Thursday, January 12, 2012

Wandering down the digital high street to the YouTube cineplex

A friend of mine who has done fantastically well over the last 5 years or so (in the online space) has a theory that in the future there will simply be a digital high street where all the online traffic flows, browses and purchases and the physical high street will be reduced to a fraction of its current size.

Since touch is one of the key senses this might be a bit extreme but the figures from Experian of 96.2 million visits to online retail sites on Boxing Day (the biggest day ever) tend to support the argument. To some degree if you make and sell clothing these cannot be usefully digitised (except perhaps in SecondLife)so online represents a great new channnel of distribution but does not change your product fundamentally.

If you distribute media which can be digitized & copied in some way (books, movies, games, TV etc etc) then this is very much not the case - control over distribution drives value (see HMV). What is very evident is that control over distribution has somewhat left the building. So what ?

Interestingly online retail stole a march on the rest of the market because (in my view) the product was the same and cannot be copied with a click (Laboutin heels are the product not the shop / distributor they come from) and online shopping could be done over a narrowband connection. Since narrowband rolled out about 6 years ahead of broadband an argument could be made that the impact of IP distribution is just about to really hit home on digitised products as online retail started to hit critical mass in 2006.

The consumer certainly seems to be up for it. Again, according to Experian, on Xmas day 42.1% of all online visits were to Entertainment, Social Media and News sites. Further over the course of 2011 YouTube grew by an astonishing 42%. My guess is that YouTube has gone mainstream and that it is now accessed by a broad demographic.

As I have been banging on about before the link between the ultimate EPG (google) and probably the biggest live and on demand video channel delivered to multiple devices via IP is a killer combination. If this logic is correct the next question is which other forms of media distribution will the consumer stop watching / reading when this really hits home ?