I’ve just wrapped four days in sweltering Las Vegas for the Home Media Expo, a gathering of home media retailers, distributors, studios, and vendors.

It’s very easy to write off packaged media as a dead medium. However, I thought such simplistic views of the universe were dead until a conference-goer blurted out the question “Isn’t the DVD dead?” during a Manufacture On Demand session.

However, the conference stage spouted other sayings like “packaged media is here to stay”, yet another example of a spun view of the universe.

Rental itself didn’t necessarily get the lion’s share of attention, largely overshadowed by sell-through, new formats (push of HD DVD), and new mediums dominating the content. The conference is a shell of its former self, down from 14,000 plus attendees to the butt of a joke that “performing to 75 people in a 300 person auditorium as being the highlight of distinguished career” from the conference’s last night of entertainment featuring some actually very funny comedians.

I sat in both the digital media retailing and MOD (Manufacture or Media on Demand, depending) sessions, thinking hard about how the retail channel fits into the media landscape when moving to digital. One such MOD vendor I discovered was Allied Vaughn, a new manufacturer on demand that does something of a white label version of Amazon.com’s CustomFlix.

On the retail side, I believe that manufacture on demand vendors provided the most intriguing possibilities for independent retailers and retailers in general for practical solutions you can envision taking force in the next 5 to 10 years.

I had a few other thoughts stemming from the conference:

#1: DVD, HD DVD and Blu Ray are victims of their own success (OK, victims of DVD’s success). Some statistics presented would tend to suggest there is saturation in disc-based ownership. I see this as one of the most feasible reasons why packaged goods sales will hurt even short-term. Eventually, it’s actually a practical problem to have shelves and shelves of discs and a consolidated option overshadows the collectibility of discs, books, etc. I’m trying to reduce my footprint and buying more DVDs does not accomplish that goal.

Again, this is the argument for rental in general. I truly believe that the overextension of stuff will drive rental markets and iLetYou will continue to be a proponent of rental, wherever and whatever.

#2: Portability is a huge issue, sort of the bigger theme of DRM issues and limits to number of devices content can be stored on. The inability to transfer media around needs to be taken into consideration with digital media delivery business models. If I pay $15 to $20 for a DVD versus $3 to $4 to rent, sometimes it’s not rationally based. Some movies I may not watch the 6 to 7 times it may require to pay back my investment, but portability and collectibility are huge psychological benefits that drive the sell-through market. Portability also means I can resell that item, trade it, share it with neighbors, bring it to a Thanksgiving celebration, or even rent it.

If digital movies are $2.99 to rent or $9.99 to own (say in a digital locker), then the cost-benefit analysis starts to look more reasonable. Look for closer pricing, as it seems an absolute necessity if digital media delivery is to really take hold.

In all this, you have to remember that music and movies are different. The tendency is to listen to the same music over and over. Most movies, unless they are your all-time favorites, will not get more than 1 to 2 views for most people. Pricing models need to reflect this if digital portability is not possible, which is may well not be because true digital portability means media will run wild. Nor do I think that true digital portability is necessary. The digital locker is the far, far goal but also the closest I’ve heard to digital media bliss.

#3: All in all, online content delivery companies don’t really know how this all shakes out either. And these guys truly believe that digital delivery will put mom-and-pop retailers out of business, leaving online aggregators and big box. They may well be right, but micro-recommendations can be drivers of both retail and e-tail channels. Even giants like Amazon.com and eBay are largely driven by micro-markets.

During the MOD session, it was quoted that 75% of titles may not have yet been published to DVD for a variety of reasons and explosion of online content, good and bad, drives this further. As such, there’s even more opportunity for even more niche media markets.

I believe that shopping is so ingrained in American culture, which seeps its way into other countries’ cultures, that it would be difficult to alter that behavior. The retail outlet is here to stay. These factors work in the savvy retailer’s favor and I simply see MOD as a method for retailers to become the micro-recommenders, while matching the digital availability. They offer convenience, service and selection. The real open question is whether the economics of retail outlets can be supported by these micro-recommendations. Either way, I think the micro-recommendations concept still applies online or possibly even in an adapted retail state, such as with a small store footprint.

Finally, I do have to say that I got the feeling at times that home media is going through the motions waiting for a sea change to cast them into non-existence. Even in pushing HD DVD and Blu Ray, which will continue packaged media’s staying power, it feels like an effort to keep the party going. In a $20 billion plus industry, it was kind of surprise to see this kind of defeated attitude to be even somewhat prevalent.

It will take some true vision to create a new retail model that works in the new digital world. I do know that content owners win and experts win. Content and the discovery of content will breed lots of winners in the change.

Remember, there’s a tendency to overestimate the short term change and underestimate the long term change (thanks Bill Gates). It will truly be a while: 10 to 20 years is still my estimate to when digital delivery is equivalent to packaged goods, quite a while to sustain the business.

Unfortunately for digital media, it’s ultimately bits that are sold. As such, there will be a wind change over some period of time. It’s time for great small retailers, those with truly great depth of knowledge (in a niche or just plain deep), personality, and a want and willingness to help people, to figure out how to continue to monetize that as their greatest asset.

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