I've been offered a sweet gig to write one article a month for Thumbshots.org
. Since the articles will be e-commerce releated, I figured I'd publish them here too (yes, they've given me permission to do so). Anyway, here goes:
With the recent announcement of Amazon's Unbox movie downloading service and Apple's announcement that iTunes will now be selling movie downloads, many people seem to think that the future of purchasing movies lies online. And why not – it's a logical jump. We went from radio to television, CDs to DVDs, so why not go from MP3's to MPEG's? When something works with music, the video counterpart usually follows with the same success. But in this case there are several fundamental flaws that both Amazon and Apple failed to address with their services that will make it difficult for video downloads to follow the success of music ones.
1. Download time and file size
While it only takes a minute or two to download a 5MB audio file, 2GB video file can take several hours to download. It may feel like you are getting your music instantly, but it sure doesn't feel like your getting your videos instantly. If it's quicker to drive to your local Best Buy, pick up a physical copy and burn it to your hard drive, why would you bother downloading it?
Also, how many people do you know with 200 GB of empty space on their hard drives? I don't know about you, but I've got over 100 DVDs in my movie collection and that would take up a ton of space. Yes, hard drives are getting cheaper, but most computers still don't come equipped with the kind of space required to hold a library of movies.
Even more importantly, one of the key components of the digital music revolution is the ability to keep your entire library on your iPod/MP3 player. Right now, even with Apple's new 80GB iPod, that's still not possible for the hardcore movie fan. While few music collections will ever exceed even 30GB, it's not inconceivable to think that you would need a 300GB iPod to house your entire movie collection. Having digital copies of all of your movies won't truly be necessary until your iPod can legitimately become your personal entertainment device with all of your music, photos, and movies (in high enough quality and with enough battery time so that you can directly play your movies from the device on to a TV).2. Cost
Most movies on Amazon will go for $7.99 to $14.99, and movies can also be rented for $3.99. New releases on iTunes will sell for $12.99 on a pre-order basis and $14 thereafter. Older titles will sell for $9.99.
Ignoring for a second that you can download illegally ripped versions of any movie, what would compel a user to pay $15 for a restricted file that has less-than-DVD-quality? If you want a digital version, it's still much more cost effective (and potentially takes less time) to purchase a physical copy and rip it to your computer. Most new titles are available at your local Best Buy or Circuit City for around $15. Many old movies can be found in the $9.99 bins, or as a part of 2-for-$15 or 3-for-$20 sales. If you don't want to leave your house, you can get free shipping from Amazon on any purchase over $25.
With a physical copy you can rip it to any computer you want, as many times as you want, in any quality that you want, and then do whatever you chose with the DVD (like resell it). Until it is considerably cheaper to download a movie (probably somewhere around $5), it makes no sense for the average consumer to make downloading a part of their routine.
When it comes to renting movies, Amazon's Unbox will undoubtedly fall short as well. For the same price as renting a movie from Blockbuster, you have to wait an hour or two to download a movie that you can only watch for 24 hours and can't rip to your computer or burn to a DVD. If you don't want to leave your house, most digital cable providers sell movies On-Demand for the same $3.99 price that require no download, can be started instantly, can be viewed on your television without connecting your PC to it, and can be watched for the same 24 hour time frame.3. Restricted file access
People want the ability to do whatever they want with a file. And if they pay for the movie, why shouldn't they be able to copy it to each of the three computers in their house, their iPod, and burn a DVD to play on their TV? Unfortunately, Amazon and Apple haven't figured this out and continue to place unrealistic file restrictions on their downloads.
Lets think about music again for a second – some people complain about Apple's restrictions on music files, but when you think about it, you can do almost anything you want with those files – and that's why it still ultimately works. You can burn them to a CD (which then can be copied or ripped), you can store them on your iPod, and you can listen to them on your computer. Compare that to what movie downloading services are offering.
According to a recent article in the E-Commerce times
about Unbox, “The downloads can be transferred onto DVDs for storage, and the DVDs can be used to play the movie on the computer which downloaded the movie, but they cannot be played on a regular DVD player.” They also give you a second file that can be viewed on Windows Media compatible digital players, but that's a far cry from the freedom that consumers desire.
Using readily available free software, it's pretty simple for the average consumer to rip a DVD to their computer in their desired format, and then to copy it to their iPod if they want. When it's so easy for consumers to get what they want with a physical copy, it still makes no sense for them to pay a similar price for a second-class product.4. The way we watch vs. the way we listen
How do you listen to your music? Most people listen while they're driving (on a CD or their iPod), while they're on their computer (using a CD or files on the hard drive), when they're traveling (on a portable CD player or their iPod), or around the house (on a stereo playing a CD or hooked up to an iPod). All of those things are easily accomplished when you download an audio file from iTunes.
Compare that with how you watch movies. Most people watch movies on their TV (using a DVD). That's it. But what do downloading services let you do? Anything but that. You can watch it on your iPod when you're traveling, you can watch it on your PC, or you can watch it on your TV in inferior quality by hooking up your PC to your TV. While all of those things are nice, they don't address the main need of the consumer – to be able to throw a DVD in their DVD player and sit back and watch.
Mark Cuban explains in a recent blog entry
: “watching video on a computer or on a PDA/iPod is a 2nd class experience. It works amazingly well as a time killer on a bus, plane, lunchroom. It works good enough in a dorm room or your apartment bedroom, but its not going to replace watching on a real TV. It will always be a niche market in every manner.”5. There's already a better option
The previous four reasons all lead up to the obvious conclusion – there's already a better option! When it comes to CDs, your options are to buy them in the store, order physical copies online (or through the mail), or download them. The price is essentially the same, but you don't have to worry about delivery when downloading (i.e. driving to the store or paying for shipping), and you get the product within minutes.
But no matter what way you get it, you end up with the same thing in the end. If you buy a CD at Best Buy, you can rip it and have a digital version. If you download it on iTunes, you can burn it and have a physical copy. You don't lose out by downloading. It's obvious that when it comes to movies, you lose out considerably when it comes to download time, file quality, and file restrictions.
As a movie buff, you have three options that are far superior to downloading from Amazon or Apple. Hardcore movie fans tend to go the Netflix/Blockbuster Online route where they can rent somewhere around 3 movies at a time for around $20/month. When they get the movies, they copy them to DVD. Now they have their own copy that they can watch, rip, and copy anytime they want.
The slightly more legal approach is to simply purchase the DVDs you want. For essentially the same cost of downloading, you get your own physical copy that you can, again, do whatever you want with. Down the road you can always sell the DVD and make some of your money back.
Those of you that like to rent movies can go the On-Demand route that most digital cable providers now offer. For the same $3.99 cost of renting a movie on Amazon or going to your local Blockbuster, you can watch it immediately on your TV and have it billed to your cable bill. The downside to this is that you can only access it for 24 hours and usually can't make a physical copy (if you really wanted to you could make a physical copy if you have a TV Tuner card on your computer that can record TV).
Rich Greenfield of Palicapital summed it up best in an article posted on Mark Cuban's blog
“At a premium price point we also question who is the target market? Illegal movie downloaders are unlikely to be attracted at these prices and physical DVD purchases are unlikely to be interested in dealing with primarily PC-based nature of the downloadable files (with heavy movie renters far better off with Netflix or Blockbuster than Amazon Unbox).”
Ultimately that leads me to one of two conclusions – either film studios are really dumb and don't understand their consumers, or tthey really don't want to take the necessary steps for movie downloading to succeed. I'd say it's more the latter than the former, but it wouldn't surprise me if it was the other way around.