The future of software

Screen Digest predicts consumers will spend $1.1 billion through software-on-demand technology by 2012. Will this mean the end of software retail as we know it?
No. At Roxio, we very much see on-demand services as complementary to existing software retail, with high-volume titles on shelf supplemented by long-tail availability on-demand. Software on-demand takes two forms – on-demand manufacture in warehouses for next-day delivery from websites and in-store burning in kiosks and systems behind the counter. At any time, customers will be able to enter a store with greater certainty of finding what they want. This will help retailers increase customer’s satisfaction, as a result.

What are the different types of technology available? And in the future?
Software and audio on-demand systems have been operating for some time. Tribeka is well known for installing on-demand systems in the retail space, and in the audio space, companies like Neo Products have installed kiosk solutions in retail, including HMV Hong Kong. Typically users browse and discover products on kiosks, pay and collect at the counter. CDs are burnt and transfer printed in low cost duplicator devices.

During 2008, retailers will be also able to add premium DVDs on-demand using the Qflix technology as developed by our parent company, Sonic Solutions. This will allow non-video specialists to offer an extensive catalogue of titles without the inventory and operating costs.

The benefits are clear. Traditionally, only a small percentage of the available catalogue was available in-store. Now, retailers will have the potential to double category revenues through the guaranteed and wide availability on-demand offers.

What will make consumers opt for this service as opposed to just buy online?
The kiosk-based on-demand services provide a rich consumer experience. Customers can browse entire catalogues to identify the product they want, with help from the interactive guides. Plus, support staff are on-hand in case additional assistance is required.

Ultimately, consumers are increasingly familiar with kiosks of this nature, thanks to airport check-in and ATMs, so for many, having a trusted retail brand offer a new and quick way to purchase applications or content will simply enhance the overall customer experience, and in turn their satisfaction.

How easy will it be for retailers to adapt?
Obviously, staff need training to use the duplication equipment, which due to high staff turnovers in retail may seem challenging. However, modern on-demand systems are highly reliable, developed with ease-of-use in mind and are easily maintained remotely.
Therefore, we don’t see them creating a need for retailers to adapt their current propositions. It is a complementary offering that provides an additional revenue opportunity through being able to deliver products when no further ‘on-shelf’ space is available because of space constraints.

Could we see the end of the boxed product in the near future?
No. People enjoy buying, browsing and owning physical product. Plus, packaging is an important part of the overall value proposition. On-demand maximizes the location’s potential to capture business by allowing an extensive catalogue of product to be available in a small space.

This is particularly important in the DVD category where only a very small percentage of titles make it to shelf with a huge number of back catalogue films and TV shows remaining unexploited.

And, in the future, we expect to see UK PC retailers diversifying into new areas, as has happened in the US. Retailers such as Best Buy and Circuit City now offer audio and video, in addition to hardware and software. On-demand kiosks are a natural extension of being able to offer this.