Posts Tagged ‘Streaming’

Wal-Mart Buys VuDu. What does it mean?

On Monday, February 22, Wal-Mart announced it was buying the movie download service VUDU.

The announcement, which was a bit of a surprise, nevertheless makes sense in light of Wal-Mart’s 2009 decision to downplay in-store sales of DVDs and Blu-ray discs. Now, Wal-Mart can deliver HD-quality movies directly to a variety of compatible TVs and media players, including LG’s new BD590 player/DVR.

According to a Business Week story, a VUDU executive said he expects the VUDU platform to be integrated into more than 150 TVs and related AV products in 2010. This is significant because VUDU picture quality tends to be higher than iTunes and Netflix streaming video. In fact, many VUDU movies can be downloaded in the 1080p/24 format for true HD playback.

VUDU’s original set-top box

This move also pits Wal-Mart directly against Apple, Amazon, and Netflix as demand for digital downloads of TV shows and movies heats up.

So – what does that mean for packaged media sales? DVD sales continued their slide last year, falling off 13% from 2008, according to Adams Media Research. Even the Blu-ray format hasn’t proven compelling enough to reverse this trend, which many analysts still blame on the economy.

I’ve got three more sensible explanations. First off, DVD rentals are still hanging in there, which means more consumers have decided they really don’t need to buy every movie or TV show boxed set out there. Renting once is just fine, particularly if you have a $1-per-night Redbox DVD kiosk in your local grocery store.

Second, there just aren’t that many memorable movies out there from recent years that are worth owning. And if you’ve already accumulated RL or BD copies of the ‘classics’ plus some boxed sets here and there, why continue to fill up your shelves with more DVDs that will likely still be sitting in their original shrink wrap a year later?

Third, it’s pretty clear that the public is captivated by broadband video. That includes video-on-demand over cable, Hulu, Netflix streaming, Amazon digital downloads, and YouTube.  Granted, mailing Netflix and Blockbuster movies back and forth is pretty convenient (although Netflix spends hundreds of millions of dollars per year to make that happen!).

But pointing your remote at the TV and downloading a movie or TV show is even more convenient (and cheaper for Netflix). And if you have access to thousands of movie titles and TV shows at the click of a button, why do you need to fill up your shelves at home with DVDs you might watch one time, then consign to a garage sale or your local library?

Wal-Mart is betting that you don’t, and that direct downloads are what you crave. And they want a piece of that action.

Cutting the Cord

There’s more than one way to watch TV these days, and cable TV’s days of being ‘king of the hill’ may be drawing to a close.

Over the past couple of years, we’ve been hearing (and reading) about folks who have decided to give up their cable TV channel package subscriptions because of the cost…and because they have audited their TV viewing habits and realized they are paying for a lot of channels they never watch.

‘Cord-cutters’ have opted to get their TV fixes in different ways. One is to supplement broadband video with free, over-the-air digital TV. Another is to stream movies and video from Netflix, or to purchase digital downloads to a DVR.

These programs are then watched on everything from laptops to desktop computers, conventional TVs connected to a computer, TVs connected to TiVo DVRs, or simply NeTVs streaming in real time – sometimes with a computer connected for Web sites like Hulu.

How about you? If you are contemplating ‘cutting the cord’ or have already done it, I’d like to hear about your experiences, both positive and negative. I’ll compile these comments and anecdotes into a future article.

Write me at with your stories. Feel free to send along a few photos, too!

The New (TV) World Order

Could and YouTube become more powerful than Disney, Fox, and Warner Brothers? Will TV manufacturers partner with studios to release movies directly to selected models of TVs? Is the traditional model of cable TV channel tiers finally on life support?

It’s all possible, thanks to the explosive growth of Internet-connected Tvs (NeTVs). While the experts are debating the ‘pros’ and ‘cons’ of 3D in the home, I have yet to hear one dissenting voice about NeTVs. People seem to love the idea that they can surf Web videos just like TV channels. And Netflix’ video streaming service also appears to be catching on in popularity.

It’s easy to see why TV manufacturers are jumping on this bandwagon. The interfaces add little manufacturing costs – a good thing in this age of downward pricing pressure and low margins on TV sales – and there are a log  list of partner content providers ready to link into your living room.

While most video streaming is limited to SD resolution, HD programs can be downloaded with some latency. In tests I’ve conducted using Amazon’s Unbox Web site, it took about 45 minutes to an hour to download 50-minute episodes of TV shows mastered in the 1920×1080 format, using MPEG4 AVC compression. If you’re not in a hurry, that’s a small price to pay to watch HDTV programs and movie. And the picture quality of these HD downloads, as seen on on my 42-inch Panasonic plasma, is close to what I’ve experienced with Blu-ray discs.

LG’s BD950 downloads HD content from VUDU to an internal 250GB hard drive.

OK, let’s assume that demand for streaming digital downloads continue to grow rapidly. According to Nielsen Online, 137.4 million Americans watched Web video in December of 2009, an increase of 10.3 percent over December 2008. 10.7 billion videos were streamed during the month, representing an increase of 11.8 percent versus the same time period a year earlier. The majority of those were from YouTube (no surprise there), with Hulu taking up the #2 spot.

Thanks to the Internet, it’s now possible for an independent production company to shoot, edit, and post a movie online, and reach several million viewers in short order. What’s to stop them from working out a distribution deal with Amazon, and let customers buy downloads (SD or HD) from the Amazon servers?

Throw in the TV shows and movies that Amazon already provides as downloads, and you can see where I’m going with this.  Control the server farms, and you control the marketplace. With DVD sales slowly but steadily declining about 3% to 5% a year for the past five years, the digital download marketplace takes on greater importance. And that puts Netflix and Amazon in the driver’s seat. (Possibly Blockbuster, Best Bu, and Wal-Mart as well.)

The Digital Entertainment Group insists that the Blu-ray format will carry the day, and that we’ll see a turnaround in disc sales about 2010 as we climb out of this recession. Trouble is, two years is an eternity in the world of consumer electronics. What will the market penetration figures look like then for digital downloads and streaming? I’ll bet DVD sales (red laser and Blu-ray) will be in even steeper decline as viewers eschew trips to the video store and even to the mailbox in favor of a few clicks on their remotes. So what does that do to the bottom line at major studios?

NeTVs will also create headaches for cable MSOs. There’s plenty of statistical evidence that cable subscriptions are plateauing and in many cases, declining. Where are those viewers going? Why, to the Internet, of course. These viewers value their broadband connections more than cable channel packages, of which most channels are unwatched. In contrast, NeTVs allow the holy grail of connected TV viewing – a la carte channel packages.

Combine broadband through a NeTV, Amazon, Netflix, and maybe even an outdoor or indoor antenna for free HDTV broadcasts, and you can see there’s trouble in River City for the traditional media distribution companies. Those companies may not admit it, but they’re scrambling to figure out ways to get on this bandwagon and replace that evaporating revenue from DVD sales. Look for TV manufacturers to form exclusive content partnerships with major studios and media companies (a strategy that Sony is already implementing on its 2010 models). And I’m not talking just about widgets!

Content partnerships and controlled content distribution has been the magic formula for Apple’s iPod, iPhone, and the new iPad tablet. There’s no reason those strategies won’t also work for TV manufacturers…