Mel,

Thank you very much for such an intelligent and articulate explanation as to why dowloading/streaming is a looooong way from being a practical alternative to physical discs. People just have no concept of how much bandwidth is necessary to download a two-hour movie in 1080p with TrueHD/DTS-HD MA/uncompressed 5.1 PCM audio. If we all started trying to do that at once, the Internet would come to a screeching halt! The current infrastructure simply couldn't handle it and the major telecoms are upgrading their equipment and cabling at a painful snail's pace. And I'm only referring to the U.S., much less the rest of the world!

Aloha

HD DVD player sales up again. From IMDb.com:

"HD DVD Sales Rebound
Apparently reassured by statements from Universal and Paramount/DreamWorks that they have no plans to follow the lead of Warner Bros. in abandoning Toshiba's HD DVD high-definition video system, sales of HD DVD players rebounded during the week ended Jan. 19. As reported by the Video Business website, HD DVD players accounted for 33 percent of all high-definition units sold during the week, up from just 7 percent a week earlier. However, the same week saw price cuts of $100-$200 dollars for the HD DVD players, which may have contributed to the rise in sales. Nevertheless, tech research firm Gartner predicted that Toshiba's price cutting "may prolong HD DVD's life a little, but the limited line-up of film titles will inflict fatal damage on the format." Paramount and Universal account for only 30 percent of all HD movies sold."

heath

I agree that consumers like owning tangible objects, and discs fit the bill. And that there are bandwidth challenges ahead.

That said, consumers have embraced rent-by-mail services like Netflix in which there is no tangible ownership of any disc. It’s not hard to envision a movie download service whereby consumers pay a flat fee ($19.95 or whatever) in exchange for HD movie downloads. There would be usage restrictions (ie. maybe a cap on the number of new releases per month, movies expire 48 hours after download, etc.), but it would essentially provide all the benefits of Netflix without the snailmail.

Microsoft already has a foundation in place with Xbox Live, which has over 10 million paying members (by comparison, Netflix has 7.5 million members). XBox Live now offers HD (720p) TV & movie downloads, but they are charging on an ala carte basis. IMHO they (along with Apple / iTunes) need to tweak the business model to improve the value proposition for consumers. I think a flat monthly fee would be more attractive.

Note that Netflix is now developing its own set-top box with LG. This will compete with AppleTV, Xbox 360, and Vudu. It’s said that Netflix subscribers will pay nothing extra for this service (other than the cost of the hardware). So if you are a Netflix subscriber, you will be able to simply download movies straight to your TV. http://blog.wired.com/business/2008/01/netflix-partner.html

The revolution won't happen overnight, but in the States it may not be so far away. This is something that will play out over the next several years. If and when download services offer better value than discs, consumers will likely follow.

The Vudu device (www.vudu.com) is one of the coolest gadgets I've used in a while. I really enjoy downloading movies and watching them. A lot of the popular films have a couple of minutes cached in the 250 GB drive, so when I purchase or rent one, it usually can be viewed at once.

My Internet connection is DSL at 6 mbps, but I average around 4. It's perfect. The Bourne trilogy in HD looks fantastic.

I still love DVDs, but when studios start to release movies with special features for Vudu, Apple TV, etc., I'll probably drop DVD purchases like I dropped CD buys.

heath

People just have no concept of how much bandwidth is necessary to download a two-hour movie in 1080p with TrueHD/DTS-HD MA/uncompressed 5.1 PCM audio.

You don't need "HiDef DVD" quality though you just need "good enough" for it to be successful in the main stream. Of course there will be people who want better quality and those people will still buy the discs just like people who want better audio quality still buy CD as opposed to downloading from the iTMS or Amazon.

I don't think physical media will disappear for a long, long time, but it's market share will drop significantly as it co-exists w/downloadable content.


-A

I don't think physical media will disappear for a long, long time, but it's market share will drop significantly as it co-exists w/downloadable content.Many people make the market share comment. With the market share ratio at about 99 to 1, of course the market share of packaged media will fall. The questions are, how far? and how soon?

Wal-Mart sells a few discs. :) They started a download service a year ago with HP doing the back end. HP backed out of the deal, forcing Wal-Mart to make a do-over. Clearly, it's not much of a business today. And I don't think Wal-Mart believes it to be huge in the near term. My guess is that they're just hedging their bets. They have enough clout with the studios, and the development/operational costs are so small for them that it's cheap insurance.

I think this war will be moot once flash memory becomes even more affordable. I don't think it's too far off, you will be able to own a small(think Ipod) device or 2 with a mini HDMI-type port that you can just take down to Walmart(or online store) and upload movies to for 10 or 20 bucks each. All the copy protection would be on the device in the form of encryption, I mean how far off are 100+ gig flash devices and once they are available on the cheap it will eliminate the player entirely. It will do to the DVD market what the Ipod has done to the CD. Sure the device may cost more than the CD, but since it's replacing the player as well it won't matter. If the storage was in the terabyte range then a whole library of movies could be stored on it.


This will be a good thing, imagine how many miles high all the CD/DVD's ever produced would stack up(probably reach the moon). Might see it in 5 years maybe, give or take, the only thing that could hold it back is a stubborn industry unwilling to give up discs and the infrastructure they created to support them.

The Vudu has an HDMI port, which is great. But until the studios allow special features with downloadable movies, I think downloadable rentals are going to be king for a while. It's nice not to have to go to the video store or wait for Netflix to show up.

But I'll say it again, watching the Bourne trilogy in HD on the Vudu is very similar to watching the HD DVD. I am impressed!

heath

Of course there will be people who want better quality and those people will still buy the discs just like people who want better audio quality still buy CD as opposed to downloading from the iTMS or Amazon.-A

Obviously, I fall into that category! I didn't buy a 70" 1080p TV and a 7.1 speaker sound system just to watch "good enough." And I like having that library of discs lining the back wall of my home theater. Besides, as I mentioned earlier in this thread, I tend to watch certain movies and TV shows over and over again to study how the directors, editors, DP's, and sound engineers did what they did. Downloading would likely never be an acceptable solution for me unless I could burn the files to disc. DRM would likely make that impractical, if not impossible.

I do understand the concept of "good enough" though, when dealing with the masses. I'm a network consultant specializing in Microsoft solutions. I readily admit that Microsoft didn't get to where they are by being the best. They beat their competitors by being just "good enough" at a competitive price point, with a pretty talented marketing division. But that's a whole other discussion.

Personally, I like being able to take my disc to a friend's house for biweekly movie nights. Or to take a disc to my parents' or in-laws' house. Or anywhere else. Until something portable comes along that's universal (e.g. DVDs) and easy to transport (e.g., DVDs), and is durable/permanent (e.g., DVDs) then the disc is not gonna go away. We use Netflix for the "we'll see that on DVD" movies, and we buy the DVDs for movies we really like and for other stuff that doesn't come out in the theatre.

Relate this to eBooks & the paperless office, with respect to what consumers want. People like to be able to hold things, see them, feel them. The paperless office has generated more paper than the non-paperless office used to. When I get an eBook, I print it out. Can't really take my computer to the...umm, well, you get the idea. Driving down the road, I (or my wife) can watch a movie (portable DVD player) or read a book (on paper). Or listen to one of 10,000 MP3s (iPod). I see tons of cars everyday with the DVD players making the kids happy (I have a fairly long commute). Until whatever technology comes along is as easy to use as a disc and as portable as a disc and as durable as a disc, most people are going to stay with the disc.

Personally, I hate watching movies on my computer. My couch is SOOOO much more comfortable, and my TV quite a bit bigger than my computer monitors....

Just my $.02. I like discs...
Matt

I'm enjoying watching movies on the Vudu from my couch on my HDTV. Soon enough, we'll be bringing HD movies over on iPods with HDMI ports and hooking them up to friend's computers. A universal remote will control it.

Or at least that's what I'm speculating.

heath

The latest rumor is that Netflix may be coming to Xbox Live.

This would be a pretty brilliant move by both companies. In the wake of HD-DVD's demise, it would really beef up the value proposition offered by an Xbox 360 vis-a-vis Sony PS3's Blu-ray. And it would help Netflix stave off challenges by AppleTV and Vudu.

http://www.msnbc.msn.com/id/23214808/

The latest rumor is that Netflix may be coming to Xbox Live.

This would be a pretty brilliant move by both companies. In the wake of HD-DVD's demise, it would really beef up the value proposition offered by an Xbox 360 vis-a-vis Sony PS3's Blu-ray. And it would help Netflix stave off challenges by AppleTV and Vudu.

http://www.msnbc.msn.com/id/23214808/
Actually it’s for both the 360 and the PS3.

Here are a couple of articles:
http://www.seanbajuice.com/2008/02/11/netflix-coming-to-ps3-xbox-360-full-details/
http://www.engadget.com/2008/02/11/netflix-coming-to-xbox-360-and-ps3/