This is the second in a series of posts reporting on the hot button issues discussed at the 2008 Entertainment Supply Chain Academy Conference. See the first post here.
Since 2004, when the Czech Republic, Poland, and Hungary became members of the European Union, these countries have seen the emergence of an ever-growing middle class. Over the last four years, the changing home video market in these territories has presented Hollywood studios and their distribution partners with a set of unique challenges for market growth of DVD and video games. At the Academy, a group of executives shared their experiences with the video supply chains in Central and Eastern Europe. They highlighted the lack of retail infrastructure and information standards for trading in the supply chain and identified the following drawbacks to doing business there:
- vendor inventory management,
- rampant piracy,
- product pricing,
- gray market,
- unknown royalty payments for Blu-ray,
- limitations posed by copyright encoding in corporate businesses where content protection is unnecessary, and
- the difficulty of getting answers to intellectual property matters.
Setting the scene for the supply and distribution of entertainment in Europe, Jim Bottoms of Futuresource presented a research perspective covering the major market shifts across the region. The consensus seemed to be that consumers will buy 45 million Blu-ray discs in the US this year, 400% more than in 2007. In Europe, where awareness and uptakes of Blu-ray are lower overall, the market is expected to be driven by the success in the United States. Falling hardware prices in the fourth quarter—as much as $200 to $250—coupled with Playstation3 owners’ increasing use of their consoles for video playback, are also expected to grow the new format.
Bottoms’ key takeaway was:
No longer does one size fit all when it came to how entertainment was enjoyed by consumers.