HD For Indies

Variety.com - Apple plants seeds for pic downloads

Nothing horribly new here, same stuff I've been predicting for about a year - that Apple would start selling movies online. The sticking point, supposedly, has been Jobs' insistence on one-price-for-all of $9.99. Studios want to vary it from $9.99 to $19.99.

OK, I don't think this is going to work as proposed, and here's why:

1.) There's a definite market for TV shows if missed it and you don't have a TiVO and don't want to wait until the end of the season for the DVD set. Anybody with a computer and broadband can download an episode for $3 and watch it, even on an iPod if they have one. There's no subscription, it's pretty painless, and doesn't commit you to any further purchases. This is a BIG deal - how many things do you skip because of the hassle, or because of fear of the lamprey like attachment onto your credit card of a subscription that will be a hassle to cancel? In any case, there's an unfulfilled need in the market - if no TiVO, if impatient, if you missed it, $3 and it is yours. Done.

BUT....movies are a different matter. If you missed it in the theater, then there's on demand, there's premium cable (think HBO), then regular cable (think TBS), then regular TV (think ABC). Oh, and this little thing called a DVD that's available at every Walmart, Target, Costco, Sam's, etc. If they don't have the one you want, buy it online at Amazon. Don't want to own it? Go to the corner Blockbuster. They don't have it? Netflix does. There are LOTS of options for getting movies, and honestly, if Apple were selling movies online, if they were the same quality as the downloadable TV shows, they'd be far inferior to DVDs. With no extras. So...

2.) Pricing - $10 minimum for a film, perhaps $20 if Hollywood gets it's way. OK, problem - we're talking about iPod resolution here - 320x240 pixels or so. DVDs are 720x480. So more than FOUR times as much information visually. And, Apple videos are compressed more - more artifacts. Shown on a TV, they look like bad, bad VHS. With more compression artifacts. Why on earth would I (or anyone) pay $20 for that? With no extras to boot? That only plays on a computer or iPod that's authorized for that one account? Yes, I can connect either device to a TV, but that's a major wiring hassle.

I'm recanting my previous position - I'm no longer all gung ho about Apple selling movies online to compete with DVDs. It doesn't make sense.

Why should anyone WANT to buy a movie from Apple at that quality and that price, with those limitations? Best case scenario - it's $10, comes out the day the DVD does, and downloads really fast. So now I have a tiny movie watchable only on MY computer (not yours), or my iPod Video (if I have one). iPod Video is $300 to $400. Perfectly decent DVD players are as little as $50. Yes yes yes, it isn't portable and tiny. True. But if you're going to sell a movie for playback on a 3 inch screen instead of a 36 inch screen, shouldn't the pricing be in line as well? And also, I'd bet dollars to donuts that downloaded movies would contain ZERO extras, unlike DVDs. No deleted scenes, no commentaries, nada.

So why would this make any sense at all? Why should Apple do this at all?

Possible reasons:

1.) If Apple gets Front Row working better (it's dog slow at present), they have a nice home do-it-all box - your own videos, your own music, your own pictures, etc, all play back nicely. The Intel based Minis are a lovely platform for this, and at present, cost about what an HD DVD or Blu Ray player cost, but do tons more.

2.) The Really Big Reason: there are two high def movie formats out on the market right now, and players cost from $500 to $1500. Blu Ray players cost $1000 minimum right now. That is nuts. A Core Solo Mini with 1GB of RAM is $700. That's right in there in terms of playback device costs. If Apple had a movie download service in HIGH DEFINITION instead of SD, then they'd be able to make a reasonable pitch as an alternative movie source. Then $20 per "raw" (no extras) movie starts to make sense. Using H.264 at 960x540 or 1280x720 pixels, at 6 or 8 megabits datarate (these are all very rough guesstimate numbers here), a 90 minute movie, downloading at 333 kilobytes/sec (based on my own cable modem speeds, but obviously would drop if everyone were downloading) would take about an 4 1/2 hours to download if my napkin math is right (8 mbits=1 MB/sec, 3.6 GB/hr, 1.5 hrs=5.4 GB file size, 333 kilobytes/sec=0.333 MB/sec=1.2 GB/hr, so 4.5 hours to download).

Hmmm....that kinda sucks. But compared to what? If Apple had an HD DVD or Blu Ray optical drive in that mini the price would push up by $150 or more at least. But it would be a pretty much do-it-all machine at that point - run Windows, run OS X, watch movies, download movies, listen to yours or buy more music, etc.

I've previously speculated on the need for an Airport Express A/V - like the current Airport Express (which can stream audio from computer to stereo, it has analog and digital connections), we'd just need a newer version of it that could decode H.264 (and MPEG-2 while we're at it) and stream it wirelessly from any computer running iTunes (or video metric equivalent) to this box which would decode and play the signal. There are complications as to how menus etc. are handled, but it could be done.

Frankly, thinking about this the other day, XBox 360 could jump all over this option already - Microsoft just needs to cut the deals with movie studios and get the host software running on another Windows computer in the house - not a stretch for the typical gamer household. Or just download directly to the XBox's own optional but limited hard drive. The Xbox 360 would have noooooooo trouble at all driving menus etc. - plenty of hardware horsepower in there. And, frankly, it's tons cheaper and does more than a dedicated high def player anyway. Who's to say they aren't already working on this? And if they aren't, they damn well SHOULD.

And if the two went head to head? I'd expect it'd be an interesting fight. Even though Microsoft outsources it's user interface design to other firms (this I know for a fact, I've even worked with some of the folks who do it), Apple still tends to win on the Easy To Use factor. So Apple's would probably have a nicer UI design. The catch would be the hardware - the XBox 360 is pretty much the ultimate piece of hardware to drive a UI - you can do all kinds of sexy powerful 3D stuff with it. Plus, XBox 360 is built at a loss, anyway - so the hardware is (relatively) cheap. Apple would have to come up with their own box, without subsidizing the hardware costs. Because if the game is to stream the content, then that means less smarts in the delivery device (the part that plugs into the HDTV) to keep the costs down - otherwise you might as well have a full fledged computer attached, not just an Airport Express AV/HD. So how to do a good UI that relies on low end hardware to display it, and still be effective, cool, and sexy? That's the challenge. And I think Microsoft, if they didn't flub the UI or create an unreliable product (a greater challenge for them since it has to run on a galaxy of hardware instead of Apple's limited and carefully controlled lineup), would have the upper hand on the hardware end.

But Apple has the market leadership on downloadable content, and everybody KNOWS they don't want to be beholden to Microsoft. Apple has gotten aggressive and negotiated fiercely, but I'd think Hollywood would still think Microsoft the greater threat long term.

OK, I could go on and on, that's enough for now. Comment away!

-mike