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Friday, September 08, 2006

Amazon's Unbox: Barriers to digital downloads

The NY Times reports that Amazon has launched its digital download service, AmazonUnbox. A snippet from Saul Hansell's story:

    Amazon will sell current and back titles of all major movie studios except Disney and has programs from several dozen television networks as well. Indeed, Amazon is the first video service to license the original “Star Trek” series.

    For many new movies, Amazon’s $14.99 maximum price is lower than other download services, like Movielink, which sells most new releases for $19.99. The studios have largely set the wholesale price of downloads above $14.99 hoping to keep the retail price at $20 or above. They do not want to alienate Wal-Mart, by far the largest movie distributor, which uses discount DVD’s to attract shoppers.

    Amazon is pricing some current movies higher than its $14.99 cap. For example, “Silent Hill” from Sony is $16.87 and “Rumor Has It” from Warner Brothers is $19.62.

To entice you to try the service, Amazon is offering a free TV show as a sample.

DVGuru has already taken Unbox for a test drive... and given it a decent (but not stellar) review. And Chris Gaither has a report in the LA Times. In Businessweek, Guba's CEO says the missing link is still an easy way to watch digital movies on a TV set.

My prediction: digital downloads will be a product that only appeals to a niche market for the next year or two. I simply think that buying DVDs, renting from the local video store, ordering video-on-demand from cable, and subscribing to Netflix will remain simpler and more convenient ways to acquire new movies. Who gonna buy digital downloads? My best guess right now is business travelers, who want a movie or two available for viewing, but don't want to carry DVDs around. The big barriers for now? Price, download time, disk space, and ease-of-use.