When AOL announced yesterday that it signed with four major motion picture studios to sell movies via download, it was the latest in a series of recent announcements about digital delivery of consumer video content. In recent weeks, Movielink and CinemaNow have announced intentions to movies that can be downloaded to DVDs. Perhaps, finally, we are reaching the tipping point where every movie on DVD will be conveniently available via download to play on the living room television. Could this dream be true, and what will it mean for consumer display technology?

John DiLoreto
Analyst and Editor
of Insight Media

Movielink and CinemaNow were vague about which studios will provide the content, but AOL has signed 20th Century Fox, Sony Pictures, Universal Pictures, and Warner Bros. Home Entertainment Group to offer downloads for between $10 and $20 per movie, about what you’d pay for the DVD.

It has long been obvious that the video entertainment industry was heading toward telecom delivery of DVD-quality movie content, but several obstacles have stood in they way - some technical and some business-related. As popular and often-emulated as Netflix has been as a way of renting DVDs, the Holy Grail is the ability to have the movies delivered directly to the TV set - "Teleflix." There it sits on your DVR, until you’re ready to play it. This result is far better than conventional broadcast or the heavily compressed video-on-demand movies from cable and satellite providers.

AOL customers will be able to view the movies online and download them to watch on the host PC, other PCs, and on "compatible portal video players." But details on the DRM solution are scarce and probably still unresolved.

DRM inconvenience and incompatibility persists despite years of industry alliances that have come and gone or changed names. Fear of Microsoft domination remains and some view it as an untrustworthy strategic partner.

Given the motion picture industry’s allergy to fair use, burning downloads to DVD may not be allowed with AOL, but it can be streamed to home theater PCs over a home network. But $2,000 for a home theater PC is not the mass-market solution to the problem of getting digitally-delivered content to the PC.

But the business hurdles have been more daunting than the technical ones. The tug of war between fear vs. greed with the studios has been widely recognized, if seldom admitted. Currently, there is a lack of content available and the rigid DRM Hollywood demands makes downloaded content unattractive to many potential customers.

Negotiating a deal that is consumer friendly requires the leverage of a large organization, such as AOL. The studios are finally beginning to be convinced that large-scale distribution can work - and revenues will follow.

DVD (or HD media) is much better than the heavily compressed (i.e. fuzzy) versions of the content delivered by cable and satellite providers to conserve limited bandwidth. And, as the floodgates of downloadable content open up, especially 1080p content, we will have a more compelling reason for multiple large screens in our homes. For many living rooms that means a 60-inch or larger screen.

When these larger-sized screens are available for $2,500, millions will be ready to buy them. Slim rear projection TVs will reach this level first, followed by flat panel TVs. Such value, along with conveniently downloaded 1080p movies is where we hope these recent announcements are tipping to. -JDL