Market Watch

Paramount Signs Up to Windows Phone 7


Display Driver IC Forecast

Paramount Digital Entertainment has announced it will be releasing ten feature-length films from its catalog to be distributed in the form of applications (apps) designed to play on smart phones running Microsoft's Windows Phone 7 software. Each app uses Microsoft Silverlight technology and includes the full movie, enhanced menus, and bonus features. These individual movie apps will be available from the Windows Phone Marketplace and will offer WP7 users contextual information and a high level of interactivity - such as creating custom clips and access to additional information about the movie.

The app for the movie School of Rock is available now from the Windows Phone Marketplace on all compatible North American handsets. It its also available via the desktop using the free Zune PC software. Paramount will be releasing additional titles and expanding to international markets shortly.

Analysis
Microsoft Windows Phone 7 users already have direct access to digital music services via the native Zune software. However, movies and other premium video has required the content to be downloaded to a PC and then side-loaded onto handsets using the Zune PC client software. At launch, the Apple iPhone had similar restrictions in regards to long-form video, but evolved to enable access via the iPhone to movies and TV shows directly from the iTunes Store, using a WiFi network. It is expected that Windows Phone 7 and Zune applications will follow a similar route for Microsoft -- with improvements in 2011 bringing the ability to directly download to handsets using a WiFi connection. The key issue for hardware manufacturers and service operators such as Apple and Microsoft has been the need to cooperate with mobile operators who are seeking to restrict the amount of data-heavy video being consumed over 3G networks. The iPhone's over-the-air (OTA) single file download limit is capped at 20MB by AT&T, and it is likely that Microsoft's OTA mobile services will have to fall in to a similar line where partner operators are concerned.

From a Hollywood perspective, the success of the greater apps business being driven by Apple, Google and Microsoft among others has created an opportunity to experiment with the 'movie app' concept, at a time when the digital movie sales continue to struggle. IHS Screen Digest expects that the US digital retail business for movies, also known as electronic-sell-thru (EST), will fail to break the $300m mark in 2010, even as market leader iTunes enters its fifth year of selling movie downloads. Microsoft has sought to tap into a desire by studios to unlock a digital model that is competing with rampant piracy, by tying a greater level of interactivity and bonus features than currently possible with the simple download of a movie file. In many respects, this is an advance on the iTunes Extras model, which incumbers the customer with multiple files in an effort to provide interactivity and added value to the movie being purchased. Whether or not it will succeed however is based on two questions: how pricing and windowing will operate -- the EST window is still significantly behind the point at which pirated digital copies become available online, enabled by the physical disc supply chain -- and how 'portable' a movie app really is. That is, will movie apps enable customers to build up a collection of movies that can be viewed anytime, anywhere across the four screens of Microsoft's ecosystem (TV, PC, smartphone, tablet)? If yes, then it is conceivable that movie apps will find their way into the movie product cycle as a meaningful form of added value distribution. If not, then the concept will remain an interesting niche experiment.