The Battle over Your TV

Everyone from Microsoft and Sony to cable and telecom companies are out to secure a big slice of the digital video download space. But Amazon, Netflix, or Apple will likely reign

by Chris Albrecht

If you were thinking of starting a set-top box company that delivers video content to the TV, let me stop you right there. There are already numerous players vying to dominate your digital entertainment future, and three of them are household names. Those three are also well-funded, well-equipped, and well on their way to becoming the center of your home video universe.

Amazon (AMZN), the e-retailing giant, just announced its new Video on Demand service, which will stream 40,000 movie and TV titles directly to Internet-connected Sony Bravia TVs and other devices. In addition to already having a huge user base to which it can market the service, Amazon will store all purchased movies on its end rather than with the end user, an approach that is likely to endear it to piracy-hating studios.

Currently the big sticking point with Amazon's VOD service is that it doesn't offer movies in HD—a must for this day and age. And one hopes the company will learn from Unbox, its earlier download video service that only worked on PCs and TiVos and didn't exactly set the world on fire.

Netflix (NFLX), the DVD-by-mail rental company, is prepping for a disc-free future by streaming 10,000 of its titles to the Roku and the Xbox 360. Both offer an all-you-can-watch video buffet baked right into your existing subscription, which makes using the streaming service a snap.

But if Netflix is going to beat out the competition, it needs to build that catalog far beyond just 10,000 titles (most of which are lame). It also needs to offer HD video. The Roku and Xbox 360 are HD-capable, but no word yet as to when HD titles will be available.

Apple's (AAPL) Steve Jobs & Co. helped spark the latest digital video revolution through iTunes and Apple TV, the set-top box that pipes iTunes content directly to your TV. Titles from all the major studios are available on the same day they're released on DVD, plus the signature Apple simplicity and style makes it hard to beat.

Apple has said it's renting or selling 50,000 movies a day through iTunes, and the service is projected to pump out 18.25 million movies this year. But what we don't know is how many actual Apple TV boxes the company has sold. It projected sales of 1 million units in 2007 but barely sold 400,000. The device was then relaunched in January of this year with a renewed effort behind it; popular shows including The Office and 30 Rock, however, still aren't available.

Fierce Competition

And while these three have the best shot of succeeding in the digital video download space, they are by no means the only ones trying.