The battle to conquer America’s living rooms with digital content heated up last week as Wal-Mart jumped into the movie download biz and players from Apple to Amazon.com to Microsoft moved to expand their offerings.
But the next big show-down is likely to come over a piece of familiar hard-ware: the DVD player.
After years of painful negotiations, tech companies will finally be able to offer the ability to burn DVDs of downloaded pics this year. Those discs could then be screened on any home DVD player.
“This is very important to us because there’s already a huge installed base of DVD players that connect to TV sets,” says Jim Ramo, CEO of film download e-tailer Movielink.
Web sites aren’t the only ones itching for the technology.
Drugstore chain Wal-greens plans to expand its DVD offerings beyond a handful of discs to thousands by installing kiosks and DVD burners in all its stores. Consumers could order a disc and 10 or 15 minutes later, after getting their prescription, pick up a disc and box just like they would get at Best Buy. Consumers could also order movies online and pick them up instore.
Wal-Mart is also work-ing on a DVD burning concept with HP, though it doesn’t have deployment plans yet.
“There are about 65,000 DVDs that have been released,” says Anthony Bay, chairman of MOD Systems, one of the companies bringing the technology to retailers. “Costco carries fewer than 200. Best Buy has about 4,000. Some stores don’t have any. Now they can stock the kind of movies it never historically made sense to have on shelves.”
The technology isn’t perfect. While burning isn’t expected to take more than 10 or 15 minutes, most folks still have to wait more than an hour just to download a pic at home.
And initially, the home-burning technology only works with “DVD 5,” a format that holds less data than the newer “DVD 9.” That means some movies, along with all their extras, may not fit on a single disc, though insiders expect burning on a DVD 9 to be possible by next year.
Another delay came as a result of Hollywood’s ongoing piracy fears. Studios hoped to use something more advanced than the standard CSS encryption already in use, as the technology is easily defeated. But after years of political machinations, the studios finally endorsed technology that burns discs in CSS. Otherwise, it would have been impossible to burn discs that work on most people’s DVD players.
“If we used anything besides CSS, we would have compatibility issues and then we just wouldn’t have a succesful format,” says Tim Hogan, VP of digital distribution for Sonic Solutions, whose QFlix system is currently the only way to use the DVD Forum-approved technology in the market.
Sonic is licensing QFlix to numerous companies, including MOD and Movielink, that want to enable DVD burning as soon as possible.
They’re now working with studios to make titles available. In the case of Web stores, that means negotiating new rights — and potentially new prices — to let their consumers burn discs. For retailers, that means getting studios to give them digitized versions they can keep on an instore server to burn.
“Right now it’s impossible for a studio like ours with a big library to keep everything in stock,” says MGM chief operating officer Rick Sands. “When you can get more people access to your production, you can more purely test demand without any other constraints.”
Many studio execs remain cautious.
Some wonder whether many more titles will move when they’re simply on a kiosk or computer screen and not being actively marketed. It also remains to be seen whether the overall impact will be additive, or simply shift some consumer spending toward library titles.
But studiosaren’t the only ones that stand to benefit.
Once shelf space constraints disappear, producers of indie pics and alternative content may get wider access to the tightly controlled DVD market.
“If they can adapt a marketing strategy that gets their product noticed, this might make the most difference to small companies with less notable titles,” says Stephen Prough, founder of investment bank Salem Partners, which has done several major deals involving film libraries. “They could generate significant dollars relative to their size.”