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HBO: A Roadblock to a Digital Future?

One of the major obstacles standing in the way of a massive expansion of the movie download business might come as a surprise to many: HBO. According to industry journal The Wrap, exclusive output deals between the premium cable channel and the Hollywood Three (Warner, Fox and Universal) prohibit download sales while popular new release titles are playing on HBO. The agreement restricts the studios from any sort of digital distribution during HBO’s exclusive pay-TV window, which typically begins six months after a film’s release on DVD and lasts around 18 months.

Currently, downloads make up a small percentage of the overall home entertainment market—about 3%. However, studios are aggressively looking for ways to increase that percentage, and insider sources consulted by The Wrap are confident that the issues blocking such expansion that exist between HBO and Hollywood will be resolved. Said an HBO spokesperson:

“We do not publicly share details of our output deals. . . but HBO always had and continues to have open and productive dialogue with our studio partners on any issue.”

Sony, which has no such agreement with HBO, has spearheaded the creation of a consortium called the Digital Entertainment Content Ecosystem. The consortium currently includes 48 entertainment, software, hardware, retail, infrastructure and delivery companies—among them the Hollywood Three.
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The group is looking to create a “digital rights locker” for movie and TV-show buyers, and hopes to launch a consumer-friendly brand name in the near future.
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The consortium hopes to create a marketplace where, according to The Wrap, “a customer could buy a copy of a movie on Blu-ray, say, and then they’d have the right to download digital copies of that film from their ‘locker’ for any device they might choose down the road at no extra charge. Or, if they don’t care for discs, they could just buy the download”.

It will be interesting to see if HBO and the studios can resolve their issues, and if Sony’s consortium can overcome the obstacles it faces and make some more inroads in the burgeoning digital delivery market. Few people doubt that digital delivery is the future of home entertainment—it’s just when it comes to the “how” and the “when” that things get a little sticky. Leave your opinions in the comments, Insiders.

[via The Wrap]

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