The final post about the Blu-ray / HD DVD format war?

The final nails were hammered into HD DVD's coffin this week, with Netflix, Best Buy, and Wal-Mart deciding to stock only Blu-ray discs and players.

Here's an obituary from today's NY Times.

From the Times piece:

Thus far, consumers have purchased about one million Blu-ray players, though there are another three million in the market that are integrated into the PlayStation 3 consoles of Sony, said Richard Doherty, research director of Envisioneering, a technology assessment firm. About one million HD DVD players have been sold.

Evenly matched by Blu-ray through 2007, HD DVD experienced a marked reversal in fortune in early January when Warner Brothers studio, a unit of Time Warner, announced it would manufacture and distribute movies only in Blu-ray. With the Warner decision, the Blu-ray coalition controlled around 75 percent of the high-definition content from the major movie and TV studios. The coalition includes Sharp, Panasonic and Philips as well as Walt Disney and 20th Century Fox studios.

ZDNet covers the Netflix and Best Buy decisions from earlier in the week.

Earlier, people had predicted that Sony's PlayStation 3, which included a Blu-ray player, would help Blu-ray edge ahead. Others thought that the availability of X-rated movies on HD DVD, or that format's cheaper equipment, would help it win. HD DVD was also the first to hit the market, in the spring of 2006.

Right now, though, it looks like Warner Bros. helped break the tie between the two formats in January, by announcing that it'd release movies only in the Blu-ray format; the studio had previously been releasing in both Blu-ray and HD DVD. History, of course, may eventually reveal that some other force was involved (conspiracy theorists imagine a giant payment to Warner Bros. from Blu-ray patent holder Sony Electronics, for instance).

It's interesting to me that it was Warner Bros. that helped make sure the studios coalesced around the original standard-definition DVD format in the 1990s... and that the Warner Bros. executive who led that effort, Warren Lieberfarb, wound up as a consultant for the HD DVD camp this time around.

No more movie downloads from Wal-Mart

Wal-Mart pulled the plug on its movie download service on December 21st... and no one noticed for a week, the thing was so incredibly popular. Wal-Mart's service was one of the few to offer movies from all six major studios. Wal-Mart's unsuccessful "beta test" began this past February,

From the NY Times coverage:

In a research note published Friday, Rich Greenfield, an analyst with Pali Capital, said the D.R.M. might have doomed Wal-Mart’s movie service. “We suspect a key reason behind Wal-Mart’s decision to exit the digital video download business was the need for D.R.M., which prevented the content from working with iPods,” he wrote. “Anywhere you look, Apple’s devices are winning, forcing content holders’ hands.”

High prices also hampered the service. Prices to buy a movie, a copy of which resides on the hard drive of the buyer’s computer, ranged from $12.88 to $19.88 on the day of the release; older movies cost $7.50. But it costs just a few dollars to rent a DVD or watch a movie through a cable system’s on-demand services.

What Percentage of Worldwide DVD Purchases Take Place at Wal-Mart?

We all know Wal-Mart is a powerful retailer in every category, with 7000 stores worldwide.

But who'd have thought Mr. Price-Slashing Smiley Face is responsible for about 40 percent of all DVD sales?

That tidbit appears in a Wall Street Journal story today, about an exec who's leaving Wal-Mart to join DreamWorks Animation.

When it comes to CDs, Wal-Mart is only responsible for 16 percent of worldwide sales.

New survey data on movie downloading behavior

Toronto-based Solutions Research Group surveyed 1,230 Americans earlier this month, and found that:

- Only 8 percent have paid to download a movie (up from 5 percent in October 2006)
- 30 percent of iTunes users have visited the movie section of the store. Among visitors to Amazon.com and WalMart.com, 10 percent and 8 percent, respectively, have visited the movie areas of those sites.
- A third of all Netflix members use Netflix's "instant viewing" feature to watch movies (or parts of movies)
- Among other movie download sites, 9 percent of survey respondents had visited Movielink.com, 8 percent had visited BitTorrent.com, 5 percent had visited Vongo.com, and 5 percent had been to CinemaNow.com.

A PDF summary of the survey results is here.

(Via Movie Marketing Blog)

Paid Downloads on the Way to Extinction: Ads and Subscriptions are the Future

That's the word from Forrester Research analyst James McQuivey. (I'll bet Steve Jobs doesn't agree with him.) Here's the alert I got from them this morning (and here's the press release):

The paid video download market is a dead end according to a new report by Forrester Research. Forrester estimates that paid video downloads will peak in 2007, generating $279 million in revenue, up from $98 million last year. Instead, advertising models will drive the online video market.

In the past year, companies such as Apple, Amazon, Microsoft, and Wal-Mart have begun offering consumers the ability to download television programs and movies to own or rent. But a recent Forrester survey showed that only nine percent of online adults have ever paid to download a movie or TV show. Furthermore, an analysis of these consumers showed they are a niche of media junkies willing to spend heavily on such content; they do not represent the vanguard of a rush by mainstream consumers. Without mainstream viewers joining the party, the video download market will not grow fast enough to support the ambitions of all the companies involved.

"The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today,” writes well-respected Forrester analyst James McQuivey. "Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today's paid downloads, will put their weight behind subscription models that imitate premium cable channel services.”

I don't agree with McQuivey's take on this -- I think media companies that crank out TV shows and movies enjoy being able to charge for them a la carte, on DVDs or as downloads, and I think they're going to do what they can to preserve that model, alongside advertising and subscription programs. They'll try to sell new, premium content as paid downloads (on Apple's iTunes and elsewhere), and make available slightly older stuff in subscription services, or free and supported by ads.

Wal-Mart: 3000 movies downloaded in first month

The AP has a story talking about how retailers are likely to see their DVD sales slip, just as CD sales have fallen each year since 2003. Two interesting tidbits from the piece relate to Wal-Mart and Blockbuster:

Wal-Mart Stores Inc. is the farthest along [in terms of retailers offering digital downloads] after selling 3,000 movie downloads in its first month, February. Blockbuster Inc. spokeswoman Karen Raskopf said the movie rental chain intends to enter digital downloads by the end of this year, perhaps in partnership with another company.

"We don't see digital downloading becoming a huge business in the next year or two, but our view is we need to be in the business, and we don't want to be at a competitive disadvantage," she said.

Could that other company Blockbuster may ally with be Movielink?

Internet Movie Marketplaces: Who's Most Likely to Succeed?

Who’ll end up as the Blockbuster of Internet movie distribution?

No one has all the elements in place yet: big audience, vast selection, intuitive design, and a simple way to transfer movies onto portable devices and the living room television.

But here’s my ranking of the five players that are “most likely to succeed” in the business of digital distribution.

1. iTunes Store The big dog. Works for both Mac and PC users, and as of April 2007, had sold 50 million TV shows and two million feature films. New $299 Apple TV device makes it easy to wirelessly transfer iTunes content to a television and view it there. The negatives: no rentals (only download-to-own, at $9.99 and up), no way yet for indie producers to sell their content, no simple way to burn shows or movies from iTunes to a DVD. Also: only a few studios offer features on iTunes, including Disney, MGM, and Lionsgate. Paramount supplies older films -- not new releases. Others have so far been reluctant to cut deals with Apple CEO (and Disney board member) Steve Jobs.

2. Amazon Unbox Unlike iTunes, Amazon Unbox makes movies available for digital rental and purchase. Movies can be sent directly to an Internet-connnected TiVo device for viewing on a TV. While Unbox hasn’t yet built much momentum in the marketplace, Amazon has a built-in advantage over the other players on this list: hundreds of thousands of consumers already trust the company with their payment information, and have Amazon accounts already. Amazon can also make movie recommendations based on past purchases. Indie producers can make their content available on Unbox using Amazon’s CustomFlix service, and keep 50 percent of the revenues. That makes Unbox the most “long tail”-friendly movie service. Among the studios offering features: 20th Century Fox, Lionsgate, Universal, Paramount, Sony, MGM, and Warner Bros. Movies from Lionsgate, Sony, Warner Bros., and Fox. Works well with Windows-compatible portable devices like the Creative Zen Vision. PC only.

3. CinemaNow CinemaNow has been in the movie download business longer than most anybody else: since 1999. It helped pioneer technology to download a movie and then burn it to a DVD (more than 100 titles are now available, mostly older movies), and CinemaNow also hasn’t been prudish about offering “mature content,” working with porn providers like Vivid and Hustler. CinemaNow is the only service working with all six major Hollywood studios. Offers some movies for free, as ad-supported streams. Movies can get to TV with a Windows Media Center Edition PC, and to Windows-compatible portable players. PC only.

4. Vongo Vongo is unique in offering an “all you can eat” movie service for a dirt-cheap $9.99 monthly fee. About 1000 movies are available at any given time, but some titles rotate in and out of inventory. Works with various Windows systems (Media Center Edition, Vista Ultimate, Xbox 360) to display content on a TV. Content can also be synced with Windows-friendly portable media players. Vongo also offers a live, streaming version of the Starz TV channel. Rental only, PC only.

5. Microsoft Xbox 360 Video Marketplace Microsoft has sold more than 10 million of its Xbox 360 gaming consoles, as of December 2006. The video marketplace offers standard-def and high-def features from Warner Bros., Paramount, Lionsgate, and New Line. (As of April 2007, Xbox and CinemaNow are the only of these services offering movies in high-definition.) Rentals only; no download-to-own. High-def new release movies cost $6, and standard-def new releases cost $4. Since the gaming console is already connected to a TV, viewing on the big screen is a breeze.

Dark horses (in no particular order) MovieLink: Initially launched as a joint venture of several major studios, but never well-promoted. Blockbuster is reportedly interested in acquiring Movielink – which could help introduce the service to a wider audience, especially if Blockbuster ties in digital downloads with rentals from its retail locations. ClickStar: Offers both rentals and downloads. Some movies, like “10 Items or Less,” will appear on Clickstar just a few weeks after their theatrical debut. Biggest things ClickStar has going for it: the involvement of Morgan Freeman and his producing partner, the supremely tech-savvy Lori McCreary. Netflix: Digital downloads are now built into Netflix’s monthly subscription package. About 1000 titles available, which could grow to 5000 by the end of 2007. Streaming only, PCs only. Wal-Mart: Expect Wal-Mart to offer the cheapest prices, if not the most compelling user experience. Launched in February 2007. Joost: Viacom announced a deal in February 2007 to make movies from Paramount and MTV Films available on Joost. BitTorrent: Download or rent movies from Fox, MGM, Paramount, and Warner Bros. Bit Torrent’s advantage is zippy peer-to-peer download speed. GUBA: Partnerships with Warner Bros. and Sony.

Some other comparisons of Internet movie marketplaces:

TechCrunch (good pricing comparison)

ExtremeTech

Three from the Times: BitTorrent, Gaming at the Movies, and YouTube Celebs

Feeling glum this morning because I wound up in the middle of the pack last night in the Oscar pool...(though I did manage to get the visual effects and best animated feature awards right -- two categories near and dear to CinemaTech.)

Most of the coverage this morning involves dissections of last night's Oscar-cast. But the NY Times has three worthy, non-Oscar pieces:

- Software Tool of Pirates Gets Work in Hollywood

Brad Stone writes about BitTorrent, the file-sharing service that's trying to go legit. One possible advantage of buying movies from BitTorrent as opposed to other sites could be speed:

In a test of the new BitTorrent store, downloading the film “X-Men 3” took two hours with a broadband Internet connection. Downloading the same movie from Walmart.com took three hours. And BitTorrent downloads should theoretically become faster as more people sign up, since digital copies will originate from nearby computers whose owners have bought the movie, instead of from a central server.

The company, which has received close to $30 million in venture capital, ultimately wants to use its media store to demonstrate how the underlying technology is effective at moving large files around the Internet. It wants to sell the technology to other media stores and to the studios themselves.

The studios hope the new BitTorrent will put a dent in the illegal trading of their content. Thomas Lesinski, president of Paramount Pictures Digital Entertainment, said he hoped the store would win over young people accustomed to free fare. “We look at this as a first step in the peer-to-peer world, to try to steer people toward legitimate content,” he said.

- The New Video Arcade in Spain Might Be the Movie Theater

Doreen Carvajal writes about cinemas inviting gamers in to play against one another on the big screen:

“Forget the pathetic speakers of a PC or television!” screams an ad for the theater, which opened in December and is offering cut-rate tickets at 3 euros, or about $3.95. “Come feel the sound that puts you at the center of the action.”

“We’re trying this concept because there are many theaters in Spain, and admissions are down,” Mr. Martínez said. “So we have to offer new products.”

- New Hot Properties: YouTube Celebrities

Bob Tedeschi profiles some YouTube celebs who are being recruited by other video sites, with promises of pay - or just more promotion. He claims that YouTube "has been stung by the departure of popular acts" like Lonelygirl15. Would any traffic numbers bear that out? Not sure it made much of a dent. But there is a tiny scrap of speculation in the piece about how YouTube may soon compensate creators. Tedeschi writes:

In January, YouTube’s co-founder, Chad Hurley, said the company would in the coming months begin sharing advertising revenue with contributors. The company last week said it would not elaborate on that plan, or on the efforts of competitors to lure its contributors away.

But [videomaker Paul] Robinett said he was contacted by a talent agency claiming YouTube plans to share about 20 percent of the advertising money gleaned from each video clip with the clip’s producer. Mr. Robinett said he could not confirm that claim with a YouTube executive.