Feb 18

hddvd1.jpgWith Toshiba’s announcement that it is to cease manufacture of HD DVD players, the High-Definition format wars are now over. With Blu-Ray left standing, some, such as Rob Beschizza at Wired are now saying that digital downloads will now kill Blu-Ray.

It’s an argument I want to support and many of you reading this will feel is a sound one, but it’s not going to happen anytime shortly. Here’s a few reasons why

Old Habits/ Age Dies Hard
I’m probably in the last generation who will ever remember a world without widespread computer use and internet everywhere. Younger generations (often called the “digital generation”) only know a world where anything can be accessed or downloaded at the click of a mouse button. To paraphrase many a politician, the young people are the future, and the next generation has nearly already abandoned CD’s, and physical media like DVDs and Blu-ray are next. But that doesn’t account for the many others who, as Rob Beschizza points out, already buy DVDs by the millions and will likely buy Blu-Ray now that HD wars are over (and as they did before DVD’s with VHS). Substantial generations have grown up with physical media, and this isn’t about to change tomorrow. Like music downloads though it will start to change, but like music that is going to take at least 5-10 years.

Access (or I want to watch movies on my TV)
I asked my mother the other day why she hadn’t downloaded something (legally of course) after she had purchased the physical media instead. Her response was simply that she didn’t want to watch it on her computer. Although many reading this will never give a second thought to watching video on their computer, there are still people who prefer consuming video on their TV sets. To be fair, HD on a 1080p 40″ TV set provides a better experience that on my 17″ Macbook Pro, although the TV set doesn’t easily come to bed with me.

appletv1.jpgThere are ways of brining digital downloads to TV sets, but none have anywhere near the penetration yet to offer a serious alternative to DVD and Blu-Ray. Apple is now offering HD movie downloads via their Apple TV box, but try and find more than a handful of people who own an Apple TV. Others offer a similar service such as Vudu, and there’s even Microsoft Media Center, and yet none are mainstream. Until such time net or network enabled devices become mainstream, TV and physical media will retain the upper hand.

Broadband limitations
The US internet community cried long and hard when Time Warner announced it was considering capping downloads on its internet plans in January, and yet I’m sure most non-Americans reading about it would have simply said welcome to our reality. The problem going forward is the days of cheap unlimited internet access in the United States may well be coming to an end as more and more download video and use P2P services. The low cost of bandwidth itself was a historical quirk that came about due to the first dot com bubble. That extra remnant capacity is being used now, and the costs of increasing capacity will likely be passed on to consumers. If this means more capped internet plans that immediately puts a constraint on the amount of video that can be downloaded. Outside of the United States this is already the case with capped plans in many countries, restraining potential growth in downloads (simply users will only be able to download so much content.)

Combine this with the need for high speed internet access that isn’t universally available. Digital video will not become dominant where it takes hours, sometimes days to download, when users can simply rent or buy the title on physical media.

Conclusion
As I said in the introduction, I’m all for the supremacy of digital downloads. I own two net enabled TV devices, a Zensonic network DVD player that allows me to stream content from any computer in the house or my NAS drive to my main TV set, and I’ve recently added an Apple TV to my line up. I wouldn’t swap this setup, and yet I’m still in the vast minority. Blu-Ray will likely be the last big/ mainstream physical media technology ever and it will have a strong future. The various factors needed for mainstream digital downloading and viewing will eventually combine to finally kill Blu-Ray (and the domination of all physical media) sometime between 2010 and 2020.
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Source: Duncan Riley

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Aug 09

Blockbuster announced the acquisition of movie download site Movielink this evening. The price is not being disclosed (meaning it isn’t “material” to Blockbuster’s shareholders), although the Wall Street Journal says it was less than $20 million.

Movielink was created in 2002 as a joint venture of most of the big studios - Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. Studios. $100 million or so was spent building the company.

That’s $80 million in losses for the studio investors on their Movielink project, which is money that could have been invested in more productive things. Like suing their customers.

This is clearly a hedge move by Blockbuster, which is locked in a death spiral with the cheaper and more convenient Netflix. Netflix also launched an awesome free movie on demand product earlier this year (and are using much of their operating profits to fund it). Until now, Blockbuster had no answer.

But Movielink certainly isn’t going to be a silver bullet for Blockbuster. We looked at all of the players in Movielink’s space last October. Their competitors include, besides Netflix, Amazon, iTunes, CinemaNow and Guba (and, let’s be honest, BitTorrent). Movielink has a very deep library of movies, but they are DRM’d to the hilt and the studios force them to price downloads at higher-than-dvd prices.

Blockbuster’s salad days ended in 2002, and the stock has slid steadily since then. It is no longer profitable. There are just too many options for consumers who want to watch movies at home. The company’s biggest asset, and biggest problem, are the long term leases it has on its 9,000 retail stores. It needs to defocus on Netflix and think about how to use those stores to its advantage. Otherwise, its long term prognosis is clear - deadpool.
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Source: Michael Arrington

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Aug 08

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We heard it was going to happen, and it did: Blockbuster bought Movielink for an undisclosed sum, surely to compliment its online offerings to better compete with arch-nemesis Netflix in the internet movie distribution game. And surely if it did sell for the piddly $50 mil figure being tossed around before, the barrier to this entry is just a drop in the bucket for the big blue movie rental giant.

[Thanks, Philip]

 

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