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DVD Insider - Content Shift

Video iPod�The Art of the Deal

"Every Dream Has a Price" - Oliver Stone's Wall Street

Job's announcement of an "experiment" into video content delivery with the new
video iPod is nothing new, nothing earthshaking.

His announcement of a video iTunes database "experiment" is nothing new.

Iger's announcement that they will offer some of the most popular TV shows as
"pay-for-play" downloads the day after their appearance is nothing to write home
about.

"Life all comes down to a few moments. This is one of them," Charlie Sheen as
Bud Fox in Wall Street

It is the complexity, the simplicity, the elegance of the deal. It is a shift
in the time/space continuum. It is a paradigm shift that will effect, change
and influence the direction and actions of the PC/CE and entertainment industries.

In this instance it isn't about the pixels�it's about connecting the dots!

Jobs has had a beautiful run with iPod and iTunes. It has changed the way ordinary
people think about, interact with and use their music. The closely intertwined
two have shaken the foundation of the RIAA which is trying desperately to deal
with the new landscape, the brave new content world that gives both musicians
and their audience freedom of choice.

Eisner and Jobs butted heads big time over the Disney/Pixar relationship. The
egos of both parties wouldn't allow a deal no matter how much money was exchanged
by either organization. Iger enters and the playing field has changed. Now
two parties can discuss without animosity, with no prior history.

The slate is clean and both firms can again talk!

In addition to a movie relationship which both parties dearly want and need,
Disney has other assets which have huge potential�ABC TV and its years of television
content sitting in dusty warehouses.

"I don't throw darts at a board. I bet on sure things. Read Sun-tzu, The Art
of War. Every battle is won before it is ever fought." - Michael Douglas as Gordon
Gekko in Wall Street

The two - Iger and Jobs - didn't just sit down to make a minor news event splash.
They developed a scheme, a plan, a program that could prod the entertainment
change. But they didn't play small by rolling out some old tired movies or TV
series for people to buy/download onto their video iPods. Iger lead with his
best cards, the network's leading TV series - Desperate Housewives and Lost -
to produce audience appeal and jump-start a lifestyle change.

In return Iger received???

A little bit of incremental TV series content sales.

Of course he did!

A renewed relationship with Pixar and Disney for future movie, entertainment
content.

Certainly he did!

Jobs has already proven his company/people can control content and attract an
audience with huge music downloads. Ok so the Rokr phone didn't rock the world
but it wasn't a new announcement rather a somewhat weak product extension that
will certainly be enhanced in its future generations. It didn't succeed wildly
but it also didn't eat into the iPod/iTunes market.

The joint announcement showed that Apple can now become a content delivery mechanism
for video entertainment management, control and distribution. Even if the relationship
with Disney's ABC TV is to provide them with an "unfair share" of the download
sale profits on the first offering, he wins because he has established the benchmark
offering for the future.

Want to play in tomorrow's video-my-way, my-time future? Let's talk.

"The most valuable commodity I know of is information." - Michael Douglas as
Gekko in Wall Street.

Why should consumers struggle with an on-going payment to TiVo and be concerned
that the company is tracking their viewing habits just so they can watch their
favorite TV show when they want? Why should they bother with a TiVo or a PVR
to time shift and delete the ads? Cripes for $2, less than a latte they can
download the show they forgot to record last night and watch tonight, tomorrow
night, this weekend�whenever, wherever!

Disney has already seen Apple's track record on handling digital rights management
when it comes to music and tens of millions of people around the globe are "ok"
with it - not completely happy but ok.

Microsoft looks with lust at the music control/management that Apple has nurtured
and grown. RIAA and music studio executives spend sleepless nights trying to
determine the long-term impact of the iTunes/iPod phenomenon and how they can
protect their livelihood, their futures. MP3 player producers join forces with
Real, Napster, Amazon and the others in an attempt to eat from the same trough.

It's a tough, expensive uphill battle but a little progress has been made.

Suddenly though Iger and Jobs have moved to new more expensive, more profitable
hills and for the time being�the big dogs rule.

But hey�it's only a video "experiment." There is certainly nothing to be concerned
about unless�

Of course tens of millions of people could rush to Apple stores to purchase their
video iPods in the months ahead. Desperate Housewives and Lost could become
even bigger hits as ordinary folks download the shows to view on the train to
the office the next morning or enjoy on their cross-country flights. Or even
just show to envious friends/neighbors to show how with-it, how leading edge,
how in-control they are with their entertainment lifestyle.

The minor ripple in the pond could become a huge set of rogue waves that will
upset MPAA's, Hollywood's and the network/cable service's rowboat. Don't even
think about the advertising industry's boat which is also on the pond.

Ironically Wall Street is a 20th Century Fox (CBS) film but Douglas as Gekko
best explained the Apple/Disney relationship and announcement when he said, "The
richest one- percent of this country owns half our country's wealth, five trillion
dollars. One third of that comes from hard work, two thirds comes from inheritance,
interest on interest accumulating to widows and idiot sons and what I do, stock
and real estate speculation. It's bullshit. You got ninety percent of the American
public out there with little or no net worth. I create nothing. I own. "

The two firms and their executives don't have souls that black but their announcement
could very well be the creation of tomorrow's entertainment relationship between
content developer, content owner, content manager/deliverer and content user.

It's not the magnitude or the importance of the lowly video iPod's announcement
or the meager launching of the video download service offering. But it does
mark the beginning of tomorrow for the two disparate organizations, the two executives
and the industries.

Wednesday, October 13, 2005 could mark the beginning of the change in relationships
between PC/CE firms and content developers/owners. The announcements were nice
but not earth shattering. And they are not without their obstacles. Sony still
has the PS3 and MS has the Xbox that have a strong potential for becoming the
media/content controls for the home. While IPTV is making some gains into the
home, cable companies still pipe much of the content to your house.

At the same time there is an overwhelming demand by people, individuals everywhere
to have their own content, their own information, their own entertainment with
them and their way. The simplicity and elegance of the Disney/Apple announcement
could mark the way we access, save, share and use our video entertainment in
the future.

The announcement clearly establishes Iger as the head of Disney and a major player
in the content industry going forward. The announcement can strengthen Jobs
and Apple as significant forces in the new entertainment arena.

The two executives and two companies may not be 100 percent right but they have
set the stage with the art of the deal. Now the industries have to determine
how and where they can participate in the new arena.

It is an announcement and market shift that organizations are going to have to
analyze, dissect, interpret and deal with.

If they don't we can only remind them what Charlie Sheen as Bud Fox said in Wall
Street, "If you step out that door, I'm changing the locks."