Bandwidth will instead augment Blu-ray

With millions of devices in homes now connecting HDTVs to the Internet, online movie services are poised to send a flood of high-def movies down those digital pipes. But the flow may be less than smooth, given limited broadband connection speeds in U.S. homes and the superior video quality on Blu-ray discs.

Vudu, Apple iTunes and Amazon Video on Demand have all added high-definition titles in the past six months. This fall, Microsoft (via the Xbox 360) and Roxio CinemaNow are each planning a major high-def push. In addition, almost every service is offering high-definition viewing via instant streaming so consumers no longer have to wait hours for large HD files to download.

But few expect digital downloads to be a serious competitor to Blu-ray discs anytime soon. That’s because most consumers don’t have broadband connections fast enough to stream HD video and, even if they did, most companies say HD streams can’t yet match the quality of Blu-ray.

The average consumer has only a 2.5-megabit-per-second broadband connection, said Mark Ely, VP of strategy for Sonic Solutions, which owns Roxio CinemaNow. To stream HD content in the standard MPEG-2 compression quality requires an 18-20 mbps connection.

Vudu’s well-reviewed HDX streams, which it touts as the highest-quality HD streaming, require a 10-mbps broadband connection, while its standard 1080p HD streams need a 4.5 mbps connection.

Because of broadband limitations, most companies in the space are positioning HD downloads as a complement to Blu-ray. That’s not surprising, since many are planning to offer their services through Blu-ray players in an attempt to expand their reach into the home. Sonic and Netflix, for instance, already have deals with LG Electronics to offer their services on BD players coming this fall.

Also limiting the potential growth of HD streaming and downloads is the amount of content studios make available and the terms under which they do so. So far, studios are releasing almost every new release, but since most HD new-release downloads and streams are available as rentals, they are available only in the VOD window, sometimes debuting after DVD and only available for a limited time.

Microsoft Xbox 360, which has been offering HD rental downloads since launching its video service in late 2006, will begin offering nearly every film it can in HD with instant-on streaming after it migrates to Zune video in the fall. Currently, the Xbox Live Marketplace has 5,000 HD titles, compared with 18,000 in standard definition.

Vudu says it now has 2,000 rental titles in HD and 200 more available as download-to-own. (Jennifer Netherby writes for Daily Variety sister publication Video Business.)

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