The end is near for the DVD -2

Yet another nail in the DVD coffin was hammered in today, though at first glance it seems to be a rather flimsy one. Santa Clara start-up Vudu is offering a set-top box for movies on demand with an initial movie library of 5000 titles. 

Customers have to have broadband access and more importantly, need to pay $399 upfront for the device, in addition to rental or purchase fees for the movies. Rental fees range from 99 cents to $3.99 and movies are available for purchase for prices ranging from $4.99 to $19.99.

This brings the tally of companies already offering online movie downloads to  4( Netflix, Jaman, Blockbuster-via Movie link, being the others) with big guns like Amazon, Microsoft, Sony and Apple nipping at their heels.

It's hard not to feel a sense of deja vu(du)( couldn't resist!). Not so long ago, Tivo offered a (then) revolutionary technology that allowed viewers to record programs from their TV on to a set-top box  without the need for a Phd. in VCR programming. Once the market had been primed and educated, the cable and satellite companies just took over with their DVRs and Tivo has been languishing ever since. 

I expect a similar shake-up in the online movie downloads market. Everybody wants a piece of the $10 billion dollar market, but once again, cable companies like Comcast have a giant advantage in that their delivery systems are in place, they are tried and tested and they have an existing client base that can be sold too with minimum effort and no further investment in technology.  Comcast already offers about 300 titles, which may be a drop compared to the 5000 plus movies the other players have, but I suspect they are just waiting to see how the movie wars play out. (At least, one hopes there is a marketing strategy behind their decision to wait. Their Bollywood service, which requires you to pay a monthly fee for access to a small library of movies, is a pretty bad idea and I wouldn't be surprised if it dies a quiet unremarked death. It would have been much more sensible to include Bollywood movies in their pay-per-view menu.)

As I see it, there is nothing to distinguish all these players from each other, except the social networking component offered by Jaman, which is the only one truly capitalizing on the interactivity of the internet. Their technology is great but their library is woefully small, so it seems likely that once the dust has settled, they would be a good candidate for acquisition by the survivors.

Meanwhile, it is the customer who is going to be the real winner. No more trips to the video store, the capacity to watch new movies without waiting in a queue, cheaper movies – what's not to like? All the players offer HD quality too. I, for one, can't wait. 

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