Digital Joe #47

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Just as quickly as the high definition format war was upon us, arguably the first nail has been hammered into the coffin. Video on Demand (VOD) is going to be tested by Warner Brothers later this year with the release of "300" in some European markets the same day the DVD reaches stores. Why, you might ask, doesn´t WB just concentrate on getting the high def formats worked out before jumping to the next iteration of home video?

Kevin Tsujihara, WB Home Entertainment Group president, claims there are two factors at work: first, the studio only makes 15-25% profit on DVD rentals, while it stands to rake in almost triple that amount with VOD. Second, in a certain sign of the apocalypse, he wants consumers to be able to get what they want at home without driving to the four corners of the map for it.

Okay, maybe I´m exaggerating a bit on the second point, but the idea remains the same. Tsujihara seems to be perfectly sober when he tells people not to get in their cars. What he doesn´t realize is that for a great many people, VOD simply isn´t going to work, especially at the price points the studio´s are going to want to charge.

Right now, we don´t have any idea what the price per movie is going to be. Just for kicks, lets say it is comparable to current DVD prices. (Sidenote: it surely won´t be for a whole host of reason we´ll talk about in a second.) So, for $20, Mr. Average Joe and Mrs. Average Jane can order up "300" or "Batman Begins" whenever they want it. That price doesn´t include the extras-or the added value content, as some companies like to call them-which justify the $20 DVD price tag.

The studio will tout convenience; all the consumer will see if more money out the window. Not only will every home need some kind of high speed internet connection, they´d also need some kind of receiver connected to an Ethernet port. To make matters worse, no studio is going to give away free internet connections or receivers (hard drives, DVR´s…whatever terminology you want to use). By the time you add up all the miscellaneous add-ons for VOD, that little movie is going to cost a whole lot more than $20.

It should be noted that America Online, the internet folks, is owned by Time Warner…who coincidentally also own WB.

Now, one of the best features of a DVD is the ability to put it on the shelf and watch it whenever you want to. With VOD, that´s not going to be possible…without investing in a DVD recorder and some fairly expensive blank discs. Ah, more money down the drain.

Why in the world would anyone-even the early adopters-want to shell out that much money and time when they can buy a disc at Best Buy on release week for $15, plug it into the DVD player which cost them $40 on sale and watch the movie on an existing television? You´re getting less value for the money (remember those special features?) and if you want a copy forever and ever, there´s even more expense and time.

I by all means believe VOD is going to be the way of the future. Just not "now" future. Not next year future and not 2010 future. 2020, maybe. Why? As we speak, both the HD and Blu-Ray camps are trying to get the average consumer to buy into either format when, in reality, the difference is not as noticeable as it was between VHS and DVD. There´s no reason for Mr. Middle America with a family, mortgage and car payments to fork over another $1,000 just to see the "Blu-Ray" version of "The Departed" or the In-Movie experience on "Batman Begins." As much as movies bring us joy and an escape from everyday life, there are more important items to spend money on…like food and gas.

No matter what happens with WB´s experiment, there will always be people who want a shiny disc (or microchip or whatever) in their hands to put on a shelf in their living room. I´m one of them. It´s the collector in me who likes to put a new purchase on the shelf; it´s far easier to show guests DVD covers when we want to watch a movie than it is to scroll through five pages of stored movies on my TiVO.

Warner, good idea. I´m glad someone is thinking beyond this stupid high def format war. Disney and iTunes, you can learn a bit from this. But it´s simply not doable in the United States for the foreseeable future.

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