Consumers Demanding New Generation Of Devices
Digital music sales are surpassing those of CDs, but it hasn’t translated into more revenue for the record labels. And while the slow death of the CD continues, the demise of record stores like Tower Records occurred rather quickly. If there’s less physical media gear to sell, that could spell trouble for retailers like Best Buy .
“Another challenge is how you demo the product at retail outlets,” Rubin points out. “In general, connected products have had a hard time being demoed at retail. It’s going to be challenging for retailers that sell packaged media.”
Rubin says retailers will have to find ways to adapt to digital distribution. Barnes & Noble, for example, plans to allow users of its Nook e-book reader to read entire e-books for free while they’re in a Barnes & Noble store. Whether that will be enough to drive traffic into stores remains to be seen, Rubin says.
Analysts note that consumers are driving the trend toward on-demand access. As the consumer electronics industry responds to this demand, Rubin cautions that everyone from device makers to content providers to retailers are only beginning to deal with the full implications of this shift.
“Is the content compelling enough to get consumers to buy connected features?” Rubin says.
“With Blu-ray, companies worked hard to convince the consumer that that step up from your DVD was worth it. And there are business model implications. Electronics companies may want to sign exclusives with content providers. It’s a transition.”