Home Theater View

This Disc Will Self Destruct. Interested?

Wired is reporting that Disney has given up on Flexplay’s EZ-D disposable DVD format.  The press had a field day getting environmental activists all riled up against the format, but that’s just a sidebar.  If consumers found disposable DVDs moderately convenient, then the used discs would end up in the landfill alongside the rest of our disposable society.  If the discs were a smash hit, then we’d end up with another color plastic recycling bin for media (which might not be a bad idea anyway.  I must throw away hundreds of discs a year, even after AOL stopped mailing them to me twice a day).  Since the format didn’t even make a dent, conventional wisdom says that consumers aren’t interested in a disc that self destructs 48 hours after you open the case.

Conventional wisdom is wrong – the product hasn’t been adequately tested to determine anything at all about consumer willingness to adopt one-time-use media.  Simply put, the business model here is all wrong.  Traditional video rental places won’t carry the product because there’s no return trip to encourage repeat business, and the pricing structure doesn’t fit in with their large scale agreements with Hollywood. Non-traditional locations (supermarkets, convenience stores) can’t sell the product at $5 or $7 each – there isn’t much margin in it for them, and they’re already carrying regular DVDs that sell in or just above that range.  Target has an entire line of DVDs for $5.50, including some decent flicks (for example, the Special Edition of Total Recall).  Other limited-use entertainment is priced lower: any cable subscriber with a STB can get VOD from their cable provider for $3 to $5 without ever leaving the house (and many digital systems provide for multiple start times or fast forward/rewind capabilities). 

So let’s recap: nobody wants to sell this, “real” DVDs are priced at or just above EZ-D, VOD is priced below it. How exactly do you conclude from this that consumers aren’t interested in anything that self destructs after 48 hours?

Somewhat related, The Wall Street Journal had an article today (I got the paper version, no link, sorry) comparing services for legally downloading and watching movies over broadband on a PC. MovieLink and CinemaNow provide downloable movies for $3 to $5, which also self destruct (within 24 hours of hitting “play”).  However, there’s a unique value proposition there for anyone who specifically wants to watch movies on their PC (for example, notebook users heading out on the road).

-avi

Consolidation in the Display Business

The New York Times today reports (free reg. req'd) two separate deals: Fujitsu is selling its LCD display manufacturing to LCD leader Sharp, and Matushita (known in the US as "Panasonic") is hooking up with Hitachi to jointly manufacture plasma displays.  Bottom line here: prices are dropping too fast to go it alone if you aren't dominating the field.

-avi

I Want My IP TV

The current issue of BusinessWeek has a nice overview of Microsoft's efforts in IP TV (sending television feeds to a set top box over a broadband connection).  It's a bit skeptical, and focuses on how Microsoft has bent over backwards to address the needs of partners.  For example, Microsoft's brand does not appear on the set top box, and the boxes don't even need to run a Microsoft operating system.

I saw a demo of the system at CES, and BusinessWeek leaves out an important element of the story: it's really, really cool.  I suppose cable operators adopting this system could simply force their customers to upgrade, but new entrants such as phone companies and alternative broadband providers will need to provide consumers with a reason to move; simple pricing bundles will only go so far.

Microsoft was running a live demo off to the side of their main consumer booth - I literally stumbled into it on the way to a different meeting. What most impressed me about the system was not the alternative angles, more interactive VOD, or even the concept of moving the DVR from your living room back to the service provider.  What impressed me about the demo was that it didn't feel like much of a demo at all: image quality was spectacular, and reactions to user input was instantaneous - far faster than changing channels on a satellite STB or HDTV tuner.  The main window contained what appeared to be full HDTV, with alternative feeds around it.  The user interface was refined, all onscreen graphics were in high resolution, and the EPG (Electronic Programming Guide) appeared simple enough for anyone to use.  Feeds switched from one to the other with smooth transitions.

OK, one feature did stand out: easy to use PIP (Picture in Picture) without need for multiple tuners. Nobody actually uses PIP in the real world because setting it up is too complicated.  But with "Microsoft TV IPTV Edition" (seriously, who comes up with these horrible names?) you can use PIP to keep an eye on multiple sports games in progress at once. If Microsoft solves the naming problem, they've got a real winner here.

-avi