004.

In total, we anticipate the wireless gamesdownload market will prove to be worth around�880m ($1,070m) in 2004, breaking the billion-dollarbarrier for the first time.

Despite explosive growth in Western Europeand North America this year in particular, we do notexpect combined spending in these two markets toexceed spending in Japan/Korea until 2006 at theearliest. One of the contributing factors is the level ofadvancement of the mobile universe. In terms ofgames-enabled handset penetration, Western Europeand North America are around 2-3 years behind theseFar East markets. Yet a much more significant factor

Prof

ile

After many years of anticipation, it is fair to concludethat the mobile games market finally arrived in 2003.Japan and Korea aside, the main territories of theworld had merely flirted with wireless gaming since1999, when the first WAP and SMS projects wentlive. Throughout this period, developers and aggrega-tors bemoaned the general lack of interest fromnetwork operators in the sector.

Whilst Japanese networks created tightly con-trolled data services infrastructures and encouragedcontent partners with generous revenues shares, theprevailing attitude among their European and NorthAmerican counterparts was �you build it, we�ll host itand we�ll take 80 per cent too�.

Two factors re-drew the landscape.¸ Mobile phone penetration in developed countriesstarted to reach saturation, meaning that networks hadto look towards non-voice services to increase reve-nue and act as a differentiating point to reduce churn. ¸ Downloadable technologies (and enabled handsets)emerged to offer a compellingly simple (and billable)platform for the delivery of games.

In 2003 the first downloadable services werelaunched en masse. Vodafone�s Vodafone Live andT-Mobile�s T-Zones introduced pay-per-downloadgames in just three or four �clicks� to subscribers. Theservices were heavily advertised. Throughout Europemost operators launched similar initiatives. Meanwhilein the US Verizon and Nextel led the way for a similartransformation.

The approach taken by operators today isdrastically different from that taken during the era ofWAP. Now, most networks have a dedicated contentunit that liaises with aggregators and developers. Theaverage revenue share is 50 per cent. It is still highcompared with i-mode service in Japan (where theshare is 91 per cent), but in Europe and the USairtime is cheaper so it is harder than in Japan fornetworks to profit from the airtime revenue accruedduring the download.

The �walled garden� built by operators likeVodafone also contrasts with the open environmentof Japanese operator DoCoMo�s i-mode (which hastens of thousands of unofficial sites). Some Europeannetworks contend that the system of offering a setnumber of games on a one-off payment model (ratherthan subscription) suits the Western mindset best. Inorder to nurture such a system, the operators need tocontrol it tightly. This control extends to dictatingAPIs (Application Programming Interfaces) tohandset vendors in order to make the consumerexperience fast and intuitive. This was vindicated bythe overwhelming popularity of Vodafone Live�sSharp GX10 phone, the handset most stronglyconfigured for the service.

Of course, not all networks are as hands-on asVodafone. Some appointed third parties to build,manage and provide content for their games


This is a short editedextract from the intro-duction to the ScreenDigest report Wireless

Gaming: Operator strategies,global market outlook andopportunities for the gamesindustry. For details, seethe centre insert in this

issue for details.

question whether this model would be financiallyviable, given the low price of airtime in Europecompared with Japan (where NTT DoCoMo makesits money out of the airtime component of thismodel).

The i-mode model is being deployed in severalEuropean markets, and although it is early days, it�sfair to say that its success rate has so far been�limited�. However, there are major mobile operatorsin Europe who are convinced of the need to move toa flat-rate pricing structure for data services, and webelieve are prepared to go it alone if necessary.

In our view, the introduction of flat-pricepricing would result in a major fillip to the Europeanmobile gaming market. If i-mode does take off inEurope, or some other form of flat-rate price modelbecomes widespread, then our forecasts for wirelessgaming spending in Europe and worldwide will berevised upwards significantly.

In Korea, the predominant business model forwireless gaming is the pay-per-download model foundin Europe and the US. But games download ARPUsare comparable with Japan, and (paid for) downloadrates are considerably higher than that achieved in theUS and Europe.

The major difference between Korea andWestern Europe/US is in pricing, with mobile gamesdownloads in Korea averaging around 1,500 won($1.30) in 2004. This is between a third and a quarterof the average price charged by operators in WesternEurope and the US. Yet pricing differentials aredwarfed by the difference in download rates, withabout 10 times the number of games purchases perenabled handset in Korea than outside the Far East.As a result, Korea has much higher mobile gamingARPUs (for enabled handsets).

Certainly not all of this massive difference indownload rates can be explained by the cheaperKorean download price. But it is a major contributingfactor, with the whole spectrum of potential usershighly incentivised to download new games, or evenjust try out mobile gaming for the first time.

The Korean model shows that there is analternative to the flat-rate model to generate highermobile gaming ARPUs, and that is more competitivepay-unit pricing. This is certainly a seriousconsideration for European and American operatorswishing to increase their overall download revenues.

Both of these strategies have a corollary in thefixed-line data market. Several European broadbandISPs are now finding that subscription-based modelsfor fixed packages of content are a far more attractiveconsumer proposition than pay-per-download.Meanwhile, after years of prevarication, the market for(legal) music downloading has taken off with theintroduction of the 99 cent download (and cheaper)by companies like Apple, Real and Wal-Mart.

is the games ARPUs deriving from games-enabledhandsets in the market.

It is clear that wireless gaming ARPUs (pergame-enabled subscriber) are significantly higher inthe Far East than those being achieved in the US andEurope. We estimate that in 2003 games downloadARPUs were four times higher in Japan/Korea thanin the newer markets, although the gap was expectedto have narrowed to 2-3 times higher by the end of2004. But we think that if the wireless gaming marketdevelops in line with the business models that arecurrently being deployed in Europe and the US, thenthere is little chance that mobile gaming ARPUs willmatch those of Japan and Korea right through to theend of the forecast period in 2010.

The business models common in Japan andKorea are different from those gaining traction in theUS and Europe, although in different ways.

FLAT-RATE OR PAY-PER-DOWNLOAD?The Japanese (i-mode) model is a flat-ratesubscription to an unlimited supply of content, whichhas been highly successful at encouraging bothwireless gaming usage and stimulating a thriving andinnovative wireless games development industry in thecountry.

Replicating this model in Europe wouldundoubtedly generate similar benefits for theEuropean industry, and consequently for wirelessgames spending in the region. Some operators



Europe: games service launch dates

1999-2Q 2002 3Q 2002 4Q 2002 1Q 2003 2Q 2003 3Q 2003 4Q 2003

number of downloadable games services launched 4 5 18 8 7 4 3proportion of all launches to date 8.3% 10.0% 36.7% 16.3% 14.3% 8.1% 6.1%total number of services launched to date 4 9 27 35 42 46 49

Europe: mobile gaming service launches by quarter

Sample includes all operators that launched ExEn, Java, I-Mode or Mophun games servicesin Europe (excludes Russia).

0

10

20

30

40

50

4Q 2003

3Q 2003

2Q 2003

1Q 2003

4Q 2002

3Q 2002

1999-

2Q 2002

num

ber o

f lau

nche

s



some major consumer brands offer downloadablegames from their sites. But there are hundreds morespecialist sites dedicated to selling Java games.

These websites are generally more localised thanoperators, working with local studios to makeavailable games that cater for regional tastes. They canhandle any number of titles and generally shuffle themfar more reactively than the networks. Some offer ahigh revenue share for content suppliers�up to 80per cent. However, the norm is rather less attractivewith portals subtracting up to 40 per cent in billingfees, and another 20 per cent for marketing/adver-tising. The remainder is split in half leaving thecontent partner with 20 per cent of the download fee.

Players can also acquire games from interactivedigital TV services and from adverts in the press. Inthe case of the latter, there is often diffidence fromdevelopers to be involved thanks to the sometimestransient nature of the organisations placing the ad.There have been reports of illegally posted games andnon-payment of content providers in this sector.

At present, Web and TV portals could controlas much as 50 per cent of the business in someEuropean territories, but overall we believe thatoperators command 80-90 per cent of the Europeanmarket. In the US, their share is negligible because thenon-adoption of SMS there makes billing a problemfor any would-be games supplier apart from theoperators themselves.

In the future, operators may face competitionfrom retailers (although it won�t be competition if theretailer is the part of the operator�s own high streetnetwork). Some stores have already begun sellinggames. During the WAP era these came in the formof scratch cards that revealed ID numbers to unlockgames WAP sites. In the download era, they use thesame basic model although others have been triedsuch as the CD-ROM that allows the transfer ofgames on to a phone via a cable or bluetooth link.Self-evidently, this model is only likely to attracthardcore mobile gamers rather than the more casualmainstream market. The sector may improve whenretailers formalise a technique to �flash� games intohandsets on the premises.

MOBILE GAMES PLATFORMS There are many ways to get a game on to a phone.The qualities of these platforms determine the game-playing experience�which is why some work andsome do not. Text games work because they are easy

OPERATORS� KEY GAMING ISSUESBecause usage and awareness are still relatively low,networks must now address key issues if they are tomaintain their position as the drivers of the market.These include:

MarketingOften there is still a vacuum where promotion shouldbe. Thus far, virtually all marketing has been genericrather than specific. Of course, revenues may notjustify the advertising of individual titles. But moremust be done to show subscribers how easy andenjoyable mobile gaming can be.

Meanwhile, specialist portals such as Germany�sJamba and Zed do advertise heavily. Operators mustsurely be aware of how the ringtone business waspoached�they will be wary of this happening againin gaming.

AccessOperators should consider broadening the scope ofthe games decks. They are right to maintain qualitycontrol. But if the sector does surge, again customerswill defect to portals and magazine ads for theirgames as they did in the ringtone market.

New technologiesMaking available demos, pay-per-level, access toleagues and tournaments, multi-play and so on�ifthey are implemented well�should improve the userexperience and grow the market. Also significantcould be the downloading of mini games engines thatallow for further play. For example, a user could pur-chase a chess engine and then play a nominal amountto play games with other owners of the same engine.

Many of these technologies will be made easierto implement by the arrival of MIDP 2 for Java andby standards agreed by trade bodies (such as theOpen Mobile Alliance�s work on digital rightsmanagement).

Alternatives to the operators: Web, off the page,iTV, retailThere are plenty of alternatives available to the keenplayer of mobile games, should operators fail toentertain subscribers or keep their partners happy. InEurope the Web now provides an open-endedchannel for masses of Java games vendors to offergames using premium SMS as a payment mechanism.Virtually all ISPs (Internet Service Providers) and



Source: Screen Digest Source: Screen Digest

World mobile games download revenue World installed base of mobile games-enabled handsets

0

200

400

600

800

1,000

1,200

200420032002

reve

nue

($m

)

0

100

200

300

400

500

200420032002

inst

alle

d ba

se (m

)

WAPDuring the heady, early days of WAP someaggregators enjoyed isolated success. Perhaps thebiggest of all was that of US developer Jamdat, whichcreated a variation on �scissors paper stone� calledGladiator for subscribers to the US carrier Sprint PCSin October 2000. By December 2001 over 2.5mgames had been played by nearly 1.1m users andgenerated over 14m minutes of usage. A sequel to thisgame was then developed for wireless networksoperated by Alltel Wireless�including AT&TWireless, Qwest Wireless, Sprint PCS, Telus Mobilityand Verizon Wireless.

But it was to be a brief burst of successfulactivity. WAP was flawed as a protocol for gaming.Essentially, WAP-enabled phones are small browsersthat connect to the server just like an Internetbrowser connects to web servers on the Internet. Theprocessing power is held completely on the serverside so users can really only make choices and beprogressed to a choice of further WAP pages. Thegames are implicitly turn-based and often very slow.

So WAP never caught on as a games platform.There is no long-term future in the �format� as astand-alone gaming platform, although manyoperators still offer WAP games for those who knowhow to find them on their browsers.

Mobile games platforms: Java, BREW, ExEn,MophunFor years, downloadable gaming was the nirvana ofthe mobile games industry. Downloadable gamespermit animation, can be played offline and can bemonetised so that consumers play the game along thelines of a traditional retail model�ie, they pay onceand play offline all they like.

Of course, downloadable applications are onlypossible when a technology is developed that enablesa program such as a game to run, to be transmittedover the air and to be understood by the user device.And these are just the basics. Other requirementsinclude the ability to handle graphics, sound, differentscreen sizes and user interfaces, security, digital rightsmanagement and so on.

The most widely adopted downloadabletechnology is Sun Microsystems� Java variant for smalldevices called J2ME. However, the perceived short-comings of J2ME�as well as the precise demandsmade on mobile devices by games (as opposed toother downloadable applications)- has led to rivaltechnologies being developed. They include BREW,ExEn and Mophun.

These platforms had achieved varying levels ofmarket penetration. Java has been adopted all over theworld, BREW in the US, China, Taiwan and Korea;ExEn in France and Germany; Mophun in parts ofthe Nordic region.

to understand. But their technical limitations reducetheir potential. Browser-based (WAP) games don�twork because they are slow and static.

Downloadable games have taken off becausethey play like conventional handheld games.

SMSSMS games have been eclipsed by downloadablegames�for obvious reasons. Downloads look likemost people�s idea of an electronic game�colour,graphical, interactive. SMS games are really text-basedquizzes. But they still fulfil a role.

As the name implies, SMS is ideal for sendingindividual short messages, but pretty hopeless when itcomes to creating compelling multi-turn experiences.The user interface is clumsy. However, when WAPwas failing during 2001/02, text games were theindustry�s only viable platform.

SMS games are generally a �dialogue� betweenthe subscriber and his/her own network. For thisreason, developers and publishers have sought closepartnerships with individual operators. In general,operators share between 20 per cent and 40 per centof premium SMS revenue with games providers.

In Europe operators bill with a so-called �0 and10� model, where all �Mobile Terminated� or incomingtraffic is free to the user, while �Mobile Originated�traffic costs $0.10/£0.10 to send. Elsewhere a �2 and10� model remains. Here, the user pays around$.02/£0.02 to receive an SMS message and$0.10/£0.10 to send one.

Generally, SMS games pay the content develo-per based on Mobile Originated revenue share deals.Networks pay between 10 per cent and 30 per cent.

Premium priced SMS Premium pricing simply means that the cost of anSMS transaction is variable based upon the message�scontents and/or where it is sent. In Europe, premiumSMS is commonly used as a download billing systemand it�s become a fairly lucrative way for gamedevelopers to earn revenue.

Premium SMS is also used as a paymentmethod when charging directly for downloads is notpossible. For example, off-the-page retailers and webportals will use it to charge for Java games that arefree to download (excluding airtime costs).

Developing for SMS For obvious reasons SMS games have evolved alongcertain common lines. Player messages have beenmade quick and simple (more complex responsesreduce the number of messages they will send)�oneword or even a single letter. Good SMS games are asmuch about narrative as they are about technology.The best games of this type can generate around200,000 texts a day.



Downloadable games engines: advantages/disadvantages

engine advantages disadvantagesExEn Proven longstanding business model, variety of revenue models Single vendor system (in-Fusio), small number of networks

(pay-per-level, SMS high scores, etc)J2ME Widespread adoption, easy/free access to tools, fast-growing handset base Runs slowly, non-secure, technical drawbacks

(especially MIDP1)BREW Robust system, favourable terms for developers, significant successes in US CDMA only, tightly controlled by QualcommMophun Technical performance Limited adoption, only pre-installed on Sony Ericsson devices

The Screen Digest reportWireless Gaming: Operator

strategies, global market out-look and opportunities for thegames industry includes fulldescriptions of platformsas well as detailed marketanalysis and forecasts to

2010.

Blockbusters push Irish production to new levelsIrish television and film production experienced a recordyear in 2003, with total investment jumping 68 per cent

on 2002 and a particular success in attracting US major productions.Final data show that in total, Ireland was host to 179 film and televisionproductions in 2003 for a total investment of �320.2m ($419.5m),which represents around 0.3 per cent of GDP.

The total spend in 2002 was �190.9m ($250.1m). IndependentTV production accounted for �47.8m ($62.6m) in 2003�up 8.1 percent from the previous year. However, a substantial increase wasdue to Ireland attracting some major feature productions, such asKing Arthur and Laws of Attraction, something which did not happenin 2004. The local animation sector was buoyant in 2003, withrecord expenditure of �28.1m ($36.8m).

The results for 2003, just published by Ireland�s Audiovisual Federation, areencouraging for Ireland, given that the the sector has returned to a measure of

stability following the revewal of the tax-driven film incentive mechanism Section481. The net positive return to the Treasury of Section 481 was �30m ($39.3m) in2003. The uncertainty over Section 481�s future led to a slow start for production in2004; final results for last year may well be down on the 2003 figure, initialsuggestions giving a figure of �159m ($208.3m).

Once again, this highlights that uncertainty is the enemy of film incentivesystems. The government is currently under some pressure to ease caps on localexpenditure that qualify for Section 481 funding in order to provide an extraboost to the sector and match the UK system.Ą Audiovisual Federation of Ireland: +353/1 660 1011; www.ibec.ie

More studios adopt Mini-DVD formatThree more studios have declared their intentions tolaunch titles on the proprietary portable video format

Mini-DVD. Following Warner Home Video�s announcement ofparticipation in November 2004 (see 2004/374b2), home entertainmentdivisions of Paramount, Twentieth Century-Fox and Universal have allsigned up to the new format. Warner-owned HBO Video and NewLine Home Entertainment have also announced their support. Mini-DVDs scheduled for release in the US include Warner�s Harry Potter and

the Prisoner of Azkaban. The releases will double the total number ofscheduled new and catalogue Mini-DVD titles to almost 100. MiniDVD discs are expected to retail for between $9.98 and $24.98.

Consumer electronics manufacturer Samsung will join CyberHomeEntertainment in the Mini-DVD hardware market with the launch ofits DVD Jr. Samsung�s partnership with WHV features a bundlingagreement similar to CyberHome�s, which includes a free Scooby-Doo:Original Mysteries Mini-DVD packaged with the player and a mailingoffer for two further free discs with a choice of various children�s titles.The player endorses the current market focus of the format, designedspecifically to offer a DVD option to under-15s.

Available in the US in first quarter 2005, the hand-held playeroffers 2.5 hours of playback time with a 2.5-inch TFT LCD screen,adapter, DC power jack and headphone jack and carries a suggestedretail price of $149.99.

Despite the insistence of the studios and manufacturers involved in Mini-DVD that the format is intended for children, several titles planned for US

release suggest that they are testing the response from the mainstream market. Theadult-oriented content of Universal�s The Fast and the Furious and New Line�sAustin Powers: International Man of Mystery�both to be available onMini-DVD�is evidence of an older target audience. The introduction of feature-length films on Mini-DVD also highlights a potential storage capacity issue withthe new format. The fact that a dual-layer Mini-DVD has less than a third thecapacity of a regular dual-layer DVD (2.5Gb compared with 8.5Gb), means thatfeature films will need to be released on two discs.ĄWarner Home Entertainment: USA; +1/818 954 6000www.warnervideo.com/minidvdĄSamsung: Korea; +82/2 751 6114; www.samsung.com

French film production falls in 2004The number of films produced in France slipped 4.2 percent to 203 titles, according to the Centre National de la

Cinématographie (CNC). There were nine fewer films produced in2004, down from the record 212 films made the previous year , but stillthe third highest for 20 years. Of that total, 167 (82.2 per cent) werewholly or majority-produced French films, down from 86.3 per cent theprevious year. The remaining films were classed as minority co-productions.

Total investment in film production increased 5.3 per cent to�892m ($1.1bn), on top of the �232m ($309.9m) that went towardsminority co-productions. In total, nine films received more than �15min funding in 2004, and a further 15 films benefited from between�10m and �15m. Meanwhile, the CNC tax credit system, based on theproportion of filming which takes place in France, was awarded to 111films. There was also an increase in the number of weeks in which filmswere shot in France to 913 from 785 in 2003. Ą CNC: France; +33/1 44 34 34 40; www.cnc.fr


New

s/an

alys

isGENERAL


Next generation DVD battle intensifiesThe war of words over rival formats to succeed today�s DVDtechnology was stepped up at the recent Consumer Electronics

Show. Attempting to apply pressure to the competing Blu-ray Disc(BD) camp, the HD DVD group tried to make its proposition as �real�as possible by announcing a fourth quarter 2005 launch for bothhardware and a number of named movie titles. ¸ Toshiba will launch HD DVD players and notebook PCs with HDDVD ROM drive in fourth quarter 2005.¸ NEC will deliver HD DVD ROM drives in September 2005.¸ Sanyo will introduce HD DVD players in fourth quarter 2005.¸ Thomson will launch HD DVD players for Christmas 2005 underthe RCA brand in US and Thomson brand in Europe (although thecompany indicated it may also produce BD products).¸ Paramount announced 13 titles for release �beginning in fourthquarter 2005� (seven new releases; 13 catalogue).¸ Universal announced 16 titles (three new, 13 catalogue) but did notcommit to a release date.¸ Warner announced 53 titles for release from fourth quarter 2005,including three from HBO and 10 from New Line.

The BD Association (BDA) announced several new members,including Sun Microsystems, Vivendi Universal Games (VUG) andElectronic Arts (EA). Criticising their rivals, BDA described the lesstechnologically ambitious approach of HD DVD as �backing timidlyinto the future�. BDA member manufacturers Sony, Panasonic,Samsung and LG already have BD recorders on their respective

domestic markets (Japan and Korea), although these will not becompatible with any pre-recorded BD discs since final decisions onsome aspects of the pre-recorded format (including copy protection)have yet to be finalised�as is also the case for HD DVD. Membersof both camps displayed working prototype players and recorders atCES. (See also Backwardly compatible next-gen discs arrive underTechnology.)

Disney�s recent (December 2004) decision to back BD took other majorstudios by surprise and some believe the current balance�Warner,

Universal and Paramount on one side and Sony/Disney on the other�couldmean an impasse that will make a format war in the market (as opposed to thecurrent pre-launch phase) inevitable. Whilst every protagonist wants to avoid this,there currently appears to be no obvious way to force the sides together to agree on acompromise format of some kind.

To some extent, the sheer size of the BDA makes it a more lumberingorganisation than the more focused HD DVD Promotion Group�and this wasapparent in the clarity of messages conveyed at CES. New members for the BDAclearly bolster their position, but membership could connote little more thancuriosity, or in the case of games publishers EA and VUG, a not very startlingcommitment to publish for the next PlayStation console that Sony has declaredwill use BD for its media. However, the bottom line is that the BDA currentlyhas more powerful brands on the hardware side and it is brand power that willprobably influence the all-important retail giants if the matter does get fought outin the market.Ą HD DVD Promotion Group: www.hddvdprg.comĄ Blu-ray Disc Association: www.blu-raydisc.com

Online retailers exploit UK tax loopholeUK supermarket chain Tesco is the latest company totake advantage of a tax loophole that allows consumers

to avoid paying tax on goods shipped from the British dependency ofJersey. In December 2004 Tesco set up an offshoot from its onlineoperation, Tesco Extra, called Tesco Jersey, on which it advertises chartDVDs for 10 per cent less than on its regular website.

Jersey has no VAT (sales tax) on goods sold there and, as long aseach item is sent separately and costs less than £18 ($34), Customs andExcise cannot impose tax when the goods are brought into mainlandBritain. As a result Tesco can sell recent titles such as I Robot for lessthan £10 ($19).

Tesco is not the first online retailer to adopt this strategy. Amazonand Sendit.com (formerly Blackstar) set up their own Jersey distributioncentres in fourth quarter 2004 and Play.com has its entire distributioncentre based there. However, Tesco�s operation has received morepublic attention due the actions of the Forum of Private Business(FPB), which claims that the Tesco Jersey website is having a damagingimpact on high street sales.

Each company offering this service does so on the condition thatany additional charges for customs clearance must be borne by thecustomer. However, the likelihood of additional charges is reduced bythe practice of posting items separately, so that the value of theindividual packages does not exceed the £18 threshold.

Companies such as Play.com have been taking advantage of this tax loopholefor some time now but the fact that a major supermarket has joined them has

brought this issue into the spotlight. Logic would suggest that in most cases it wouldnot be cost-effective for Customs and Excise to pursue revenues owing on single discDVDs, as the majority of discs advertised cost less than £18 but the additionalVAT charges on higher priced box sets could be a different story. The fact that theUK government has recently promised to crack down on tax avoidance, which isthought to cost the Treasury tens of billions of pounds in revenue every year, maymean that this practice will be more closely scrutinised in the future.Ą Tesco: UK; +44/0 1992 632 222; www.tesco.com

UK regulator looks at cricket dealUK�s media regulator Ofcom is investigating BSkyB�srecent agreement for exclusive broadcast rights to

England�s home test cricket. BSkyB agreed to pay £220m for a four-year deal that will run until 2009. Agreement with the England andWales Cricket Board means that for the first time in history live cricketwould not be shown on free-to-air television in the UK. The BBC,which broadcast test cricket from 1938 until 1998, has retained liveradio rights to the games.

Rights to television highlights went to Channel Five. But Englandtest cricket is a Group B listed event, meaning that rights to highlightsmust be offered to either BBC1, BBC2, Channel 4 or ITV1. Ofcomsaid that as Channel Five�s national reach is below 95 per cent it did notsatisfy the criteria for a listed sports event.

If approved, the agreed £220m will represent a 10 per cent increaseon the value of the previous contract under which BSkyB and ChannelFour shared coverage of the matches. Sky promised that every matchwould be shown live and in full without interruptions on Sky Sports,Sky�s premium sports channel, which is available to satellite, cable andDSL TV viewers in the UK.Ą BSkyB: UK; +44/20 7705 3200; www.sky.comĄ Ofcom: UK; +44/20 7981 3000; www.ofcom.gov.uk

Canada in throes of tit-for-tat film tax credit risesCanada is going through one of its regular bouts of competitionbetween provinces for film dollars, with tax credit systems being

overhauled and made more attractive. ¸ Ontario has raised its tax credit for domestic projects to 30 per centfrom 20 per cent as part of a $48m package to help the film andtelevision sector. Foreign producers will gain from a new 18 per centtax credit rate, raised from 11 per cent. There is still a 10 per cent

bonus credit for Ontario productions shot outside the Greater Torontoarea.¸ Quebec has increased its tax credit for film and TV productionsfrom 11 per cent to 20 per cent, largely in response to Ontario�s raisingof its tax credit. Key target is to attract foreign productions.¸ British Columbia (BC) has joined the party, with the film and TVsector putting pressure on government to respond to moves from itscompetitors. Local BC producer Brightlight Pictures, producer of newrelease White Noise, is planning to switch several projects to Ontario totake advantage of generous terms on offer. BC currently offers 11 percent tax credit on foreign productions, the same as both Quebec andOntario before recent rises.

Whilst the Canadian system encourages fierce competition between provinces,there is a limit to this blunt instrument approach to attracting producers in

that Treasuries like to make a net return on tax credits. There may be room forfurther improvement in the terms but, given a ceiling of around a 30 per cent taxcredit, Canada�s provinces will relatively soon need to start exploring more subtleadvantages to film producers, including value-added measures such as skills trainingand improved infrastructures. Ą Brightlight Pictures: Canada; +1/604 453 4710; www.brightlightpictures.com

UK cinema merger given approvalUK�s Office of Fair Trading (OFT) has decided not to refer therecent acquisitions of the Odeon and UCI cinema circuits by

Terra Firma Capital Partners to the Competition Commission. Theregulatory clearance was given on condition that several concerns overcompetition are met in 11 local areas across the UK, including theprime Leicester Square complex and two more in the wider Londonarea.

According to the OFT, reduced levels of competition resultingfrom the merger would affect cinemagoers in these key localities. Themost likely outcome is that Terra Firma may sell up to 10 per cent ofits newly purchased cinemas to another exhibitor. The companycurrently controls 127 cinemas with 936 screens across the UK, after itpurchased two of the UK�s largest cinema circuits in September 2004(see 2004/279b2). The takeover of Odeon was formally given the go-ahead in November 2004.

The UK regulatory decision is in sharp contrast to a ruling over theplanned sale of the 90-screen Sandrew Metronome cinema chain to itsrival SF Bio in Sweden. According to the Swedish Competition Autho-rity, the deal would create a monopoly controlling more than 75 percent of the exhibition sector. The case, which has been heavily criticisedfrom the start (see 2004/280b1), will now be referred to the districtcourt.

However, several other potential buyers have been reported,including local distributor Triangelfilm. The circuit has been valued at$13.7m, which excludes costs needed for restoration in several venues.Ą Office of Fair Trading (OFT): UK; +44/207 211 8842 ; www.oft.gov.uk Ą Swedish Competion Authority: Sweden;+46/8 700 16 00; www.kkv.se

India issues guidelines for unified licenceTelecom Regulatory Authority of India (TRAI)has issued guidelines for a unified licence allowing

companies to offer all telecom and broadcasting services, includingcable and direct-to-home (DTH) satellite television broadcasting, voice,radio and data services.

At present, different telecom and broadcasting services requireseparate licences. Companies must make a one-time payment of Rs 107crores ($24.5m) for the unified licence. TRAI�s proposed unifiedlicensing regime is expected to encourage free growth of newapplications and services and leverage technological developments inthe country�s information and communication technology (ICT)markets.

The régime is also expected to simplify the licensing procedure inthe telecom sector, ensure flexibility and efficiency of resources andapplication of technological developments, encourage efficient smalloperators to cover niche areas, particularly in rural and remote areas,and facilitate easy entry and a level playing field for new and existingoperators.

Unified licensing regime should also benefit consumers by providing them witha �one-stop shop� for voice, data and broadcasting services. Instead of dealing

with different companies for different connections, customers will be able to purchaseall types of telecom and broadcasting services from a single operator. Furthermore, theregime is expected to build an economy of scale and enhance competition, which inreturn should make better services available to customers at a cheaper price. Ą TRAI: India; +91/11 2610 1934; www.trai.gov.in


New

s/an

alys

isREGULATION


Cable giant spends big for ChristmasPan European cable giant UGC went on a December spendingspree, agreeing to buy Liberty Media�s stakes in Irish, Belgian

and Slovenian cable groups at a combined cost of $269m.¸ It paid $55m for Liberty�s 100 per cent stake in ChorusCommunications in an all-share deal that saw Liberty acquire further6.4m shares of UGC common stock. Chorus is Ireland�s number twocable operator with 200,000, TV, broadband and telephony subscribers.¸ In the second transaction, UGC acquired an indirect interest inTelenet by purchasing all of Belgian Cable Investors which holds 14.1per cent of Telenet. Belgian Cable Investors was previously a subsidiaryof Cable Partners Europe. UGC paid $143m for the Telenet stake, ofwhich $121m went directly to Liberty Media. Telenet is the largest cableoperator in Belgium with 2.5m television, broadband and telephonysubscribers.¸ UGC agreed to buy Slovenia�s Telemach from private equity groupEMP Europe and local shareholders for �71m cash. Telemach serves100,000 cable television subscribers and 10,000 broadband Internetcustomers. The group is by far the largest cable operator in the country,controlling nearly 30 per cent of the total market. By contrast, the nextlargest cable group controls less than seven per cent. UGC said thepurchase price represented 8.2 times the expected 2004 fourth quarterannualised normalised EBITDA. It expects the transaction to close firstquarter 2005, subject to review by the Slovenian competitionauthorities.Ą UGC Europe: Netherlands; +31/20 778 9447; www.ugceurope.com

Cine sound group targets image for digital futureDigital sound technology company DTS has made astrategic acquisition of an image enhancement outfit,

hoping to position itself as a key technology provider in the growingfield of digital cinema. DTS has paid $11m in cash for private outfitLowry Digital Images (LDI), a company that is expected to earnrevenues of $10m in 2005. The purchase positions DTS in the field ofhigh definition entertainment image and audio technology, with a viewto capitalising on demand for higher quality cinema and video creation,delivery and playback. LDI was founded in 2000, and grew out of its founder�s work on imagetransmission for NASA in the 1970s. LDI is an image enhancer orrestorer, captured on film or in digital format, working on nearly 100films since 2000. DTS is one of three leading digital sound technologiescurrently used in cinemas around the world: DTS, Dolby Digital andSony�s SDDS. DTS was launched in 1993, its first film being JurassicPark, and is present in around 22,000 cinema theatres worldwide.Ą DTS: USA; +1/818 706 3525; www.dtsonline.com

Deal struck for largest French cable groupFrance Télécom and Canal Plus Group have agreed to sell theircable assets to private equity group Cinven and French cable

operation Altice for �528m. A sale had been expected: earlier this yearFrance Télécom signed a memorandum of understanding to merge itscable assets with Canal Plus-owned NC Numéricâble. Pair said at thetime that they would seek to sell a majority of the merged group to anew investor. France Télécom will get �351m from the sale. Canal Pluswill get �87m. Both will retain a 20 per cent stake in the merged cablegroup worth �37m, but will maintain an option to divest the holdings inthe medium term.

Terrestrial transmission group TDF (which was previously ownedby France Télécom and retained a stake in France Télécom cable) willget �90m for its stake in the merged cable operation. The merged cablegroup controls 1.7m subscribers�about 47 per cent of the total cablemarket in France�and passes 4.2m homes. On completion, Cinvenwill hold a 50.01 per cent stake in the merged group and Altice 10.01per cent. France Télécom said it was �confident that the transactionwould close in the first half of 2005�.Ą Cinven: UK; +44/20 7661 3333; www.cinven.com

Philips increases share as DVD price war loomsAggressive video hardware pricing strategy by Philips India hashelped boost the company�s share of India�s DVD Video player

market in 2004. Subsidiary of the Dutch giant, Philips India increasedits sales of DVD video players from around 40,000 units in 2003 toover 500,000 in 2004. Increased sales have helped boost Philips� marketshare in India�s DVD video player market to 52 per cent by end 2004,up from 25 per cent a year earlier.

Underlying the increase in sales was the company�s aggressivepricing of its DVD players at around Rs 4,000 ($92) during 2004. Theprice-cut strategy was part of Philips� plan to encourage users of VCDplayers to migrate toward the more advanced DVD hardware. Despitesuccess in 2004, Philips is facing fierce competition from leadingmanufacturer Media Video so far in 2005. Media Video is India�s largestand Asia�s second largest manufacturer of DVD hardware. Operatingwith over 132 distributors and 2,000 dealers across India, Media Videohas this month (January) released its basic function DVD video playerfor just Rs 3,190 ($73) and a home theatre system with DVD videoplayer for only Rs 11,990 ($275). By comparison, Indian consumers arecurrently able to purchase entry-level DVD players for 3,990 ($92) fromVideocon, Rs 4,690 ($108) from Samsung and Rs 4,990 ($115) fromLG, whilst home theatre systems with DVD Video players are availablefrom Samsung for Rs 17,990 ($413) and LG for Rs 18,990 ($436).

Media Video�s price reductions are likely to trigger a price war in the IndianDVD hardware market. As a result, profit margins on low-end models will

be minimal. Consequently, manufacturers are expected to expand product lines tocater for other consumer electronics products in an attempt to increase revenues. Forexample, Media Video has already announced plans to embark upon a majorexpansion into microwave oven production.Ą Philips: India; +91/22 5691 2085; www.philips.co.in

SBC/Echostar alliance comes of ageUS telco SBC Communications has established a jointventure with set-top box (STB) firm 2Wire to develop a

device for deliver of entertainment into the living room. The newdivison, SBC Media Solutions, will run parallel to SBC�s ProjectLightspeed IPTV platform, providing a service that will integrate signalsfrom the satellite dish with a DSL return path. Subscribers will be ableto receive television programming from Echostar�s Dish Network, on-demand music and video, caller ID and digital photo-sharing throughYahoo. The platform, which is expected to be launched in all 13 ofSBC�s US markets, will also enable remote digital video access, allowingsubscribers to programme a personal video recorder (PVR) from a PCusing the SBC-Yahoo service. A future feature will provide the sameability through mobile phones via the SBC-owned Cingular mobilenetwork.

Commercial charges have not yet been established but it is expectedthat customers will pay a one-time fee to lease the device alongside amonthly subscription fee for the service. The plan brings into fruition along-gestating strategy by SBC and Echostar to develop a hybrid STBin reaction to cable drive towards VoD (see 2004/280a2 and US satelliteoperator unveils �push PVR� under Products).Ą SBC Communications: USA; +1/210 351 2100; www.sbc.com

DVD e-tailer broadens distribution channelsOnline DVD retailer Filmnight is to expand its businessin the UK through two contrasting channels, following a

deal with mobile telephony provider Vodafone and its acquisition ofbricks-and-mortar video rental chain Apollo. Under the former deal,Filmnight will provide exclusive film-related content for the newlylaunched Vodafone Live third-generation (3G) mobile service in theUK. Filmnight services will include film-related news and trailerdownloads, wallpapers and ringtones as well as DVD release news andreviews. Vodafone Live�s existing 2.5m consumers will also be able toaccess Filmnight�s video e-retailing operations via their handsets.

Purchase of Apollo�s 65 branches and 200 franchise operationsacross the UK makes Filmnight the UK�s fourth largest rental chain(after Blockbuster, Choices and Global). The Apollo stores will becomeFilmnight�s high street physical delivery channel, operating alongsidethe digital delivery division (online retail and mobile content delivery) aspart of a strategy to deliver content to customers via all channels ofdistribution. Filmnight�s acquisition of Apollo follows the e-tailer�srecent takeover of audio-visual software retailer Pricestorm and isbelieved to make it the first dot-com company to acquire a bricks-and-mortar chain.


New

s/an

alys

isBUSINESS


This is not Filmnight�s first attempt to develop a �bricks and clicks� operation.Although the website does not currently offer an online DVD rental-by-post

operation, the company set up small retail outlets in two UK railway stations in2003 where commuters could pick up rental or retail DVDs ordered online.However, as Screen Digest went to press, the London Waterloo outlet hadrecently closed and the website was no longer taking orders for collection, suggestingthat British consumers are not organised enough to do their browsing online and inadvance.Ą Apollo: UK; +44/20 8397 3333; www.apollovideobusiness.co.ukĄ Filmnight: UK; +44/20 7549 2820; www.filmnight.comĄ Vodafone: UK; +44/1635 673 310; www.vodafone.com

News Corporation to buy rest of FoxNews Corporation has launched an exchange offer for all stockin its content subsidiary Fox Entertainment that it does not

already own. News Corporation will buy the remaining 18 per cent ofequity, offering Fox Entertainment shareholders 1.9 shares of NewsCorporation stock for each Fox Entertainment share held.

Fox is central to News Corporation�s strategic positioning in the US. It holdsNews Corporation�s recently-acquired 34 per cent stake in satellite pay TV

platform DirecTV as well as US major Twentieth Century-Fox and the Foxnetwork and cable channels. News Corporation said the offer valued FoxEntertainment shares at a premium of 16.9 per cent over Fox�s six-month averagetrading price. News Corporation currently owns 82.1 per cent of the equity and 97per cent of the voting power in Fox Entertainment. Ą News Corporation: USA; +1/212 852 7017; www.newscorp.com

EA buys share of rival games companyThe world�s largest video games distributor, Electronic Arts(EA), has purchased 19.9 per cent of rival games company

Ubisoft. Ubisoft has stated that it regards the acquisition as hostile. Thepurchase of the shares from Dutch investment firm Talpa Beheer givesEA the second largest voting block within Ubisoft, only the Guillemotfamily holding more voting rights. The move has forced Ubisoft�smanagement to look at ways of defending their majority voting rights,including seeking investment from other French firms or asking for theintervention of the French government (although this is unlikely unlessEA can be proven to have broken any anti-monopoly laws). Ubisofthas expanded rapidly in recent years due to successful titles such asSplinter Cell and Prince of Persia. However, despite being one of EA�sfastest growing rivals, Ubisoft currently has a market capitalisation ofjust under �460m ($620m), compared with EA�s massive marketcapitalisation of over $18.8bn. The high profile nature of thisacquisition and speculation in the gaming press over Ubisoft�s potentialbusiness partners, could see this drama being played out for some time.

Another large media organisation has also indicated that it isinterested in moving into the games arena: Rupert Murdoch�s NewsCorporation recently stated that it was seriously considering thepurchase of a major video games company (which one has yet to bedecided). Further evidence, if it were needed, that the video gamesmarket is currently perceived as a lucrative prospect for investors .Ą EA: USA; +1/650 628 1500; www.ea.comĄ Ubisoft: France; +33/1 48 18 50 00; www.ubi.com

Game stores suffer due to hardware shortagesVideo game retailers in Europe and the US claim that theshortage of PlayStation 2 and Xbox consoles in the period

before Christmas has had a negative impact on overall sales. Initialclaims of hardware shortages (see 2004/378b2) were confirmed byElectronics Boutique (EB) and GameStop in the US and Game in theUK after hardware sales failed to meet expectations in the holidayperiod. Gamestop claims that the company�s console hardware salesdropped by 40 per cent on a like-for-like basis in December and that inthe last weekend in December it managed to shift only 186 Xbox andPlayStation 2 consoles across the company�s 1,768 stores. As a result,

both EB and Gamestop have dropped their financial projections forfourth quarter 2004. Leading UK video game retailer Game alsocomplained that hardware shortages had resulted in a shortfall inrevenues, with like-for-like sales in the UK and Ireland down by over20 per cent during the six weeks to 8 January 2005.

Lack of available PS2 hardware could be due to Sony recently launching twonew consoles: a slimline version of the PS2 and PlayStation Portable (PSP).

The extra pressure this placed on Sony�s manufacturing capacity may have had animpact on its ability to meet demands of retailers during the crucial holiday season.Ą Electronics Boutique: USA; +1/877 222 1061; www.ebgames.comĄ Game Group: UK: +44/0 1256 784000; www.gamegroup.plc.ukĄ GameStop: USA; +1/817 424-2000; www.gamestop.com

Schibsted offers for Finnish TV groupNorwegian media and publishing group Schibsted has made a�705m offer to acquire Finnish television and newspaper group

Alma Media. If successful, the buy would greatly expand Schibsted�sScandinavian television portfolio. Buying Alma Media would give itcontrol of Finnish national commercial channel MTV3 and smallersister channel SubTV, as well as an additional 23.4 per cent stake inSwedish national commercial channel TV4. Schibsted already owns 20per cent of TV4, which in turn is one of the bidders lining up toacquire a controlling stake in Danish public broadcaster TV2.

Schibsted would also acquire Alma Media�s radio stations and itsnewspaper and financial publishing activities, which would gel well withSchibsted�s existing newspaper investments. Schibsted has offered�11.40 for each Alma Media Series I share and �10.70 for each SeriesII share. It will also pay between �20.48 and �23.80 for each AlmaMedia warrant. Schibsted said the offer would remain open for fourweeks. The Alma Media board issued a statement saying it would�evaluate the offer after receiving the prospectus�. A deal would requireapproval from stakeholders representing 33 per cent of the votingstock. Alma Media�s single largest shareholder is Sweden�s BonnierGroup, which holds 33 per cent of the shares.Ą Schibsted: Norway; +47 23 10 66 00; www.schibsted.no

Thai distributor lifts output of older video formatDespite a shift across the Asian region from Video CD (VCD)to the more advanced DVD format, Thai home entertainment

distributor and replicator EVS Entertainment plans to boost its currentVCD output from 2.5m to 6.0m copies a month. EVS has purchasedseven high-volume copying machines�six for VCD and one forDVD�to be installed by the end of this month (January). At present,around 250,000 DVD copies are produced each month. EVS claims tohave invested 160m baht ($4.1m) to increase its VCD and DVDproduction capacity. It expects the investment to boost its market shareand help sales reach 1bn baht ($25.9m) by 2007. CVD Entertainment iscurrently Thailand�s biggest operator followed by Mangpong and EVS;the latter hopes to move into second place as a result of this expansion.

Established in 1979, EVS generated 570m baht ($14.7m) in salesduring 2004 and forecasts sales growth of 32 per cent to around 750mbaht ($19.3m) in 2005. EVS currently has rights to almost 9,000 films,documentaries and comedy titles that may be produced in VCD andDVD formats. It claims to be spending around 25m baht ($645,000) amonth buying new content for VCD and DVD production. At present,EVS releases up to 30 new titles for the Thai market a month.Ą EVS: Thailand; +66/2 671 3300; www.evsthailand.com

US cable groups to buy middleware unitUS cable groups Cox Communications and Comcast haveagreed to buy the North American operations of troubled

middleware developer Liberate for $82m cash. Cox and Comcast haveformed joint-venture company Double C Technologies, in whichComcast is the majority shareholder, to take control of Liberate�s NorthAmerican assets and patents. The deal will not go ahead until Liberateends it appeal against a court decision that prevented it declaringbankruptcy late last year. Both Cox and Comcast already use Liberatemiddleware in some of their set-top boxes. Comcast also usesMicrosoft�s middleware solution in a proportion of its homes. It has alicence to use the software in 5m of its 21.5m subscriber homes. Coxhas a further 6.3m subscribers.

The pair say the Liberate purchase will allow them to speed theroll-out of interactive services and aid development of new features thatwill distinguish the companies� offerings from other operators.Ą Comcast: USA; +1/215 665 1700; www.comcast.com


New

s/an

alys

isBUSINESS


China box office surges as local films soarTotal box office revenue reached an estimated CNY 1.57bn($182m) in China in 2004�a huge 50 per cent increase on the

previous year and a new all-time record. The boost has been attributedto high profile local films such as House of Flying Daggers, the top-rankedfilm in China last year, which grossed a total CNY 150m ($18.1m),equivalent to 10 per cent of mainland box office. The film was also wellreceived abroad, grossing an estimated CNY 400m ($48.2m) to date.

In total, local films secured the majority 55 per cent of revenues inChina in 2004, up from an estimated 45 per cent the previous year. Thetrend for higher quality local films has continued from 2003 when toptitle Hero grossed a total 250m yuan ($ 30.1m) and also topped the USbox office charts in 2003. In addition, there was an increase in thenumber of local film releases to 212, up from 140 and 112 over the pasttwo years respectively.

Growth in box office revenue looks set to continue as several new reforms alsobegin to take effect. Most notably, Warner Brothers has been quick to take

advantage of new laws that allow foreign investors to take up to a 75 per cent stakein cinemas in the seven largest cities (see 2004/249a2) . Meanwhile, the currentquota for 20 foreign films imported into China each year is also likely to increase in2005, according to the State Film Bureau SARFT. These factors, in tandem witha rapid upgrade in China�s exhibition infrastructure to modern multiplex cinemas,are likely to push up China�s box office even more sharply over the next few years.Latest figures from SARFT indicate that there are now 1,188 modern cinemaswith 2,396 screens in China.Ą SARFT: China; +86/10 6605 3114; www.sarft.gov.cn

Mixed results for European box officeTheatrical box office in the Netherlands fell for the first timesince 1999, as total revenues dipped 7.3 per cent to �151.3m

($171.3m), according to data from the Dutch Exhibitors AssociationNVB. Total admissions also slipped by an estimated 10.4 per cent to22.3m, the lowest level since 2000. Meanwhile, the average ticket pricecontinued to rise by 3.5 per cent to �6.78 ($7.67) compared with 2003.The drop can be partially attributed to a lack of strong local titles,which together accounted for 9.4 per cent of total admissions, downfrom 13.3 per cent in 2003. Top film overall was the latest Harry Pottermovie, which attracted over 1.3m admissions for Warner Bros. Topdistributor was UIP with a 21.6 per cent market share in 2004.

In sharp contrast, Polish box office recorded a dramatic increase in2004, up 43 per cent to 462.2m zloyts ($148m), according to localresearch firm ES Media. Admissions increased by nearly 10m to 33.3min 2004�a jump of over 40 per cent. As a result, average annual admis-sions per head reached 0.8, which is the highest rate since 1990, butnonetheless still much lower than many other European nations. Topfilm of 2004 in Poland was Shrek 2, which grossed $15.4m for UIP. Ą ES Media: Poland; +48/22 654 1731; www.esmedia.plĄ NVB: Netherlands; +31/20 42 66 108; www.nvbinfocentrum.nl

UK box office hits new highTotal box office revenue in the UK and Ireland reached an all-time high last year, led by a string of high profile blockbusters.

Total revenue hit £838.7m ($1,572.0m) in the full year 2004, a 3.5 percent increase on the £810.0m ($1,518.0m) recorded the previous year,according to data from Nielsen EDI. Total revenues were also 3.2 percent up on 2002�s previous record of £812.2m. UIP finished top of thedistributor table with a massive 29.8 per cent share, ahead of second-placed Warner Brothers with 14.7 per cent of the market. UIP releasedthree titles in the top 10 of the year, including top-ranked film Shrek 2.It was also UIP�s second-highest market share in the UK since 1996.

Buena Vista finished third in 2004 with 14.5 per cent of the market,down from first place in 2003. Its top title was The Incredibles, which hasgrossed £29.7m ($ 55.6m) since its release in November. In total, USmajors increased their combined market share to 79.7 per cent of UKbox office, up from 77.7 per cent in 2003. Ą Nielsen EDI: UK; +44/207 170 5200; www.entdata.com

Russian cinema boom still in full flowRussian box office jumped 40 per cent in 2004, with a local filmin the top spot for the year. In total, box office revenues stood

at $262m for the year, according to local trade source Russian FilmBusiness Today, up 34.7 per cent on the $194.7m recorded in 2003.Admissions for Russia and other CIS states were 75m, also a substantialrise on previous years and a sign that the predicted good growth insector is staying on course.

There were 286 films released in the territory, of which the highestgrossing title was local thriller Night Watch, which grossed $16m for sixper cent of total box office. The title was distributed by Gemini Films,whose revenues also rose dramatically to $51.4m for the year. Lord of theRings: Return of the King came in second with a gross of $14.1m and Troywas third with $12.3m. These were the only three titles to break $10mthreshold.

Russian films accounted for 17.8 per cent of all releases and 12.4per cent of all revenues, indicating that overall they underperformed inthe market, although it was an improvement on 2003. In terms ofrevenue distribution, 77 titles took over $1m in 2004, compared with 48in 2003, and 11 titles took more than $5m (seven in 2003). Ą Russian Film Business Today: Russia; www.kinobusiness.com

Sony leads US distributors againSony Pictures returned to the top of the US theatricaldistributor leader board for the third time since 1995 with

a 14.2 per cent share in 2004, according to data from Nielsen EDI. Italso achieved its second highest box office gross, mostly due to theresounding success of Spider-Man 2, which raked in $373.4m as thesecond biggest theatrical hit of the year. Sony�s last winning year was in2002 when the first Spider-Man movie was released. The film helped itaccumulate revenues of $1.57bn in 2002, which still stands as the all-time record gross for any studio.

Meanwhile, Warner Brothers was edged into second place with 13.2per cent of the national box office. It also recorded its second highestbox office tally in history last year, and broke the $1bn barrier for thefourth time in succession (the only studio to achieve this feat).

In 2004, three distributors managed over $1bn at the box office,down from four the previous year. Dreamworks also had its mostsuccessful year of the last five years, with a 10.0 per cent market sharein fourth place. This was mostly due to the CG animated movie Shrek2, which was also the top performing film of the year. The film alsoachieved another milestone in 2004, by becoming the most successfulanimation film ever, knocking Finding Nemo of the top spot.

Buena Vista, the leading US distributor of 2003, settled for thirdplace with a 12.6 per cent market share. Its top title was The Incredibles.Paramount, however, suffered its lowest box office for nine years, and acontinuation of a box office slide that has gripped the studio since1998. The leading independent was New Market, which achieved a 4.4per cent share, due primarily to the surprise hit The Passion of the Christ.There were more wide releases (144) on over 1,000 screens, comparedwith 135 and 139 over the last two years respectively.

According to provisional data for the year 2004, total box officerevenue in the US hit an all-time high of $9.53bn. Admissions slippedfor the second consecutive year to 1.53bn, an annual fall of 2.5 percent. As a result, average ticket prices jumped to a new high of $6.23m,a rise of 3.0 per cent.Ą Nielsen EDI; US; +01/323-860 4600; www.entdata.com

Research shows online renters still go to cinemaResearch conducted by UK online DVD rental operatorVideo Island (VI) confirms the theory that heavy video

renters are also heavy consumers of filmed entertainment through otherchannels. A survey of subscribers to VI�s ScreenSelect (SS) brandedservice carried out in December 2004 show that:¸ SS members rent an average of 27 DVDs annually, compared with aUK national average of just seven rentals per DVD householdaccording to Screen Digest data.¸ Over half (54 per cent) also go to the cinema at least once a month,51 per cent buy at least one DVD a month, as well as renting regularly,and 20 per cent watch a premium pay TV movie channel every month.¸ Research also confirmed that the online sector is cannibalising off-line rentals: 64 per cent of those questioned said they no longer rentedDVDs from high street stores. ¸ This may partly reflect their desire for a broader product range thanthat offered by most bricks-and-mortar stores. Over 17 per cent of SSrentals are of titles more than three years old (and the company says


New

s/an

alys

isMARKETS


that 80 per cent of titles sent out are at the top of the subscriber�s �wishlist�).¸ TVDVD accounts for 17 per cent of rentals, suggesting that manysubscribers are using rental by post to provide TV programming ondemand.

Video Island, which includes �white label� online rental services forcompanies such as Tesco, MSN and easy.com, as well as theScreenSelect brand, claims to have generated 3.4m rentals in 2004�equivalent to almost three per cent of the total UK off-line marketaccording to Screen Digest data. As anticipated, Blockbuster�s entry intothe market has served to raise awareness of the concept of online rentalservices in the UK.

Research carried out by Taylor Nelson Sofres in January 2005 andseen by Screen Digest indicates that 48 per cent of those who rent at leastonce a month were aware of Blockbuster�s online rental service.Awareness of other services was much lower: VI-operated Tesco DVDRental was familiar to nine per cent and ScreenSelect to seven per cent.Video Island itself and its main rival Lovefilm were each recognised bythree per cent of respondents, whilst just two per cent had heard ofUS-based Netflix.Ą Video Island: UK; +44/20 7446 7553; www.screenselect.com

Early results show decelerating DVD growthPreliminary full-year results for 2004 from the US and Europeindicate that whilst video distributors in the US continue to

benefit from the shift from rental to purchase, in Europe�where theretail (sell-through) sector has been dominant for some time�overallDVD growth is slowing.¸ Screen Digest�s US research partner, Adams Media Research (AMR),indicates that US consumers bought 1.16bn video units in 2004, up19.7 per cent on 2003, generating consumer spending of $17.1bn (up18.5 per cent). The main driver for growth was once again DVD retail,spending on which rose 31 per cent to $15.9bn. Preliminary AMRresearch indicates a decline of eight per cent in rental transactions to3.2bn (including on-line and other subscription-based rentals) and adownturn of nine per cent in spending on the sector to $8.9bn. The on-going shift from rentals to sales is good news for video distributors,who receive a significantly higher proportion of consumer spending onsales. As a result, distributors� revenues from video software arethought to have risen by 15.6 per cent last year, despite a rise of just 7.4per cent in consumer spending.¸ The British Video Association (BVA) reports a UK upturn of 12 percent in retail video sales by volume in 2004 to 234m units. Sales ofDVDs were up 36 per cent, accounting for 84 per cent of the total. Onthe rental side, Screen Digest has learned that data from MRIB�s RentalMonitor indicates a downturn of two per cent in video rentals in 2004.However, for statistical reasons data for 2004 covers 53 weeks insteadof the usual 52, resulting in a slightly inflated figure compared with2003. These figures do not include online rentals, which are notmonitored by MRIB.¸ Spain�s video distributors� association UVE says its membersshipped 30.8m videos to the retail sector in 2004�up seven per centon the previous year�s figures. Over 90 per cent of these were DVDs.However, falling average prices meant that distributors� revenues fromthe retail sector rose by just five per cent. Meanwhile, shipments to therental trade fell by 12 per cent whilst revenues declined even further(down 19 per cent). As a result video distributors� revenues in Spainappear to have fallen by about two per cent in 2004, to �404.1m.

The US figures indicate an unexpected upturn in consumer buy-rates in2004, although indications are that buy-rates in the UK and Spain are

fractionally down on 2003. In both the European markets, levels of DVD piracyhave increased dramatically in the past year, a fact that the industry believes hasadversely affected DVD sales. This, coupled with the apparant confirmation ofslowing DVD growth, will only serve to reinforce Hollywood�s desire to launch thenext generation of DVD as soon as possible (see 2005/21a3).Ą Adams Media Research: USA; +1/831 624 0303; www.adamsmediaresearch.comĄ BVA: UK; +44/207 436 0041; www.bva.org.ukĄ UVE: UVE: Spain; +34/91 522 4645; [email protected]

Software sales grow despite hardware setbackSales of 128-bit software grew in Europe by 28 per cent involume and 15 per cent in value in 2004, despite reduced

footfalls caused by hardware shortages of two of the most popular 128-bit hardware devices, PlayStation 2 and Xbox (see Game stores suffer due tohardware shortages under Business). However, year-end data from ScreenDigest Games Intelligence indicates that European sales of 128-bithardware may have peaked in 2003, as overall 128-bit sales volume fellby nine per cent in 2004. Only the Xbox managed to achieve annualgrowth, with an increase in sales of seven per cent, while PS2 andGameCube sales declined by 10 per cent and 24 per cent respectively.A similar pattern emerged in the US where, despite a 27 per cent upliftin Xbox sales, overall 128-bit hardware sales fell by 15 per cent involume terms. PS2 hardware sales fell for the second year running,having peaked in 2002 and GameCube sales dropped by 30 per cent.

The fact that the 128-bit hardware market has under-performed in Europe,despite the re-launch of the PS2 and a decline in purchase prices (both the

PS2 and Xbox fell below �150), makes it conceivable that the peak year for thisgeneration of console hardware in unit terms was 2003. Although it is possible that,with replenished stocks, the new PS2 could achieve year-on-year growth in the earlypart of 2005, it is unlikely that this performance would be maintained throughoutthe rest of the year, particularly as its successor is planned to launch in 2006. If2003 proves to be the year when the market peaked, then the PS2 has followed thesame path as the PSOne did when it peaked in the fourth year of its life in 1998.Ą Microsoft: USA; +1/206 882 8080; www.microsoft.comĄ Nintendo: Japan; +81/75 3541 6111; www.nintendo.comĄ Sony: Japan; +81/3 5448 2111; www.sony.co.jp

PRODUCTSUK cable launches VoD services

UK cable operators NTL and Telewest both launchedvideo-on-demand (VoD) services for their digital cable

subscribers on 18 January 2005. The services are claimed to be the firstmass market cable VoD launch outside the US. Initially available to80,000 NTL homes in Glasgow and 21,000 Telewest homes in Bristol,the services will progressively roll out throughout 2005-2006. Coreelement of the VoD offering is feature films supplied by the FilmFlexjoint venture (formerly called MovieCo) between Walt Disney, SonyPictures and On Demand Management that was given regulatoryapproval by the European Commission on 11 November 2004 (see2004/345a1). In line with the deal, the operators will show UKpremieres of films such as Spider-Man 2 and King Arthur in February.There will also be offerings of TV programming and music videossupplied by the BBC, Warner Music, Nickelodeon, Jetix and otherpartners. Prices on both services range from £2 for library films to£3.50 for first-run features. NTL said it would charge between £0.20and £0.50 for television shows.

Cable VoD in the UK has been long in gestation, both operators havingconducted major trials back in 2001 and 2002. However, subsequent

financial restructuring meant that plans were put on hold for a considerable period oftime, much to the benefit of satellite platform Sky Digital. The latter�s Sky+personal video recorder (PVR) service launched in 2001, which provides a �virtualVoD� service, has to date claimed approximately 0.5m customers in the UK and isexpected to pass 3m by 2010. Meanwhile, DSL operators have also developed theirVoD services, with BT expected to launch its Freeview Plus VoD platformcommercially in August 2005. The launch of the new cable offering thus comes notas a first mover but into an increasingly crowded UK VoD market�having cededdominance of the digital TV market to Sky and facing serious competition in thebroadband sector from DSL-based ISPs, as well as BT itself. An important pointin this equation then becomes the studios, other than Disney and Sony, and to whatextent they will seek to support FilmFlex as a means of eroding Sky Digital�sunassailable negotiating position when it comes to premium movie content.Ą NTL: UK; +44/1962 823434; www.ntl.co.ukĄ Telewest: UK; +44/1483 750900; www.telewest.co.uk

First commercially viable video headset releasedAfter a number of false starts over the last decade, USdisplay developer Icuiti is the first company to begin

selling an affordable consumer video headset. Intended to resemble apair of sunglasses, the Video Eyewear V920 is the first binocular displaythat does not need to be strapped or mounted on the user�s head. Theadvantage of this device over other direct-view portable displays, suchas that found on existing portable video players, is that it appears to


New

s/an

alys

isMARKETS


generate a big screen image a few feet away from the user. The unit,which contains two 920,000 pixel LCD screens and weighs 3.5 ounces,went on sale in the US in January 2005 for $499 and a PAL version willbe made available in Europe in February 2005. The device is intendedto be used in conjunction with a variety of video sources, includingportable video players and portable DVD players.

Previous attempts to create viable video headsets include the PLM-50Glasstron from Sony in 1996 (see 1996/162b3), which cost around

¥90,000 ($900), and a head-mounted display (HMD) from US companyMicroOptical in 1999 which cost between $1,500 and $5,000 (see 1999/117a1).Ą Icuiti: USA; +1/585 273 8293; www.icuiti.com

Australia launches first multicultural DTH serviceAustralia launched its first full-time direct-to-home (DTH)multicultural television network last month (December). Hosted

on the Optus B3 satellite, the Australian Multicultural TelevisionNetwork (AMTV) is being broadcast across Australia and NewZealand. The new free-to-air television service is expected to enhancethe diversity of programming choices available to Australian and NewZealand audiences as well as support and develop arts, music andcultural programming in both countries.

AMTV content is produced in Australia and comprises communitylevel programmes, events and live forums as well as daily segments oneach of Australia�s main ethnic groups. AMTV�s programming coversArabic, European, Asian, Baltic and English-language groups. InitiallyAMTV intends to broadcast 12 hours of content back-to-back beforeextending to 24 hour transmission in 2006.Ą AMTV: Australia; Fax: +61/2 9796 3640; www.amtv.com.au

US satellite operator unveils �push PVR�US satellite operator Echostar has announced the launchof Dish on Demand over its Dish Network satellite TV

service. Available from March 2005, the service will be based on DishPlayer-DVR 625 integrated personal video recorder (PVR) set-top box,which comes equipped with a large hard disk able to store 100 hours ofcontent. Movies will be beamed onto hard disk by the operator usingsatellite signals and can be viewed, for a payment, by customers whowill then have the ability to play, pause, rewind and fast-forward muchas with a DVD or in a true video-on-demand (VoD) environment.Echostar�s aim is to offer as many as 100 movies, with new contentpremiering every week.

Development of a �push PVR� strategy by Echostar, where content is pushedonto a local storage device, is an important development in tackling the threat

of the true VoD being offered by US cable operators. Indeed, its an approach thatmany satellite operators around the world are turning to as they address the absenceof an instant return path required for supplying VoD. In this respect, however, amore significant long-term development for Echostar is arguably its alliance with telcoSBC as they launch a hybrid set-top box providing VoD via a DSL broadbandconnection. This would allows for the delivery of on-demand movie content fromcentralised servers and thus does not limit the service to the size of the local harddisk (see SBC/Echostar alliance comes of age under Business).Ą Echostar: USA; +1/303 799 8222; www.echostar.com

BVHE speeds up Disney Classics release cycleBuena Vista Home Entertainment is to double the number ofDisney Classics released annually under its limited release

strategy to two per year. The move reflects the growing number oftitles now considered �Disney Classics�. When the previous �one a year�policy was implemented five years ago (see 1999/279a3), 10 titles wereincluded in the premium range. This number has since increasedsignificantly, with 14 Disney Classics titles currently out of circulation.

The new campaign begins with the DVD debut of Bambi on 14February 2005, followed by Cinderella in October. Although the formertitle has never been available on DVD before it has already sold over10m units on VHS in Europe, according to BVHE, and the new release

has been more extensively restored than any other animated Classic. The increasing number of titles considered to merit the �Classic�

treatment has been bolstered by BVHE�s decision to include somedirect to video releases as well as the original theatrical titles. Thecompany has also announced that three titles in The Lion King franchisewill exit the market on 31 January for an undisclosed number of yearsunder the Disappearing Classics programme.Ą BVHE: USA; +1/818 560 1000; www.disney.go.com/disneyvideos

TECHNOLOGYWal-Mart seeks cheap DVD recorders in Taiwan

Discount retail giant Wal-Mart has held talks with leading opticaldisc drive (ODD) manufacturers in Taiwan in a bid to source

entry-level OEM DVD recorders that would retail for as little as $99 inthe US, according to local sources. Makers involved in thediscussions�including Lite-On IT, BenQ, Quanta Storage, MustekSystems and Protop Innotech�are said to be considering the viabilityof a proposal that would require OEM production prices of $75-$80per unit, compared with current levels of $110-$120. Wal-Mart isapparently keen to introduce recorders priced below the �magic� $100mark by second or third quarter 2005.

According to Taiwanese manufacturers, entry-level DVD recordersdid not sell well in the US and Europe during the Christmas retailperiod, despite reductions in retail prices to as little as $139-$149. As aresult, Japan�s Techno Systems Research recently reduced its globalDVD recorder sales forecast for the year to 10m units, although theTaiwanese manufacturers claim that if prices fall to $99, global demandfor DVD recorders could potentially reach 20m-25m this year.

The prospect of regular orders from the �world�s biggest retailer� is clearlyhighly attractive to Taiwan�s manufacturers, but the demand that they reduce

production costs by up to a third (or absorb the difference) is a tough one. So far,demand for DVD recorders has come almost entirely from Japan (see 2004/263),where they accounted for an estimated 54 per cent of DVD hardware shipments in2004, compared with just 10 per cent of shipments in the US and 11 per cent inWestern Europe. Although the DVD recorder appears to be the obviousreplacement for the VCR, the increasing availability and ease of use of personalvideo recorders (PVRs) with electronic programme guides (EPGs)�such as TiVoin the US or Sky+ in the UK�may mean that entry level recorders will be lesspopular outside Japan than Wal-Mart believes.

Backwardly compatible next-gen discs arriveBoth JVC and Cinram have developed discs which will work inboth today's DVD players and the next generation of high

definition (HD) players. This means that users that do not have a HDplayer can view video content at standard definition using their currentDVD player, and watch the same content at high definition resolutionwhen upgrading to a HD player in the future. Although they providesimilar functionality, both JVC and Cinram are working on technologiesthat are format specific: JVC's Combo Disc will work only on Blu-rayDisc (BD) technology and Cinram's disc only on HD DVD players.

JVC has incorporated a reflective film that reflects the blue laserused for Blu-ray reproduction but is transparent to the red laser used inDVD reproduction. This has enabled the company to develop a single-sided, triple-layer structure, comprising a Blu-ray Disc layer and DVDdual layer with a capacity of 33.5 Gb. Cinram has opted for a flip discthat consists of a traditional DVD 9 on one side that can store up to8.4Gb of data, while the other side is a HD DVD capable of storing upto 15 Gb of data.

In addition JVC is also developing a Blu-ray/ DVD combo discwith an even larger 58.5Gb storage capacity. The proposed disc willcombine a 50 Gb Blu-ray dual layer and a 8.5 Gb DVD dual layerstructure (effectively four layers).

The arrival of these backwardly compatible discs could serve both an interimand a long-term solution to software incompatibility for the next generation of

video hardware. In the interim, consumers could purchase a disc now that they wouldbe able to use in a Blu-ray or HD DVD machine in the future, giving consumers areason to upgrade their hardware. Further down the line, consumers would be able toplay a next generation HD disc in an old DVD player which has been relocatedelsewhere in the home. It still remains to be seen whether the studio or the consumerwould absorb the higher cost of manufacturing these hybrid discs but if they areintroduced effectively then they could certainly play a part in the ongoing format war.Ą Cinram: Canada; +1/416 298 8190; www.cinram.comĄ JVC: Japan; +81/45 450 2581; www.victor.co.jp


New

s/an

alys

isPRODUCTS



Busi

ness

Mergers, takeovers and investmentsBecker GroupAustralia: +61/2 9438 3377www.beckerentertainment.com.au

Australian entertainment company has acquired outdoor cinema and advertising group Moonlight Projects for $6.3m in cash and shares. The movefollows from the recent sale of Becker�s shareholding in local distributor Magna Pacific. The company has also recently expanded its Dendy Cinemachain in Australia.

C-CORUSA; +1/814 238 2461www.c-cor.net

Network solutions company has completed its acquisition of on-demand server vendor nCube. With completion of the purchase, nCube is to beintegrated into C-COR�s existing software business unit, C-COR Solutions. The purchase of nCUBE follows four significant acquisitions by C-CORduring 2004 as part of a strategic plan to aggregate components required to build end-to-end Internet Protocol (IP) broadband and telecom networks.

CinemarkUSA; +1/972 665 1000www.cinemark.com

US exhibitor has received a $50m cash injection from an investment by private equity outfit Quadrangle Group.

Cisco SystemsUSA; +1/408 526 4000www.cisco.com

Networking giant has acquired privately-held Airespace, wireless equipment maker, for around $450m in stock. The move is part of Cisco�s strategy tostrengthen its offerings of wireless local area network (LAN) products. Subject to regulatory approval, the deal is expected to be completed by end April2005.


CinecittàItaly; +39/06 7229 3450www.cinecitta.it

Italian film studio has jointly acquired a film studio in Morocco with Italian media veteran Dino De Laurentiis. The purchase has been on the cardssince building began last year. The sStudio spreads over 371 acres in Ouarzazate in Southern Morocco and cost around $8m to build. The measure ispart of a strategy to turn Rome and Cinecittà into a European media hub.

DVDs365.comUK; +44/131 220 1313 www.dvds365.com

Online DVD rental operator is understood to have acquired Movietrak.co.uk and QFlicks.com (themselves merged last year: see 2004/220). No detailswere revealed, but the latter services now carry a 'powered by DVDs365' logo and URLs have changed to movietrak.dvds365.com. UK's The Guardiannewspaper website has terminated its agreement with Movietrak and partnered rival LoveFilm. DVDs365's online rental software is provided by Alarit,which also underwrites rental service of MailboxMovies.com; the latter site did not appear to be run by DVDs365 as Screen Digest went to press.

Fiji TVFiji; +679/305 100www.fijitv.com.fj

Fiji Television has purchased Papua New Guinea�s EM-TV for around $1.6m from Australian commercial free-to-air broadcaster Nine Network. FijiTV will take control of EM-TV�s parent company Media Niugini as part of the deal, which is subject to regulatory approval. Local reports claim NineNetwork decided to sell EM-TV following continual financial difficulties. Fiji TV broadcasts one free-to-air channel called Fiji 1 and three paychannels�Sky Sports, Sky Entertainment and Sky Plus.

FilmnightUK; +44/20 7549 2820www.filmnight.com

Online DVD company has acquired video rental store chain Apollo. The purchase price is believed to be around £10m, funded by a mixture of cashand shares. Apollo�s shareholders will become equity holders in the enlarged Filmnight group�understood to be valued at about £8.5m. Revenues overthe coming year are expected to exceed £20m and EBITDA to be just under £2m (see also DVD e-tailer broadens distribution channels under Business).

InfoSpaceUSA; +1/425 201 6100www.infospacemobile.com

US mobile content provider has reached agreement to acquire Elkware, a German mobile games company, for approximately $26m in cash. Elkware isresponsible for developing more than 90 mobile video games, including a number of interactive role playing games and strategy titles. The games areavailable in over 10 European countries through relationships with major mobile operators, including Vodafone, O2, Orange, T-Mobile, TelefónicaMoviles, 3 and TIM.

MediasetItaly: +39/ 06 77081www.gruppomediaset.it

Italian commercial broadcaster has sold a 1.9 per cent stake in Telecinco for �76.6m ($99.7m) to JP Morgan Securities. The company still holds amajority 50.1 per cent stake in the Spanish TV station and is committed to maintaining this threshold for the next six months.Microsoft

USA: +1/206 882 8080www.microsoft.comSoftware giant has sold its sporting

game development studio Indie Built to distributor Take-Two Interactive for an undisclosed sum. The deal marks the end of Microsoft�s internaldevelopment of sporting titles. New York-based game developer and publisher Indie Built, previously bought by Microsoft in 1999, developed a numberof titles exclusive to the Xbox, which could now end up being made for competing consoles as well.

MotorolaUSA; +1/847 576 5000www.motorola.com

Set-top box manufacturer has acquired home networking software company Ucentric Systems. Ucentric�s software enables connectivity in the home,providing the ability to move content, such as movies and music, around different digital devices in different rooms of a house. Motorola plans tointegrate the software into its Home Media Architecture solution for its digital set-top platforms.

NavarreUSA; +1/763-535-8333www.navarre.com

Audio-visual software publisher and distributor has acquired Funimation, a home video licensor and distributor specialising in children�s entertainment.Navarre will pay approximately $100.5m in cash and issue between 1,495,216 and 1,827,486 shares of Navarre common stock. Should Funimationachieve set financial targets, the sellers could also receive up to $17m in cash to be paid over five years.

NetMusic EntertainmentUSA; +1/425 775 9197 www.netmusic.com

Digital media firm has rescinded an offer of investment in video streaming firm Scream Networks. The company had sought to use the latter�sVideoScream technology to offer Internet video-on-demand (VoD). NetMusic has stated that it has since found an alternative technology vendor moresuited to its needs, with aim of offering VoD service in first quarter 2005.

SES AstraLuxembourg; +352 710 725 310www.ses-astra.com

Satellite operator has completed its previously announced purchase of Digital Playout Center from German pay TV operator Premiere, followingregulatory approval from the German Bundeskartellamt. Astra originally agreed to buy a 75 per cent stake in Digital Playout Center for �41.2m butBundeskartellamt asked that it acquire 100 per cent. Final price paid was thus raised to �55m. Astra says it will expand the playout centre�s activities withlaunch of Germany�s first �open pay TV platform�.

SharpJapan; +81/598 38 1221www.sharp-world.com

Southern Star Entertainment UKAustralia; +61/2 9202 8555 www.southernstargroup.com

Japanese electronics manufacturer plans to invest ¥150bn ($1.4bn) to build a liquid crystal display (LCD) panel facility for production of screens used indigital televisions, video game consoles and mobile phones. New Kameyama based facility is expected to commence production of around 15,000 panelsa month in October 2006, rising to 30,000 panels a month in 2007.

Division of Southern Cross Broadcasting (Australia) is raising its shareholding in Carnival (Films and Theatre) from 40 per cent to 75 per cent byacquiring the shares of company founder Brian Eastman for £2.4m immediately and £1.2m in four years� time. Carnival is a leading UK independenttelevision producer, responsible for such series as Agatha Christie�s Poirot, Jeeves & Wooster and Porterhouse Blue.

Leading music company has sold its UK and French mail order music and video club subsidiaries to Platinum Equity, a merger and acquisitioncompany. Between the UK and French branches�trading as Britannia and Dial respectively�there are approximately 2m active members, constitutingEurope�s largest club-based marketers of DVDs, CDs and games. According to reports, Platinum intends to operate the two clubs as a single, stand-alone business. No financial details have been released.

Warner Brothers InternationalCinemasUSA; +1/818 977 6278

International cinema chain of US major with partner Village Cinemas has acquired the remaining 10 per cent of the Italian cinema circuit they did notalready own. The stake was sold by local firm Focus Partnership. Warner and Village Cinemas now own 50 per cent each of the territory�s largestexhibitor, comprising 146 screens.

Publicly-owned Russian film studio is up for sale: the Russian Federal Property Fund is holding an open auction mid February 2005 to sell off a 75 percent minus one shareholding in the studio. The authorised capital of studio is R91.4m ($3.3m). The starting bid is R123.2m ($4.4m).

Animation BridgeIndia: +91/9 8200 99711www.animationbridge.com

Mumbai-based animation studio has signed deals with animation producers in UK, France and Japan. Production of $4.5m six-part CGI spy thrillerseries, to be distributed on DVD, is expected to begin in second quarter 2005. Pre-production of project will be handled by UK�s RichwoodEntertainment and post-production by Bangalore�s Paprikaas Animation Studios. The company will also work on 26-part Japanese anime title, forwhich key animation will be carried out in Japan, and, with French production company Digital Salade, on a further title.

Content deals

On the money markets

Gorky Film StudiosRussia: +7/95 181 0183www.gorkyfilm.ru

Universal Music GroupUSA; +1/212 841 8000www.umusic.com


AstroMalaysia; +603/9543 4188www.astro.com.my

Best EntertainmentGermany; +49/610 468030Home entertainment licensor has

Malaysian pay TV provider Astro All Asia Networks has secured broadcast rights to the 2006 FIFA World Cup championship. Owned by MeasatBroadcast Network Systems, Astro will broadcast all 64 championship matches, as well as World Cup qualification matches as part of the deal. Theagreement also grants Astro broadcast rights to the 2005 FIFA Confederations Cup which starts June 2005. Subscribers will not be charged anadditional fee for World Cup matches.

acquired video rights for several productions from TV-Loonland, a cartoon producer and distributor. Best Entertainment bought six licences forGerman-speaking territories from TV-Loonland�s catalogue, the deal extending the alliance between the German companies. Titles bought includeGulliver�s Travels, Beauty and the Beast and Enchanted Tales, a highly successful TV-Loonland home video licence selling over 17,000 units in recent monthsin German-speaking countries.

Cable TelevisionHong Kong; +852/2112 6868www.cabletv.com.hk

Hong Kong�s leading pay TV provider has signed content sharing agreement with Cathay Pacific Airways. As part of the agreement, daily news will bebroadcast in Cantonese on StudioCX, Cathay Pacific Airways� in-flight system commencing this month (January). A wholly owned subsidiary of i-CableCommunications, Cable Television will provide a customised news broadcast for the airline, containing edited highlights from the company�s daily newsbroadcast.

Clear Channel EntertainmentTelevisionUSA; +1/1-210-822-2828www.clearchannel.com

Broadcasting arm of media giant Clear Channel has agreed a music DVD output deal with Ventura Distribution, a home entertainment distributorspecialising in independent labels. CCETV will produce and release a minimum of 12 new music programmes over the next two years to be distributedby Ventura. The titles will feature high definition productions compatible with next-generation DVD players. The first title is due in May 2005. WithClear Channel selling 72m tickets in 2004, CCETV intends to use its parent company�s stronghold in the live performance arena, with potential to cross-merchandise DVDs with retailing at ticket sales, advertise titles at concert venues, and include discounts for events in disc boxes.

Crystal Clear EntertainmentUSA; +1/954 753 5440www.thechilmarkgroup.com

Multimedia production and distribution firm has signed a joint venture agreement with Mark Hager Productions, specialists in TV and video coverageof Nascar racing and stunt driving. The objective of the alliance is to create and acquire projects for development into film, games, televisionprogramming and DVD properties.

DivXNetworksUSA; +1/858 909 5300www.divxnetworks.com

Video compression and digital media firm has announced a deal for its DivX Open Video System with Bollywood Internet video-on-demand(VoD) service Cinema On Web. The agreement enables the service to deliver fully-encrypted, cinema quality, licensed content to Internet users.Cinema on Web expects over 500m pay-per-view customers in the 2005-2007 period, and is charging $5 for a new release and $0.90-$1.99 forlibrary titles.

Electronic ArtsUSA: +1/650 628 1500www.ea.com

Leading US game distributor has signed an exclusive 15-year agreement with one of the world�s biggest sport TV networks, ESPN. Agreement willallow for all of EA�s sports franchises to have access to the network�s programming and personalities. The deal will commence in 2006, as ESPN stillhas one year left in its partnership with games developer Sega. Sega formally took on ESPN names in 2003 and the loss of the network�s brandingcould have an impact on its other licensed products, which include NBA and Major League Baseball.

First Look MediaUSA; +1/310 855 1475www.firstlookmedia.com

Media firm�s home entertainment arm has signed a distribution deal with science-fiction film production specialists Nu Image. First Look will distributesix DVDs, with the first title released in April 2005. Financial details of the agreement have not been announced.

IPC MediaUK; +44/20 7261 5000www.ipcmedia.com

Magazine publisher has agreed an exclusive licensing deal with Boulevard Entertainment. Under the agreement, Boulevard will launch a collection ofWoman�s Own-branded DVDs linked to IPC�s popular UK women�s magazine title. The collection will retail at £4.99, with 26 titles due to be released on7 February 2005. Boulevard also has the option to launch ranges tied to other IPC publications including NME (music), Loaded (�laddish�) and MarieClaire (women�s)

ITVUK; +44/20 7843 8000www.itv.co.uk

UK commercial broadcaster has agreed an output deal with NBC Universal, covering the film studio�s output between 2004 and 2006. The dealincludes films from UK production company Working Title.

NBC UniversalUSA; +1/212 664 4444www.nbcuni.com

US entertainment group has signed a multi-year global marketing deal with German car manufacturer Volkswagen. Under the agreement, the NBCtelevision network and Universal film studio will feature Volkswagen products and brands in its film, DVD and television programmes as well as atits theme parks worldwide. In exchange, Volkswagen will include NBC Universal�s programmes in its promotions. Marketing activities will initially bein US and European markets. NBC Universal was created in 2004 by the merger of NBC and Vivendi Universal�s entertainment assets (see2003/311a1).

Adult entertainment company has struck a long-term agreement with UK cable operator NTL to be the exclusive adult video-on-demand (VoD)content provider carried on the new VoD service, NTL On Demand. Over 50 hours of content will be available at the launch, a quantity that will growas the service evolves.

Sun TVIndia; +91/44 2431 8181www.sunnetwork.org

Indian television broadcaster has renewed its content agreement with Disney distribution arm, Buena Vista International Television�Asia Pacific.Feature films from Walt Disney Pictures, Touchstone Pictures and Miramax Films will be broadcast on Sun TV�s multi-dialect channels as part of thedeal. Movies will be broadcast in three regional languages (Tamil, Telugu and Malayalam) across South India. Multi-year agreement is part of Sun TV�sstrategy to further expand its programme mix. Sun TV is the flagship company of India�s Sun Network Group.

Technology deals

CinemaNowUSA; +1/310 314 2000www.cinemanow.com

US media group has launched extreme sports DVD production and distribution arm Studio411. Following the acquisition of 411 Productions in March2004, WMG intends Studio411 to produce and distribute an increased number of action sports DVDs, possibly expanding beyond that category andeventually exploiting rights opportunities for programming as new distribution technologies emerge. Studio 411 plans to release 15 DVDs this year onsubjects including skateboarding, surfing, snowboarding and motocross.

Wasserman Media GroupUSA; +1/310 407 0200

Internet video-on-demand (VoD) firm has entered an alliance with Microsoft�s MSN TV to offer its movies service to the TV set, using the MSN TV 2Internet & Media Player. The new feature will be made available to MSN TV 2 customers in spring 2005 as a free automatic upgrade that will includesupport for Windows Media 10 Digital Rights Management technology.

Funai CorporationUSA; +1/201-288-2063www.funai-corp.com

Video hardware manufacturer has extended its licence deal with Emerson Radio Corporation until 31 December 2006. Continuing the agreement thatbegan in January 2001, Funai will manufacture, market and distribute Emerson branded audio-visual hardware in North America.

MacrovisonUSA; +1/408 743 8600www.macrovision.com

Copy protection specialist has signed a new, multi-year copy-protection agreement with Universal Studios Home Entertainment under which thevideo distributor will use Macrovision�s copy protection systems for all its DVD titles and �selected� videocassettes worldwide. In addition to corruptingrecordings made on VCRs or DVD recorders, Macrovision technology is also recognised by the majority of personal video recorders (PVRs) and homemedia centre PCs, according to the company. Attempts to record copy-protected content are either disabled or an encrypted copy is made that isplayable only on the machine on which it was recorded and is thus useless for file sharing.

Matsushita Electric IndustrialJapan; +81/6 6908 1121www.panasonic.co.jp

Japanese electronics giant is to collaborate with DVD authoring tool manufacturer Sonic Solutions. The alliance, combining Panasonic�s Blu-ray Disctechnology with Sonic�s professional authoring products, is designed to advance the development of BD-ROM authoring systems and speed theproduction of BD titles for commercial release. The two companies previously collaborated on the development of DVD Audio production products(see 2001/138a2).

SBC CommunicationsUSA; +1/210 351 2100 www.sbc.com

Telecommunications carrier has established a joint venture with set-top box (STB) firm 2Wire to develop integrated entertainment set-top box. Newdivison, SBC Media Solutions, will provide service that will provide subscribers with the ability to receive television programming from Echostar�s DishNetwork, as well as on-demand music and video, caller ID and digital photo-sharing through a DSL connection and SBC�s alliance with Yahoo.

VodafoneUK; +44/1635 33251www.vodafone.com

UK mobile giant has entered agreement with more than two dozen wireless carriers and telecommunication manufacturers to develop a mobile videostandard. Designed to improve third-generation (3G) phone technology, collaborators include Cingular Wireless, China Mobile, NEC and Japanesemobile network NTT DoCoMo. The objective is to determine a universal standard by 2007 and offer the new 3G system by around 2009.

Playboy TVUSA; +1/212 261 5000 www.playboytv.com


SES AstraLuxembourg; +352 710 725 310www.astra.lu

Satellite operator has launched a deal to deliver a range of satellite-delivered internet services via Astra 23.5 degress East to households in Croatia withZagreb-based Vodatel. Operating under the brand name eTV, the company will offer interactive media services, including VoD with a choice of 100films every month, in addition to access to more than 100 TV channels.


Even

tsdi

ary

Markets & exhibitionsCairo ICT 2005 1-4 February;

Cairotelecomp; t +2/012 3999 240;f +2/02 4148 845; e [email protected]; www.cairotelecomp.com

Int Media Art Festival Berlin 2005 Berlin,4-8 February; Transmediale; t +49/302474 9761; f +49/30 2474 9814;e [email protected]; www.transmediale.de

CSTB2005 Moscow, 7-10 February;Midexpo; t +7/737 7479; f +7/1455133; e [email protected];www.cstb.ru

2005 Media Summmit New York, 9-10February; Digital Hollywood; t +1/212352 9720; e [email protected]; www.digitalhollywood.com/MediaSummit.html

GSM World Congress 2005 Cannes, 14-17 February; GSM Association; t +44/20 7017 5504; f +44/20 7017 4747;e [email protected];www.3gsmworldcongress.com/2005/congress

CABSAT 2005 Dubai, 8-10 March; DWTC;t +97/14 308 6012; f +97/14 3318034; e [email protected]; www.cabsat.com/

CeBIT Hannover, 10-16 March; TradeFair Support; t +44/16 2275 4200;f +44/16 2220 3048; e [email protected]; www.tradefair.co.uk

Sportel Asia Hong Kong, 14-16 March;Sportel; t +1/201 869 4022; f +1/201869 4335; e [email protected];www.sportelasia.org/hk.php

CTIAA Wireless 2005 New Orleans, 14-16March; Cellular Telecommunicationsand Internet Association; t +1/202785 0081; f +1/202 785 0721;www.ctiawireless.com/

Multichannel Retail Show 2005 London,15-16 March; Retail Events; t +44/207430 0077; f +44/20 7430 0055;e [email protected]; www.retailevents.co.uk/MCRS

CCBN 2005 Beijing, 21-23 March;Beijing Meizhan Technology Co;t +86/10 6360 1092; f +86/10 63600188; e [email protected]; www.ccbn.tv/

Convergence India 22005 New Delhi, 22-24 March; Exhibitions India Ltd; t +91/11 2463 8680; f +91/11 2462 3320;e [email protected]; www.convergenceindia.org

Bingo World 2005 Las Vegas, 22-24March; Ascend Media Gaming Group;t +1/203 938 2782; e [email protected]; www.bingoexpo.com/

Satellite 2005 Washington DC, 23-25March; PBI Media; t +1/301 3541667; f +1/301 340 7136; e [email protected]; www.satellite2004.com/

Digital Hollywood Santa Monica, 30March-1 April; Digital Hollywood;t +1/212 352 9720; e [email protected]; www.digitalhollywood.com/

NCTA 2005 San Francisco, 3-5 April;NCTA; t +1/202 775 3669; f +1/202775 3692; e [email protected];www.thenationalshow.com

GameNET 2005 San Francisco, 3-5 April;Shorecliff Communications; t +1/ 949443 3735; f +1/949 443 9206;e [email protected]; www.shorecliffcommunications.com/

The Connected Home Marlow, 6-7 April;HSA Conferences; t +44/20 74045444; e [email protected]; www.the-connected-home.co.uk

MILIA 2005 Cannes, 11-15 April; ReedExhibitions; t +33/1 4190 4400;f +33/1 4190 4470; e [email protected]; www.milia.com

NAB2005 Las Vegas, 16-21 April;National Association of Broadcasters;t +1/202 429 5335; f +1/202 4293922; e [email protected]; www.nab.org/conventions

Broadband Wireless World Las Vegas,21-22 April; Shorecliff CommunicationsLLC; t +1/949 443 3735; f +1/949443 9206; e [email protected];www.shorecliffcommunications.com/

MEDIA-TTECH Expo 2005 Las Vegas, 10-12 May; Messe Frankfurt Ausstel-lungen; t +49/61 1951 6618; f +49/61 1951 6623; e [email protected]; www.mediatech-expo.net

Mediacast 2005 London, 10-12 May 2005; Reed Exhibi-

tions; t +44/77 4775 1805; e [email protected]; www.mediacast.net

TelecomVideo 2005 Amsterdam, 10-12May; Shorecliff Communications LLC; t+1/949 443 3735; f +1/949 4439206; e [email protected];www.scievents.com/telecomvideo05/

ECTA 2005 Barcelona, 11-13 May;ECTAportal; t +44/1189 793282; [email protected]

Mobile Content World 2005 Sydney, 11-12 May; Terrapinn; t +61/29 0050788; e john.pozoglou.terrapin.com;www.terrapinn.com/2005/mcw_au/

E3 Expo Los Angeles, 17-20 May; TheElectronic Entertainment Expo; t+1/805 654 0171; f +1/508 8757364; e [email protected];www.e3expo.com

Interactive TV Advertising Show 2005London, 24-25 May; Junction; t +44/1179 042003; e [email protected]; www.interactive-tv-advertising.com/

CeBIT Australia Sydney, 24-26 May;Hannover Fairs Australia; t +61/29280 3400; f +61/2 9280 1977;e [email protected]; www.cebit.com.au

Anga Cable 2005 Cologne, 31May-2 June; Anga Services;

t +49/22 8962 1890; f +49/22 89621895; e [email protected]; www.angacable.de/

The Digital Radio Show London, 1-2June; Junction; t +44/1179 042003+44/1179 044223; e [email protected]; www.digital-radio-show.com

The Broadcast Production Show London,1-3 June; NA; t +44/20 7505 8018;www.broadcastproductionshow.com

Supercomm 2005 Chicago, 6-9 June; TIASUpercomm; t +1/312 559 3327; [email protected];www.supercomm2005.com/

GIGSE 2005 Montreal, 13-15 June; RiverCity Group; t +1/636 946 0820; f+1/636 946 0566; e [email protected]; www.gigse.com

Mobile Entertainment Market 2005London, 15-16 June; IBC Global;t +44/1932 893853; f +44/1932893893; e [email protected];www.mem04.com

DISCOP 2005 Budapest, 23-25 June;Discop Organization; t +33/14 2293224; f +33/14 2293 474; e [email protected]; www.discop.com

GC 2005 Leipzig, 17-21 August; Leip-ziger Messe GmbH; t +49/34 16788280; f +49/34 1678 8282; e [email protected]; www.gc-germany.de/

IBC 2005 Amsterdam, 8-13 September;IBC Global; t +44/7831 6909; f +44/7242 8907; e [email protected];www.ibc.org/

Enhanced TV Show 2005 London, 28-29September; Junction; t +44/1179042003 +44/1179 044223; e [email protected]; www.enhanced-television.com/

SpPub

SpPub

Conventions & conferencesImagina 05 Monte Carlo, 2-5 February;

Imagina; t +37/7 9310 4054; f +37/79350 7014; e [email protected]; www.imagina.mc

2005 Media Summit New York, 9-10February; Digital Hollywood; t +1/212352 9720; e [email protected]; www.digitalhollywood.com/MediaSummit.html

European Film Finance Summit Berlin,10 February; Screen International;t +44/20 7505 6044; e [email protected]; www.screendaily.com/eurofince05

Cartoon Masters Bremen, 17-19February; Cartoon; t +32/22 4293 53;e [email protected];www.cartoon-media.be

Collaborative ConferencingSummit New York/London, 21-

22 February; ETA Expo; t +1/917 6550818; f +1/360 285 7591; e [email protected]; www.ccsexpo.com

Pacific Congress on I-GGaming Sydney, 1-2 March; River City Group; t +1/636946 0820; e [email protected]; www.rivercitygroup.com/pcig

DVB World 20005 Dublin, 2-4 March;International Academy of Broadcasting;t +353/1 2899 412; e [email protected];www.iab.ch/

Digital Music Forum 2005 New York, 2March; Digital Media Wire; t +1/323822 0936; www.digitalmusicforum.com/

The 2005 UK Cinema IndustryConf London, 3 March; Landor

Conferences; t +44/20 7582 0128;f +44/20 7587 5308; e [email protected]; www.landorconferences.co.uk

Sport and Technology: The Conf 2005London, 4 March; ArkSports Limited;t +44/20 7485 0745; e [email protected]; www.sportandtechnology.com/index.php?pageId=0219

Games Developer Conf 2005 SanFrancisco, 7-11 March; CMP Media;t +1/415 947 6000; www.gdconf.com

FT New Media and Broadcaas-ting Conf London, 7-8 March

2005; FT Conferences; t +44/20 78733262; e [email protected]; www.ftconferences.com

IPTV World Forum London, 8-9March; Junction; t +44/1179

042003; f +44/1179 044223;e [email protected]; www.iptv-forum.com

The Forum for European Animation FilmsBabelsburg, 10-12 March; Cartoon;t +32/22 42 9343; f +32/22 454689; e [email protected]; www.cartoon-media.be

Euro CPR 2005 Potsdam, 13-15 March;WIK; t +49/22 2492 2512; f +49/222492 2568; e [email protected]

Sportel Asia Hong Kong, 14-16 March;Sportel; t +1/201 869 4022; f +1/201869 4335; e [email protected];www.sportelasia.org/hk.php

The 2nd European HDTVSummit London, 17 March; TV

Conferences; t +44/19 2369 0636;e [email protected];www.tvconferences.com/sessions.html

ECCA Congress 2005 Budapest,21-23 March; Informa Group;

t +44/20 7017 5203; e [email protected]; www.eccacongress.com

European Conf on Interactive TelevisionAalborg, 30 March-1 April; AalborgUniversitat; t +45/96 35 8080; e [email protected]; www.kommunikation.aau.dk/indimedia/mar3005.html

The Mobile Gambling Forum London, 5-6April; Osney Media; t +44/20 78800000; e [email protected];www.osneymedia.co.uk

Pub

PubMP

SpPub

PubMP

SpPub

Sp

Mobile Music ForumBarcelona, 12-13 April; C5

Online; t +44/20 7878 6888; f +44/20 7878 6896; e adria@c5-onlinecom; www.c5-online.com/

Mobilemusicon 2005 Los Angeles, 14-15April; Consect; www.mobilemusicon.com/

Games and Mobile Forum New York, 21April; Digital Media Wire; t +1/323 8220936; www.gamesandmobile.com/

Southern Gaming Summit 2005 Biloxi, 5-6 May; Ascend Media Gaming Group; t+1/913 344 1334; e [email protected]; www.sgsummit.com/register.html

FT World Mobile Communications ConfLondon, 11-12 May; FT Conferences; t+44/20 7873 3262; f +44/20 78734204; e [email protected];www.ftconferences.com

Int Casino Operattor Forum Athens, 25-26May; ATEonline; t +44/20 7713 0302;f +44/20 7713 6630; e [email protected]; www.ateonline.co.uk

Gaming Technology Summit 2 Las Vegas,25-26 May; Ascend Media GamingGroup; www.gametechsummit.com/

Telephony VoIP for Service ProviderrsChicago, 6 June; Shorecliff Communi-cations; t +1/949 443 3735; f +1/949443 9206; e [email protected];www.shorecliffcommunications.com/

BroadcastAsia2005 Singapore, 13-17June; Singapore Exhibition Services;t +65/6738 6776; f +65/6732 6776;e [email protected];www.Broadcast-Asia.com

Cartoon Forum Kolding, 21-24 Septem-ber; Cartoon; t +32/22 4293 53;f +32/22 4546 89; e [email protected]; www.cartoon-media.be

Film festivals: generalHong Kong Int Film & TV Market, 22-24

March; TDC Trade; t +852/ 25844932; f +852/ 2824 0249; e [email protected]; www.hkfilmart.com/

European Cinema Festival Lecce, 4-9April; Art Promotion; t +39/0832252344; f +39/0832 279963;e [email protected]; www.europecinefestival.org/

The 38th Annnual WorldFest-HHouston IntFilm & Video Festival Houston, 22April-1 May; t +1/713 965 9955; [email protected]; www.worldfest.org

Festivals:specialised/thematicBig Sky Documentary FF Montana, 17-23

February; t +1/406 541 3456;e [email protected]; www.highplainsfilms.org/festival

German Children�s Film and TV FestivalErfurt, 24 April-4 May; Goldener Spatz;t +49/361 66 386 0; e [email protected]; www.goldenerspatz.de

CannesLionss 2005, 19-25 June; Inter-national Advertising Festival; t +44/207291 8444; www.canneslions.com

45th Monte Carlo Television Festival, 26June-1 July; t +37/7 9310 4060;f +37/7 9350 7014; e [email protected]; www.tvfestival.com

Edinburgh Int Television Festivaal, 26-28August; MGEITF; t +44/20 7430 1333;www.mgeitf.co.uk

AwardsRoyal Television Society Awards London,

15 March; RTS; t +44/20 7430 1000;e [email protected]; www.rts.org.uk

BAFTA Academy Television AwardsLondon, 17 April; BAFTA; t +44/207734 0022; f +44/20 7494 2759;e [email protected]; www.bafta.org

PubMP

Screen Digest speaker at this event

Media sponsor

Official publication

For a full events listing visit www.screendigest.com

Pub

SpConf ConferenceExhib ExhibitionFF Film FestivalInt InternationalAll events in 2005 except as stated



Dat

abox

Japan: domestic shipments of Hi-Vision TV setsHiVision shipments annual growth

000s %2000 164 86.42001 282 72.02002 438 55.32003 399 -8.92004 325 -18.5[JEITA]

UK: viewing share by channel, all homes% 1999 2000 2001 2002 2003 2004BBC1 28.4 27.2 26.9 26.2 25.6 24.7BBC2 10.8 10.8 11.1 11.4 11 10ITV 31.2 29.3 26.7 24.1 23.7 22.8Channel 4 10.3 10.5 10 10 9.6 9.7five 5.4 5.7 5.8 6.3 6.5 6.6others 14 16.6 19.6 22.1 23.6 26.2[BARB]

Broadband InternetChina: broadband internet subscribers2003 12.5m2004 26.3m2005f 42.1m2008f 86.3m[BDA China]

Leisure softwareUK: top 20 games charts�all formats 2004

publisher1 Grand Theft Auto: San Andreas Take Two2 FIFA 2005 Electronic Arts3 Need for Speed: Underground 2 Electronic Arts4 The Simpsons: Hit And Run Vivendi Universal5 Pro Evolution Soccer 4 Konami6 Sonic Heroes Sega UK7 Spider-Man 2 Activision8 Need For Speed: Underground Electronic Arts9 Halo 2 Microsoft

10 Driv3r Atari11 The Incredibles THQ12 The Sims 2 Electronic Arts13 Burnout 3: Takedown Electronic Arts14 FIFA 2004 Electronic Arts15 Call Of Duty: Finest Hour Activision16 Harry Potter and the Prisoner

of Azkaban Electronic Arts17 The Sims: Bustin' Out Electronic Arts18 Shrek 2 Activision19 Tom Clancy's Splinter Cell:

Pandora Tomorrow Ubisoft20 Lord of the Rings: Return of

the King Electronic Arts[ELSPA]

SatelliteWorld: comparative digital DTH pay TV platformchurn rates% 2001 2002 2003 2004BSkyB (UK/Ireland) 10.0 10.5 9.4 9.7Sky Italia Italy) 18.0 17.4Digital+ (Spain) 9.0 25.0 12.0 10.0Premiere (Germany) 20.0 15.5 13.5 13.6TV Cabo (Portugal) 16.3 15.1 12.6TPS (France) 10.6 :Direct TV (US) 20.4 19.2 18.0 16.8Nova (Greece) 17.6 5.4[companies, Screen Digest]

VideoUS: awareness of digital video recorder (DVR)% Jan 2004 Jan 2005antenna users 60 71cable subscribers 71 77satellite subscribers 76 80total 70 77[Ipsos-Insight]

AdvertisingUS: advertising spend forecasts by media

2004 2005growth spending share growth spending share

% $m % % $m %newspapers 3.5 46,300 25.5 4.1 48,198 25.3local & national spot TV 9 26,511 14.6 1.5 26,909 14.1magazines 8.5 20,832 11.5 4.0 21,665 11.4radio 3 20,161 11.1 2.0 20,565 10.8broadcast networks 6.5 17,398 9.6 4.0 18,094 9.5network cable television 9.6 14,659 8.1 9.2 16,008 8.4yellow pages 0 14,117 7.8 0.0 14,117 7.4online 25 7,814 4.3 30.0 10,158 5.3outdoor 5 5,663 3.1 4.0 5,890 3.1local/regional cable tv 11 5,120 2.8 9.8 5,622 3.0broadcast syndication 4 2,907 1.6 3.0 2,995 1.6total advertising 6.3 181,483 100.0 6.3 190,220 100.0[Jack Myers]

CinemaWorld: top 20 grossing films of the year 2004

distributor North America international worldwide$m $m $m

Shrek Dreamworks/UIP 441.2 450.2 891.4Harry Potter� Azkaban Warner Bros 249.6 539.9 789.5Spiderman 2 Sony Pictures 373.6 410.2 783.8The Passion Of The Christ Newmarket/Icon 370.3 253.3 623.6LOTR: Return Of The King* New Line Cinema 122.3 423.0 545.4The Day After Tomorrow Fox 186.7 355.9 542.7Troy Warner Bros 133.4 364.4 497.8The Incredibles Buena Vista 237.0 202.0 439.0I, Robot Fox 144.8 202.4 347.2The Last Samurai* Warner Bros 31.4 298.9 322.3Shark Tale Dreamworks/UIP 159.6 151.3 310.9Van Helsing Universal/UIP 120.2 182.2 302.4The Bourne Supremacy Universal/UIP 176.2 98.8 275.1The Village Buena Vista 114.2 142.3 256.5Fahrenheit 9/11 LGF/Wild Bunch 119.2 102.4 221.5Collateral Dreamworks/UIP 101.0 115.1 216.1King Arthur Buena Vista 51.9 150.0 201.8Something's Gotta Give* Sony /Warner Bros 59.5 141.2 200.7Garfield Fox 75.4 120.3 195.750 First Dates Sony Pictures 120.9 74.5 195.4*first released in US and some international territories in 2003 [Screen International]

TelevisionAustralia: pay TV subscribers

Jun Dec Jun Dec Jun2002 2002 2003 2003 2004000s 000s 000s 000s 000s

Foxtel 798 809 836 862 904Optus Television 250 241 222 211 201Austar 417 403 407 427 460total 1,465 1,453 1,465 1,500 1,565net annual additionFoxtel 73 34 38 53 68Optus Television 0 -9 -28 -30 -21Austar -9 -29 -10 25 53total 64 -4 0 48 100annual change

% % % % %Foxtel 10.1 4.4 4.8 6.6 8.1Optus Television 0.0 -3.6 -11.2 -12.6 -9.3Austar -2.1 -6.8 -2.3 6.1 12.9total 4.6 -0.3 0.0 3.3 6.8[companies, Screen Digest analysis]

France: viewing audience shares by channel 2004share share

4+ yrs change <50 yrs change% % % %

TF1 31.8 0.3 35.5 1.1France 2 20.5 0 17.1 0.1France 3 15.2 -0.9 11.3 -0.9Canal+ 3.8 0.1 3.6 -0.3France 5 3 0.1 2.7 0M6 12.5 -0.1 18.6 0.1Arte 2 0.2 1.4 0other TV 11.2 0.3 9.7 -0.3[Ecran Total]

Â Unless otherwise stated, numbers are in units, full year or as of year-end. Â Comparisons with corresponding period a year earlier, except as stated.Â Data reported from sources; in some cases this may contradict datapublished elsewhere in Screen Digest.

Screen Digest data conventions: not available 0 zero f forecast� not applicable e estimate r revised


Netherlands: distributor market shares 2004share %

UIP 21.6Warner Bros (Holland) 18.3Buena Vista International 15.4A-Film Distribution 14.6Columbia Tristar 7.5Fox Film Netherlands 7.3Independent Films 5.4Rcv Entertainment 4.2Paradiso Entertainment 2.0Cinemien 1.2Moonlight Films 0.9Filmmuseum Distributie 0.9Bright Angel Distribution 0.41 More Film 0.2Three Lines Pictures 0.1Twin Film 0.0[NVB]

US: distributor market shares 2004box office share

$m %Sony 1,308 14.2Warner Bros 1,215 13.2Buena Vista 1,157 12.6Universal 906 9.8Twentieth-Century Fox 904 9.8Paramount 625 6.8Newmarket 407 4.4New Line 388 4.2Miramax 378 4.1Lions Gate 301 3.3MGM/UA 199 2.2Fox Searchlight 173 1.9Focus 122 1.3[Nielsen EDI]

For a supposedly moribund industry the video rental business isattracting a lot of attention at the moment. As Screen Digest wentto press, Blockbuster still seemed determined to succeed in itsbattle to take over its next largest US rival, Hollywood Video,despite the latter having entered into a �definitive agreement�with the industry�s third largest player, Movie Gallery. ButBlockbuster is in no danger of losing its dominance of the USmarket: a combined Movie Gallery/Hollywood store countwould still be half the size of Blockbuster�s existing domesticoperation. And in the UK, Apollo, a leading independent rentalchain was recently taken over by an online DVD retailer keen toestablish a high street presence (see DVD e-tailer broadensdistribution channels under Business).

Meanwhile, the new kids on the block, the online rentaloperators (or rentmailers as they have been dubbed by one UKtrade publication), continue to jostle for position. At the sametime their new business model has achieved something regularrenters have been trying to do for years: abolish the despised�late fees�. Keen to share in the positive PR this has generated,Blockbuster itself has revised its approach to this key feature ofthe traditional pay-as-you-go rental business in the US. Andusually where Blockbuster leads, the rest of the industry has littlechoice but to follow.

So is all this activity a sign of a revitalised rental businessor merely the sector�s swan song? Several seasoned industryobservers of our acquaintance have commented recently thatthey believe 2005 will see a resurgence in demand for videorental. Many consumers have built up extensive DVD libraries,the argument goes, and are now running out of shelf space,requiring them to limit their purchases to �must have� new titles.Surely the time is ripe for them to return to rental? Especiallywhen the online sector is not only making rental easier than everbefore but even making it sexy again.

The problem is that we have yet to find a senior studioexecutive who supports this theory. Video distributors have nointerest in consumers returning to rental, since they make farmore money when people buy their titles outright. Meanwhile,the expansion on both sides of the Atlantic in DVD �trading��the exchange of unwanted titles for cash or store credit �meansthat consumers will be more prepared to buy titles that theydon�t know if they will like.

So are the rentmailers simply rearranging the deckchairson the Titanic? We believe not. A quick glance at the missionstatement of any serious player in the online rental sector showsthat they all consider the combination of DVDs and a reliablepostal service to be an early (if slow) form of video-on-demand.As soon as the technology is in place to provide true digitaldelivery services, those who have survived the current processof consolidation will be ready and waiting with detailed analysesof customer preferences, optimum pricing plans and a databaseof loyal customers keen to explore ways of cutting out thecurrent 24-hour delivery times. HDJ

2005: A download odysseyIt has barely begun, but 2005 could be the year in which legiti-mate Internet movie download services in Europe start to turn avery important corner. Indeed, January 2005 continued the trendof December 2004. The swathe of publicity that followed the

publication of the UK Film Council�s report Film Theft in the UK,meant that the ever-present spectre of Internet movie piracy andthe increasing trafficking of feature films on peer-to-peer (P2P)networks became subject to significant media coverage�muchthanks to the presence of whipping-boy du jour, the filesharingservice BitTorrent.

The message has been that if content owners do not act(and act soon) they could end up in a hole as big and black as theone the music industry found itself in before the appearance ofthe iPod. But where is the film industry�s iTunes?

The range of legitimate services offered in Europe ispatchy and piecemeal. In the mainland, where broadband usersare limited to a handful of offerings from third-party platforms,Moviesystem�s NetCine service now provides a good library ofFrench-language and independent titles online to Frenchcustomers. In the Nordics, Internet users can access domestic andinternational titles on Bonnier�s SF Anytime platform, as well asmovies from Warner Bros. Worldwide. DivXNetworks makes arange of TV and movie content available through its website.

Of course, the major broadband ISPs also have their ownservices locally, although co-operation with content owners hasbeen slow and treacherous for all parties concerned. NetCine iscarried on several French ISP portals, in Germany movie down-load services are available to customers of T-Online and Arcor,Telecom Italia�s Rosso Alice has a broad range of on-demandmovies to the PC, including some Hollywood fare. One notableabsence from this list though is the UK. In fact, despite promisesand announcements, not a single UK ISP has launched a serviceas yet�although early word suggests this is about to change.

In contrast, the US has already seen the launch ofMovielink (in 2002), established by five of the major Hollywoodstudios, and the Lions Gate/Microsoft-backed CinemaNow (in2001). Both of these offer a range of a significant library of majortitles to US Internet users, Movielink now adding to its roster ofISP partnerships by taking its service onto the ultra-high speedInternet2 platform shared by 60 US college campuses.

Issues of release windows aside, the question is how longcan the major studios, whose blockbuster titles form the bulk ofpirated content on P2P services, choose to ignore Europe�sbroadband users. The localised focus of Movielink and thecatalogue of CinemaNow are two prime examples�althoughCinemaNow claims to be offering its content �worldwide�, thereality is that outside of the US, Internet users are left with a listnon A-List straight-to-video titles to choose from. Gettingblockbuster movie content online in Europe legitimately is still anear impossible task. As the UK Film Council has come torecognise, the need for the early launch of legitimate services isparamount in the fight against Internet piracy. In the month thatthe pioneer of illegal Internet downloading Napster announced itsdesire to move into the online movies market (legitimately, ofcourse) the absence of Movielink from the major Europeanmarkets continues to be an anomaly. If the technology is there forthe services to operate successfully in the US, then the same mustalso hold true for Europe.

The fact is, the timing has never been better for contentowners. Broadband speeds are up, with most operators nowoffering services well in excess of 1Mbps at very affordable prices(others in excess of 3Mbps, some even as high as 26Mbps).Simultaneously, average revenue per user (ARPU) for broadbandoperators is facing a long-term decline�most ISPs are trying toprop this up with ever higher speeds, but most are also aware thatthe higher speeds/higher prices equation is not the long termsolution they're looking for. That the key for long term revenuegrowth is a coherent content strategy, with movies forming anintegral component of the business model.

As a new year gets under way, it can but be hoped thatcontent owners respond and that the film industry can finally turnthat corner, rather than fall into that big black hole. AA

PERSPECTIVEInsi

ght SCREEN DIGEST January 2005


SUBSCRIBE NOW to Screen Digest and receive a FREEScreen Digest study worth £350

It couldn�t be much easier to subscribe to Screen Digest.And if you are already enjoying the benefits of receivingeach issue of the leading journal of media research,news analysis and reference, you can now renew yoursubscription simply and quickly.

u Complete the card with your choice of format (print,PDF or both) and select the way you wish to pay.

v Three ways to send your order: Fax this card to Screen Digest on +44/20 424 2838Email your order to [email protected] post this order to Screen Digest SubscriptionsLymehouse Studios, 30/31 Lyme StreetLondon NW1 0EE

CHEQUES AND DIRECT BANKING PAYMENTS¸ Screen Digest Ltd's accounts are at Barclays Bank, Media Banking Centre, 27 Soho Square, London W1D 3QR, UKSort code 20-10-53 Account number 50548650 (sterling, euros, US dollars)

VAT¸ EU countries outside UK: VAT is payable on orders that do notprovide the buyer's VAT registration number.Please give your TVA/BTW/MOMS/MWST/IVA/FRP number in thespace provided or add VAT at your local rate to the remittance¸ Screen Digest Ltd's VAT number is GB 234 3230 04

Yes! Please START my subscription to Screen Digest immediately and send my study worth £350.

Please RENEW my subscription to Screen Digest now.

CHOICE OF FORMAT

Print version £425 / $845 / �666

PDF version £425 + VAT / $845 / �666

Print and PDF version £625 + VAT / $1,245 / �980

FOUR WAYS TO RENEW

Please debit my Mastercard / Amex / Visa card

Card number

Cardholder name Expiry date

Signature

I enclose a cheque made payable to Screen Digest Ltd for £ /$ /�

Please invoice my company for £ /$ /�

Payment will be made by direct transfer to Screen Digest Ltd's account at Barclays Bank (details above)

NEW SUBSCRIBERS ONLY: Your choice of free reportBoxing Which Way Next GettingTelevision for DVD? Personal

RENEWALS ONLY

Reference code

Renewal date from to

YOUR DELIVERY DETAILS

(Mr, Ms, Dr) First name Last name

Job title

Company

Nature of business

Address

Post code

Country

Telephone Fax

Email address

Date

your TVA/BTW/MOMS/MWST/IVA/FRP number

SUBSCRIBE

or RENEW TODAY

NEW SUBSCRIBERS ONLYChoose one of these reports, each worth £350, toreceive free of charge as your welcome to ScreenDigest.

BOXING TELEVISION: TV programmes aspackaged entertainment

DVD unlocks the market for selling TVprogramming.

WHICH WAY NEXT FOR DVD?

DVD market growth and next-generationhigh definition.

GETTING PERSONAL: Bringing video tothe individual

Video delivered to portable video playersand mobile phones.

All three reports were published in December 2004.

"

SD0

501

Priority subscription order

Screen Digest SubscriptionsLymehouse Studios30-31 Lyme StreetLondon NW1 0EE

Some more recent Screen Digest reports

Published November 2004; 128 pages; over 200 charts and tablesPrint version: £1,495/$3,042/�2,424Electronic version: £2,990/$6,085/�4,688�includes hard copy, a fullcolour PDF file, and an Excel file containing the underlying data

UK VIDEO DISTRIBUTIONThe retailers� verdict

A unique insight into the views andopinions of video retailers in the UK in2004 and how they perceive theirbusiness relationships with videodistributors. Results rate 13 leading UKvideo distributors (seven majors and sixindependents) in four key areas:general product/performance, sales,marketing and logistics/supply chain.

WIRELESS GAMINGOperator strategies, global marketoutlook and opportunities for thegames industry

This new report outlines mobilephone network operator strategies forwireless gaming across Europe, NorthAmerica and the Asia Pacific region.The report includes forecasts to 2010for games revenues, enabledhandsets and monthly ARPUs forgames subscribers.

Published October 200486 pages, over 110 charts and tablesPrint: £995/�1,495/$1,828Electronic (with free print copy): £1,990+VAT/�2,990/$3,656

EUROPEAN DIGITAL PAY TVPLATFORMS Market assessmentand forecasts to 2008

In-depth analysis of the pay TVmarkets in all Western and keyEastern European markets, includingmarket forecasts by delivery platform�including IPTV�and detailed analy-sis of the conversion of subscribersfrom analogue to digital services. Alsoincldues profiles of key players ineach of the 21 markets.

Second edition, published September 2004169 pages, 237 charts and tablesPrint version: £1,245/�1,952/$2,474Electronic (with free print copy): £2,490+VAT/�3,905/$4,948

TV SHOPPING AND T-COMMERCE INEUROPE

A comprehensive study of the TVshopping markets in France,Germany, Italy, Spain, the UK, theNordic and Benelux regions. Acollaboration between Screen Digestand Goldmedia, this report looks attraditional TV shopping, travelshopping, direct response TV,interactive digital TV and Europe'sregulatory environment.

Published September 2004124 pages; 58 charts and tablesPrint: £995/�1,495/$1,828Electronic (with free print copy): £1,990+VAT/�2,990/$3,656

Three ways to send your order

u Fax this card to Screen Digest on+44/20 7424 2838

v E-mail your order [email protected]

w Mail this card¸ For subscriptions to be paid directly toScreen Digest Ltd�s account or to beinvoiced, just add a stamp and send thepre-addressed card.¸ For credit card and cheque payments,protect your privacy by sending the card inan envelope with the credit card details orthe remittance.

Global media intelligence.

Affixstamp

screendigestwww. .comTo order this report, e-mail [email protected] or call +44 20 7424 2820

MovieSequels

¸ Completeguide to 25years of moviesequels

¸ Detailed analysis ofrelease timing. boxoffice by distributorand genre, and tail-off effects

¸ Unique survey ofthe performance ofall theatrical moviesequels released since1980

Movie Sequels is the latest report from Screen Digest, aunique and original analysis of the increasingly popular areaof movie sequels at the US box office between 1980 and2004.

The report includes theatrical box office numbers,release data, week by week burn rates and frontloadingrates. The detailed analysis also takes in sequel success bydecade and year, release patterns and a full box officeanalysis by year, month, distributor and genre.

This report is a vital tool for anyone interested indeveloping, financing, investing, producing, distributing andresearching movie sequels, franchises or series.

Published December 200476 pages; around 100 charts and tables

Print version: £795/�1247/$1,580Electronic version: £1,590+VAT/�2,494/$1,582

Summary of contents

Tables and charts� Sequel comparison� Gap between titles� Time spans by genre in years� Time spans�ranked by total

time span� Frequency of number of titles

in a series� Number in series� Title development summary� Box office evolution for Series

in %� Title revenues development by

genre� Sequel box office breakdown

by genre (box office)� Sequel box office breakdown

by genre� Sequel box office breakdown

by month� Sequels box office breakdown by

distributor� Sequels box office breakdown

by year� Average yearly box office by

decade for sequels� Sequels box office breakdown

by decade� Sequel releases by genre� Sequel Releases by month� Sequels release breakdown by

distributor

� Sequels release breakdown bydecade

� Sequels release breakdown byyear

� Burn rate by genre� Burn rate by distributor� Burn rate by month� Burn rate by year� Frontloading rates by genre� Proportion of total box office

accounted for by week bydistributor

� Frontloading rates by month� Frontloading rates by year� Genre breakdown by

distributor� Overall distributor's proportion

of titles within genre� Overall proportion of titles by

genre for each distributor� Monthly breakdown by genre� Overall proportion of total

monthly releases by genre� Overall breakdown of releases

by month for each genre� Monthly breakdown by

distributor� Overall proportion of total

monthly releases by distributor� Overall breakdown of releases

by month for each distributor

1 Executive summary2 Introduction3 Methodology4 Sequel comparison5 Time spans6 Titles7 Sequel revenues8 Box office headlines9 Release headlines

10 Burn rate headlines11 Frontloading headlines12 Genre releases by US

distributor13 Genre releases by

release month14 Monthly releases by US

distributor15 Appendix A: Sequel

details + comparisons16 Appendix B: Theatrical

box office/admissionsdecay USA sequels/franchises

� Appendix A: Sequel details +comparisons

� Sequel Details� Sequel comparison ranked by

Total BO� Sequel comparison ranked by

average BO per title� Sequel comparison ranked by

% taken by first title

Appendix B: Theatrical boxoffice/admissions decay USAsequels/franchises (sample)

� Genre: Action: Bad Boys� Genre: Adventure: Back to the

Future � Genre: Comedy: Analyze This� Genre: Family: Babe� Genre: Romantic Comedy:

Look Who's Talking� Genre: Horror: Nightmare on

Elm Street� Genre: Sci-Fi: Terminator

Main findings

¸ All sequels between 1980and 2004 took over $20bn atthe US box office.¸ Average box office per yearfor sequels has jumped to$1.9bn in 2000s, comparedwith $718m in the 1990s. ¸ The highest-grossing series ofmovies ever is Star Wars, taking$1.4bn at US box office.¸ Two-thirds of sequel revenuesare taken in the first two weeksof release in 2000s comparedwith one-third in the 1980s.¸ The most number of moviesin a series is the Friday the13th franchise with 11 titles.¸ May is the most popularmonth for releasing sequels,accounting for 17 per cent of allreleases.

screendigestwww. .comTo order this report, e-mail [email protected] or call +44/20 7424 2820

¸ Bring yourselfup-to-date on amajor moviegrowth sector

¸ All major studios are now active inproducing new animation features

¸ Europe has produced 81 full-lengthanimated titles in the past six years,compared with only 150 in all previous years

Animatedmovies

US and Europeanmarket

assessment Animated Movies: US and European market assessmentis the new report from Screen Digest analysing the USand European markets for feature film animation.

As well as a detailed analysis of admissions andmarket shares in US and key European territioriesbetween 1997 and 2003, the report lists all admissionsand box office of all animated titles in the USA andeight European territories. The report also looks at USand European production budgets, key producers andhow the trend towards 3D animation techniques ischanging the animated movie environment.

This report is an indispensable tool for anyoneaiming to capitalise on or understand the currentopportunities in animated movie-making.

Published November 200444 pages27 charts and tablesPrint: £595/�965/$1,211Electronic (with free printcopy):£1,190+VAT/�1,866/$2,422

Highlights from the report

¸ Production of animated movies is at an all-time high,buoyed by high box office returns for CGI movies andthe strong DVD market

¸ Every one of the major US studios is now involved inproducing animation features.

¸ Some 81 animated movies were produced andreleased theatrically in Europe between 1997 and2003. This compares with only 150 animated featurefilms produced in Europe in all the years before 1997.

¸ Admissions to animated movies were 95m in the USAand 74m in Europe in 2003.

¸ US films captured 88 per cent of European animatedadmissions in 2003, compared with nine per cent forEuropean and three per cent for Japanese movies.

¸ Finding Nemo was the most successful animated filmin the last five years, grossing �506m in the USA and�205m in Europe.

¸ European animated movies have suffered from smallbudgets and piecemeal distribution strategies. However,several big budget European animated films are due forrelease in the next few years, including The MagicRoundabout, Sprung! Valiant, The Wallace and GromitMovie, Astérix and the Vikings and Arthur.

Summary of contents

� Major US animation releases� Major European animationreleases in 2004� Main European animatedfilm producers� US animation productionbudgets� European animationproduction budgets� Top animated titles inEurope, USA and international� Admissions to animatedfilms in USA� Admissions to animatedfilms in Europe� Comparison of admissions toblockbuster films in USA andEurope� Proportion accounted for bymajor European territories ofleading titles� Market shares of nationalfilms in Denmark, France,Germany, Italy, Spain, Sweden� Comparison of marketshares by origin in Europe2003� Strengths and weaknessesof the European animatedsector� Full admissions to animatedfilms in Europe� Box office of animated filmsin US and Europe� Top animated titles in Europeranked by box office revenue

1 Executive summary

2 Animated movies in theUSA

3 Animated movies inEurope

4 Production budgets for animated movies

5 Leading animated moviesin Europe and the USA

6 Admissions to animatedfilms in USA

7 Admissions to animatedfilms in Europe

8 Market sharebreakdowns of nationaland US titles in selectedEuropean territories

9 Challenges facing the European animated filmindustry

Tables and charts� Animated feature filmsreleased in USA� Full length animated filmsreleased in Europe� Total admissions toanimated movies in Europeand USA� Productions and co-produc-tions per European country

january 2005 - sfu.ca › cmns › courses › 230 › body text.section › scree… · one of the...

Documents