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Digital payoff’s scarce

Young folks dig digital but money's hard to find

Young consumers overwhelmingly view all their digital devices as outlets for entertainment, but showbiz’s ability to make money off these new platforms is trailing far behind the fast pace of change in consumer behavior.

That was the frustrated consensus Friday at a Variety-sponsored panel at the Consumer Electronic Show, where Deloitte presented data from a study on consumer media consumption and execs spent most of their time discussing difficulties building business models around that behavior.

According to Deloitte’s survey, titled “State of the Media Democracy,” 65% of American consumers view their PC as a more important entertainment device than the TV, and 32% use their phone as a mobile device. The numbers are roughly equal in the U.K., Germany and Japan, with Brazil the only one of the five nations surveyed where digital engagement is significantly higher.

While TV remains the top medium for most consumers, others are rapidly on the rise, particularly among the 14- to 25-year-olds surveyed. In that group of “millennials,” a full 75% consider the PC a more important entertainment device than the TV, and 53% use their phones for entertainment.

But the four panelists from the entertainment biz seemed as much worried as excited, pointing out that revenues are distantly trailing consumer behavior and technological opportunities.

“We truly are trading analog dollars for digital pennies, and the reason is there was so much waste in that digital world,” said Ira Rubenstein, exec veep of digital media at Marvel.

Rubenstein was one of several panelists who asserted that difficulties monetizing digital media do not so much reflect a problem with the new technologies as expose problems with the old.

“It was hard to know really what value you were getting out of the 30-second commercial,” said venture capital investor and former RealNetworks chief strategy officer Richard Wolpert. “One of the things that has hurt us as a result of Internet video is measurability. You know if somebody clicked. You know if they watched it. You know how long they watched for.”

Though some are experimenting with different business models — Sony senior VP of mobile and digital Eric Berger said his company has had some success with pay-per-download mobile games and subscription video — the panelists agreed that making more money from advertising is the only solution to digital media’s woes.

“Premium content can only go so far with subscription and pay-to-own,” said Tom Kuehle, exec VP of strategic solutions at Ascent Media. “You have to insert advertising.”

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