Sorry, David

David Pogue,Blu-Ray,DVD,online movies,downloads,streaming,CNBC,The New York Times,HD,1080P

I turned on CNBC this morning, and what did I see but a rant (and rant is the only word I can use to describe it) by David Pogue assailing online movies and defending Blu-Ray. (I can't find it on the New York Times site, and Windows Media Player is crashing both IE7 and Firefox before I can get the URL for the video from the CNBC website, so click here to read his article.) (UPDATE: The video is now availabe on the New York Times website; click here to view it.) I've already dealt with most of his arguments in previous posts, but there was one that I missed: Since only 50% of the U.S. population has high-speed Internet connections, the other 50% can't get access to online movies.

That's entirely true, but think for a minute: If you can't afford or live in some place too rural to get a high-speed connection, how likely is it that you'll have a big-screen HD display? Not very. It's even less likely when you consider that a 1080P display is needed to get the full value from Blu-Ray. As I wrote in an earlier post, less than 30% of all households now have HD monitors or receivers of any resolution, let alone 1080P. An upscaling DVD player will work fine for most people, at a cost of 50% less than a Blu-Ray player.

In fact, Pogue inadvertently made my argument for me. By the time there are enough HD monitors and receivers in households to make Blu-Ray a viable business for either consumer electronics manufacturers or movie studios, the problems of online movies will largely be resolved. For the vast majority of people in North America, there's no reason for them to buy a Blu-Ray player, unless they're already buying a Playstation 3 or PC with a Blu-Ray drive.

Thus, I believe the transition will go from DVDs to downloads and streaming. Just as DVD-Audio and SACD were touted as the next generation of CD but were bypassed by downloads, DVD will live on, and Blu-Ray will be bypassed by downloads and streaming.

Does VOD Suck? I Think Not

Blu-Ray,DVD,VOD

A number of writers have suggested that Blu-Ray won't be made obsolete by VOD and downloads, for several reasons:

• Only a few thousand movies are available electronically, while Netflix is said to have some 90,000 titles on DVD
• It's too hard for most consumers to view VOD movies or downloads
• Consumers want the commentaries and special features found on discs

While all of these arguments are true today, none of them will stand up for very long. Let's take them in order:

• It's true that there are only a few thousand titles available on VOD today, but almost all of the major studios' releases are made available electronically. In addidion, only a small fraction of the total output of DVD titles will ever be released in Blu-Ray. The post-production, mastering and manufacturing costs are simply too high when compared with the available audience.
• The user interfaces for some VOD and download systems are awful, but user interfaces can be fixed.
• How many viewers really want commentaries and special features? Yesterday, I was at Target, looking at the DVD of "Michael Clayton." It had a commentary by the director/writer and two documentaries. Price: $16.99. I ended up watching "Michael Clayton" on Comcast VOD, in HD, for $5.99. It simply wasn't worth $11 more for special features that I most likely would never watch.

I have shelves full of DVDs that I've watched once, and will likely never watch again. Rather than make the same mistake with Blu-Ray, I'm perfectly happy to watch on VOD, and to perhaps buy the few films that I know that I'll want to watch over and over. Parents will undoubtedly want to buy movies for their kids to watch again and again, but why buy them in Blu-Ray when the kids will be perfectly happy with DVD?

In short. Blu-Ray is simply too late for the marketplace, and in my opinion, it will never be more than a niche product for the top end of the audience.

HD DVD is Dead...Now What?

Two days ago, Toshiba announced that it has abandoned HD DVD, with player production and all marketing activities to end in March. Yesterday, Universal Home Video announced that it would discontinue HD DVD production and shift to Blu-Ray. Paramount and DreamWorks, the remaining HD DVD-only studios, haven't yet made an announcement, but one is expected soon. (UPDATE 02/21/08: Paramount and DreamWorks have officially announced that they've dropped HD DVD in favor of Blu-Ray.) Thus, we finally have a single high-definition blue laser optical disc standard. The question is, does it really matter?

Video Business and Adams Media Research recently reported that the adoption curve for the first two years of HD disc sales ran significantly below that of DVD sales; 8.3 million HD discs vs. 16.3 milion DVDs. Now, there are a number of reasons why the growth of DVD sales was much faster than that of HD discs:

• DVDs were clearly superior to VHS cassettes, while HD discs are far less of an improvement over DVDs.
• HD discs are of value only to those consumers who already have a HD television set, of which only 26.5 million households in the US (out of 111 million total, according to Nielsen) have at least one.
• Many consumers can't tell the difference between movies on HD discs and DVDs.
• The format wars caused many consumers to delay purchasing either format until a winner arose.

Now that Blu-Ray is the winner, consumers don't have to choose between formats, but there's still the issue of the evolving Blu-Ray standard. In order to get the interactive features of BD Live (Internet connectivity, games, forums, etc.), Blu-Ray players have to conform to Profile 2.0 or greater. Unfortunately, the only player on the market right now that can meet Profile 2.0 is the Playstation 3, and even it will require a firmware update later this year in order to get BD Live functionality. So, smart consumers won't rush right out and buy a Blu-Ray player, unless they're already buying a Playstation 3.

The biggest issue, however, is whether electronic distribution will make Blu-Ray obsolete before it has a chance to take hold. As a Comcast subscriber, I can already see some VOD movies in HD; I can also rent HD movies on my Apple TV. As I write this, a partnership between Microsoft and Netflix is being rumored; this will get Netflix's streaming catalog, including some HD titles, onto Xbox 360s. If I can rent a movie electronically for a few dollars (and even see it at the same time that it's in theaters, as I did with "4 Months, 3 Weeks and 2 Days" last weekend on Comcast,) why do I need to buy or rent it on physical media?

If the Blu-Ray and HD DVD contingents had settled their quarrel two years ago, before either of them came out, the unified standard would have had two years to establish itself in the market. Today, I honestly can't recommend that anyone buy a Blu-Ray player unless they're buying it for some other reason (such as playing games on the PS3,) and thus will get the Blu-Ray capability "for free."

The New Medium: One Perspective

Michael Wolff,Vanity Fair,user-generated contemt,UGC,reality television

In the March, 2008 edition of Vanity Fair magazine, Michael Wolff addresses the decline of the film and television industries as a result of the wholesale shift away from plot-driven narratives. I'll pull one quote from the article that summarizes his point:

"...nobody, writers or executives, remotely has an idea about how to do what they do, how to apply their trade—creating these elaborate, hoary, three-act or four-act divided-at-the-midpoint stories—in a new form with a new means of distribution for an audience that seems more and more to want some radically different thing."

Wolff isn't quite sure what that "radically different thing" is, and neither am I. He lumps together reality television, user-generated content and videogames, when those are different forms (although one can argue that that reality TV and UGC are often more alike than different.) Writers aren't going away, but what they write is changing dramatically. Will the three-act form finally go the way of the dodo?

Add One: Samsung's Soul

Samsung,Soul

In my previous entry, I missed one new 5 Megapixel phone, the Samsung Soul. The Soul was apparently the hit of the show; in addition to its 3G chipset and 5 MP camera, it has a touch-sensitive display with haptic feedback and navigational/function icons that change in context with what you're trying to do (it's easier to see than to describe, so you'll find more details here.)

I'm now following cameraphones...

Mobile World Congress,GSM,Nokia,Samsung,Sony Ericsson,Microsoft,Danger,Android,Google,T-Mobile,Sharp,Motorola,Apple,iPhone

Given the content of my previous post, I've decided to start following developments in camera phones. (Yes, I know, it's about time.) This is a good time to start, as the Mobile World Congress, covering everything to do with GSM, started today in Barcelona. So far, the state-of-the-art seems to be 5 Megapixel phones, new versions of which were announced by Nokia (the N96 and 6220 Classic), Samsung (the G810) and Sony Ericsson (the G900 and C902.) (Note that I'm not including launches of phones with 3MP cameras; if I did, the list would include three new models from LG.)

You may have also heard that Microsoft purchased Danger, the company that created the Sidekick phone for T-Mobile and other operators. (Danger's co-founder now works for Google and manages the Android mobile phone operating system project.) Danger farms out manufacturing to companies such as Sharp and Motorola, but this acquisition firmly puts Microsoft in the handset, not just the operating system, business. However, Danger has a miniscule share of the overall smartphone market, so it remains to be seen if Microsoft will actually market its own phones (and go head-to-head with Apple's iPhone) or use Danger to create reference designs that it will then license to other companies.

Short-Form Video via Phone

jeff jarvis,beet.tv,nokia,n82,qik.com

I've been catching up with Jeff Jarvis's dispatches from Davos, along with an interview that he did with Beet.TV concerning his new video dispatches.

Click To Play

Jarvis has been doing video interviews with the Nokia N82, which has been customized by Reuters and Nokia to accept an external microphone; the interviews are streamed live to the Internet via qik.com. With the exception of the microphone adapter, everything is standard and is available today.

I've been unimpressed with the quality of pictures taken by camera phones, as well as the user interfaces used to control the cameras. I haven't been able to play with the N82, so I can't comment on either the camera phone's quality or ease-of-use, but Jarvis is quite enthusiastic. In any event, the N82 gave him an almost transcendent ability to get interviews with the likes of Sergey Brin, Bono and Hamid Karzai. The camera phone has become such an integral part of day-to-day life that it almost disappears from the conversation, in a way that even small camcorders can't. It reminds me of when I took one of JVC's first DV camcorders to Canada in 1996; it was so small and light that most people didn't even think that it was a camera, let alone a camcorder.

The output of these camera phones won't look like something that's been shot by a conventional three-person crew (camera/sound/reporter,) but it doesn't have to. Short-form video is developing into its own medium, one that has very different quality expectations than either film or broadcast television. Are these camera phones the "Brownie" cameras of this new medium?

Avid & Apple Withdraw From NAB--What Does it Mean?

apple,avid,yamaha,roland,creative,sony,thomson,harris,m-audio,digidesign

Earlier this week, Apple confirmed the rumors that it’s not going to exhibit at NAB this year. This comes on the heels of Avid’s announcement that it would pull out of this year’s show. Both announcements spawned a variety of speculations about the reasons behind their departures; said speculations will now be added to by myself.

To me, Avid’s announcement that it’s withdrawing from NAB is far less important than the announcement of the company’s new Chairman and CEO, Gary Greenfield. Here’s Mr. Greenfield’s bio, from the press release announcing his appointment:

“Greenfield has been CEO of GXS since 2003, a leading worldwide provider of business-to-business integration, synchronization and collaboration solutions. Since December 2003, he has also been an operating partner with Francisco Partners, a leading technology-focused private equity firm.

Previously, he served as CEO of Peregrine Systems where he managed the restructuring of their business; president and CEO of MERANT; and while CEO of INTERSOLV, they merged with Micro Focus to form MERANT. He has experience growing businesses both organically and through acquisition, managing development, marketing and operations, and serving diverse customers from small businesses to the Fortune 500.”

I don’t see any experience with audio or video production or post-production in his background; in other words, he doesn’t know the company’s business. He does, however, know how to restructure businesses. My bet is that he’s going to split up the company and sell pieces to the highest bidders. Yamaha or Roland would be potential bidders for Digidesign and M-Audio, Creative Technologies might snap up M-Audio and/or Pinnacle, and Sony might take all three. As for Avid, I think that Sony, Thomson or Harris are the most likely bidders.

The speculation that Avid might buy Apple’s media products, or anything else, is silly under the circumstances. They’re trying to clean up the company as a result of previous acquisitions that made little sense (Pinnacle being the best example), as well as failures to deliver promised products; acquiring yet more products would be counterproductive.

Apple’s move to exit NAB is more interesting. A company spokesperson stated that the company’s decision was made, in part, because it has a very effective way of reaching users through its Apple stores. I think that’s one reason, but I also think that exiting NAB allows Apple to change its development schedule to better fit reality. There doesn’t necessarily need to be a major new version of Final Cut Studio every year; features can be added and bugs fixed incrementally. I believe that Apple is fully committed to being in the media creation tools business; the company’s success, especially in the video field, has been at the expense of both Avid and Adobe.

At one time, I thought that Apple might purchase a video or audio hardware company to better compete with Avid; both AJA and MOTU were potential candidates. However, I think that Avid’s failure indicates that Apple has the correct strategy right now: Stay out of the hardware business, and support the most popular products out there.

I’d bet that twelve months from now, Avid will either be a much smaller company or only a brand name within another company’s product portfolio, and Apple will still be in the media creation and post-production business with its suites of video and audio software.