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Movie downloads will be a big business... but for whom?

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Analysis The trouble with one business model that works for one area of digital media, is that it will rarely work, unchanged, for another area.

That’s the thing that has been bugging Steve Jobs at Apple and which stops his company from coming out with something analogous to a video iPod. But it doesn’t seem to be stopping any other company, and everyone this week seems ready to announce their shot at taking digital video to the world legally, hoping to become the iTunes of the movie and TV world.

Sony has announced it will launch a service next year, Microsoft has launched MSN Video Downloads in the US, Intel and Bertelsmann plan to collaborate on devices and a service for downloading music, movies and games, while Akimbo Systems, is adding more content to its download-to-DVR service, from the Food Network, Home & Garden Television and DIY Network.

It’s not that any one of them on its own is likely to revolutionize video file delivery to the home, but it shows how many companies are already on the track of the Holy Grail of internet film delivery services.

All we know so far is that CinemaNow, MovieLink and Starz Ticket, an online version of the US Starz film channel, have not managed to break through, and recent figures suggest that only 36 per cent of internet users in the US are even aware they exist. But then again they don’t really advertise and there is the tiniest suspicion that none of the studios want them to work.

Perhaps this week, the most important of these new services, with a natural advantage, is from Sony Pictures, whose senior vice president, Michael Arrieta, was heard telling reporters in the US that his company plans to digitize and make available its top 500 films from an online store rather like iTunes.

Sony already has the experience of building Connect, its music store, which is probably 90 per cent as good as iTunes, but you have to question whether or not 90 per cent is good enough to have initiated the market.

It can solve all of the technical difficulties, and it has. The system works well. It lacks perhaps in some of the subtler innovations and design detail from iTunes, and also its delivery into Europe and the US was bungled, in the sense that there was no fanfare of marketing, no anticipatory splurge of publicity. Where a smaller company Apple, rolled out its CEO for the iTunes Europe launch and gathered 600 or so journalists for a show of rock star proportions, Sony managed to put out a press release and launch the system a day before it was working properly.

But Sony will have learned from the experience and its movie store may well become a success. Sony can also learn from the fortunes of Movielink, a company it has a share in, which has been offering around 400 "current" movies for rental online for several years now, but not for permanent sale.

Although the company claims success, and once told Faultline that it was growing at 25 per cent per month, it was always from a very low base, and no-one can say that the same growth rate is still being experienced. The downloads have been limited to the US, and the playback has been limited to a PC, and so its success has been limited.

What Apple achieved with iTunes was a service that would compete with piracy as a means to obtaining music. The simplicity with which it works, the availability of sufficient content, the consistency of price (within a region anyway) and the iPod dominated playback experience, were all part of the success of the venture, and if Sony wants to achieve the same, it will have to come up with something similar.

Perhaps in the PlayStation Portable (PSP) it already has, and the genius of the PSP may be that it is a wolf in sheep’s clothing, a general purpose entertainment machine, masquerading as only a gaming device. So can the PSP playback on any TV? If so, how will it communicate with the TV? Through a plug or though Wi-Fi or some other way?

The smart choice: opportunity from uncertainty

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