Digital distribution is currently in a state of transition. Christian (2012) writes in his report how the television industry developed from its beginnings with free to air channels, that ran almost completely on advertising, into the subscription based channels that significantly boosted the profit margins in the industry. This allowed the industry to produce more high-quality media for specific audiences who were willing to pay for niche content. Better content meant more attention to television as a source of entertainment. The increase in attention, as well as the ability to promise a specific consumer demographic allowed them to further increase the cost of advertising on their channels, as brands that needed such specific audiences would be inclined to advertise on such channels. It also allowed for the industry to have the capital to establish other services such as their DVD production and merchandising platforms, which further increased their profit margins.


As the Internet was touted as the dawn of a new age, Christian claims that web entrepreneurs sought to create web entertainment businesses that emulated existing forms of entertainment. This is what, according to Christian, spurred early development of technology that allowed for the circulation of music and video content over the internet and accessible on computers. From that point, digital distribution steadily grew, incentivising audiences to spend more time on computers rather than watching television. The steady shift of audiences sent existing distributors and entrepreneurs, eager to take advantage of a market that no one had a strong foothold in.


However, there were multiple major setbacks with establishing in this platform that made it infeasible for traditional distributors to directly import their business models to digital distribution. First, and arguably the main source of a lot of issues, was the lack of legislation regarding digital distribution. Picker (2002) explains a lot of the early pros and cons regarding this lack of legislation, such as the ability to fully control the user's rights over content and the lack of protection against online piracy. Since then, the platform has been increasingly legislated and recently, governments have been considering more laws that define the rights of consumers, distributors, and internet service providers (ISPs) more clearly. Lack of legislation has lead to companies; both ISPs and distributors to have the authority to have total control over what they own but has not allowed them to enforce certain rules on their consumers. Examples of current issues that require legislation to define include; the rights of the consumer regarding digital 'property', the rights of a distributor to demand ISPs to monitor how consumers use their internet services, and how internet service providers block certain websites. In recent times, however, there have been some movement by various governments to tackle these issues.


This has lead to the next major issue; piracy. Piracy has been especially enabled by a lack of technology and legislation that could prevent it, as well as the development of technology such as peer to peer (P2P) file sharing, which gave pirates the ability to distribute pirated content faster. With little to no difference between legal and pirated content, as well as a lack of methods to fight piracy, legitimate digital distributors are forced to compete against piracy by distributing their goods at low costs and providing services to incentivise audiences to use them. Examples of such services include large varieties of content, streaming services for audiences who do not wish to download content onto their devices, and exclusive content.













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All this has lead to the central problem that will affect the future of film and television; monetization. Traditional media distribution forms pre-internet had business models that allowed for large profit margins. Profits sustained not only the distribution platforms, but also the auxilary businesses such as DVD production services, and the content producers. A report in The Economist (2012) cites the concerns within the industry that if traditional media platforms lose the ability to fund media production the way they are currently able to, content producers are likely going to charge digital distributors extra, which will harm their ability to provide a wide variety of content at low costs, which in turn affects their ability to compete with pirates. To make matters worse, digital distribution depends on content producers selling the rights for them to distribute their content, but as digital distribution is seen as competition to traditional distributors, many cable networks are trying to restrict digital distributors' ability to distribute their content. Lotz (2008) and Garrity (2002) highlight many of the views that most within the industry have regarding the opportunities presented by the internet. Currently, many cable networks are attempting to set up their own digital distribution platforms or delaying the release of content on digital platforms to incentivise watching television. All this creates a messy situation for the consumer, that further incentivizes piracy.

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The future of the industry depends on the monetization ability of the distributors, and currently, distributors only make enough profit to support small productions, unable to consistently fund large-scale productions for high quality content. If, content production is to maintain the current standard of quality, as traditional media platforms decline, digital distribution platforms need to find a way to increase profits. The major obstacles they face are the incentive to pirate forcing them to charge lower costs on the consumer, competition within the industry incentivising consumers to pirate, and legislation that significantly fights piracy. In addition, Shields (2010) also voices his concerns regarding the inclination toward monopoly within the field, due to the nature of digital distribution platforms to compete for content.