February 16, 2005 - By Chris Marlowe, The Hollywood Reporter

Consumers are increasingly in control of their entertainment, and companies such as TiVo and Yahoo! that harness technology are providing these customers with more options than ever before from which to choose. A panel of experts made these observations Tuesday and agreed that the entertainment industry faces turbulent times.

Gary Arnold, Best Buy senior vp entertainment, summed up what many in the audience were thinking when he said, "We think the whole television industry is going to have to change."

The panel was addressing the topic of "Entertainment Everywhere: Beyond TV, PC, DVD and the Local Movie Complex" at a Century City event hosted by the Digital Coast Roundtable.

Targeted distribution was one key aspect of this impending future. Yankee Group consumer technologies and services analyst Patrick Mahoney noted that Yahoo! is coordinating technology, business models and entertainment content into one cohesive platform that can meet consumers' desire for a personalized experience.

"The content industry should be looking at - and maybe even be a little scared of - what Yahoo! is doing," he said.

Gigi Johnson, executive director of the entertainment and media management institute at the UCLA Anderson School of Management, added that Yahoo! can track each user's preferences and interests and utilize this data to provide a targeted experience. "They almost have you addicted to their product because they do such a good job of delivering on their promise," she said.

Many entertainment companies underestimate the potential of Internet delivery even without the personalization and targeting capabilities, the panel thought. Mahoney said 27% of consumers watch some form of video on their computer, for instance.

Paul Brindze of Brindze Consulting added that 10 million people are likely to watch a DVD on their computer. "That's a real market, but the content just isn't there," he said.

TiVo and other digital video recorder products were a good example of what consumers want. Brindze said TiVo's only problem was its business model, and that the company faced being undercut by cable and satellite operators that were incorporating DVR technologies to reduce churn.

Another brewing storm is the battle over which format will replace DVDs. Arnold said it looked likely that studios were going to bring both Blu-ray and HD DVD to market, leaving consumers with a choice of incompatible devices. "I think if they're not careful, they're going to destroy their DVD business ... and lose the cash cow," he said.

Johnson observed that music "is in that phase right now" because music purchased from one online store doesn't necessarily play on a consumer's choice of device.

"As a rule, we like open formats," Arnold agreed. "ITunes is great, but it causes confusion because it's a walled garden."

Copyright 2005, The Hollywood Reporter. All rights reserved.