VOD's Threat To HD Optical Discs
By Steve Smith -- TWICE, 2/27/2006
High-definition movies began to be available through key retailers in the top 29 U.S. markets on Feb. 14 ... and the movies weren't in the HD DVD or Blu-ray formats.
MovieBeam, a video-on-demand (VOD) service began selling standard- and high-definition movies earlier this month that don't use cable, satellite or the Internet, but over-the-air set-top boxes using portions of the analog NTSC broadcast spectrum of PBS affiliates. As TWICE executive editor Greg Tarr's story relates (see p. 1), the set-top box is $199 after a $50 rebate, there is a $29.99 activation fee, the pricing for movies is reasonable, the system is said to be relatively easy to install, and it is supported by most of the major Hollywood studios.
Meanwhile, Toshiba began its HD DVD promotional campaign last week in preparation for its March rollout of the format. And during the second half, probably by summer, the first Blu-ray players will reach the market.
My question is this: If MovieBeam and other video-on-demand services that deliver HD movies are really easy and economical to use, will they undercut the two fledgling disc technologies?
If you're a regular reader of this column, you know that yours truly agrees with those who say there should be one, unified HD optical disc format. Some think that consumers will stay on the sidelines with their hands in their pockets clutching their wallets until a winner, or most likely a “survivor,” of this battle occurs a year or two from now.
Of course the likelihood of a union of both of these optical disc formats will probably not happen, so the real question is what will happen to these two formats if VOD becomes very popular before these formats can be understood and accepted?
Since the first optical disc players and videocassette recorders were introduced, their main use has always been playing movies. If MovieBeam, and other video-on-demand providers, can truly send HD movies to consumers' homes in a relatively easy and cheap way, and tack on a few home networking functions down the road, these HD optical disc formats could be marginalized.
One could see a marketplace two, three or four years down the road where the main way consumers rent or buy movies would be through VOD providers who would also enable users to perform a plethora of home networking functions with their set-top boxes.
Sure, HD optical disc formats would be part of the mix, but the market for movies on disc might be limited to a specialty offering. The same would be true for home video recorders. In this scenario, either HD optical disc format would be featured in some home camcorders, the way DVD camcorders are available today. The core of their use would probably be in desktop and notebook computers. But those uses are a far cry from their original intention, to be the centerpiece of the HDTV experience at home.
Of course this is only one, albeit negative, scenario for the two HD optical disc formats, and my crystal ball is always more than a little fuzzy. But these factors are something to ponder as the rollouts of these two optical disc formats and HD VOD services begin.
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