With the entry of the Apple (AAPL) iTunes Music Store and Amazon.com (AMZN) into the movie business, film downloads are finally being sold by folks who really know how to sell entertainment. This is a big step in Hollywood's glacial crawl into the Digital Age. But the limitations of the offerings suggest that online distribution will remain mostly a novelty for the foreseeable future.
Amazon quietly announced its Unbox service on Sept. 11, and the iTunes movie store was announced the next day. As you would expect, both services are well-designed and easy to use. (Unbox's classifications still need a little work. Its title notwithstanding, Pee-Wee's Big Adventure is not an Action & Adventure movie.)
Right now, the pickings on both the Amazon and Apple sites are slim. Unbox launched with "thousands" of titles from seven studios, but Amazon won't be more precise, and many of those "titles" are episodes of TV shows. iTunes starts with just 75 Walt Disney (DISN) movies. While those numbers should grow quickly, the bar is set by Netflix (NFLX), which offers more than 65,000 titles for rent. Both Amazon and Apple have priced their films at $10 to $16. For some movies, Amazon also offers $4 "rentals," which are usable for 24 hours once opened.
FEW VIEWING OPTIONS. Both services claim "near DVD" quality, but that's a stretch. It's closer to broadcast TV, with Amazon having a quality edge. And watching an Unbox or iTunes movie isn't an impulse decision like choosing something from an on-demand cable service. Even on my fairly fast Comcast (CMCSA) connection, it took more than two hours to download a feature film. If you want to watch a movie without interruption while it's arriving on your hard drive, you'll need to start the download a good hour before you want to watch.
The bigger problem is the viewing experience. Both iTunes and Unbox let you watch your movie on one or more computers (Windows-only for Amazon). Unbox films can also be watched on handhelds, such as Toshiba's (TOSBF) Gigabeat, that use Microsoft (MSFT) Portable Media Center software. iTunes movies can be downloaded to iPods, though Apple's updated line does not include a much anticipated widescreen video iPod. Sometimes you will want to watch a movie on a computer screen—on an airplane or perhaps if you live in a dorm room. But most of us, most of the time, would rather see Pirates of the Caribbean on a big-screen TV.
This is possible, but far from easy. A few people have a PC or Mac connected directly to their TV sets; the best computers for the job are some expensive Media Center PCs or the cheap Mac mini. In theory, you can also stream video over a network from a Media Center to an Xbox 360 jacked into the TV, but the quality leaves a lot to be desired.
DAUNTING DATA. Apple promises to solve this problem early next year when it introduces a $299 product with the working title of iTV. Apple gave an impressive demonstration of iTV on Sept. 12, but I have seen too many impressive demos of products that either never materialized or fell short of their promise.
Apple's toughest challenge is getting the massive amounts of data required for video from a computer running iTunes software to an iTV connected to a television. New wireless technology may allow for reliable delivery of standard-definition TV this way, but Apple raised the stakes by demonstrating high-definition TV, which is at least an order of magnitude harder.
I really hope Apple succeeds where Microsoft and others have failed. The amount of quality video available for download to computers is growing daily, but the challenge of putting that video where people want to watch it has so far been insurmountable. And the reluctance of the studios to buy into the digital vision has kept much of the best content out of reach. Apple revolutionized music with the iPod and iTunes. Maybe it can work its magic again with video.