Yes, we think broadband will kill the DVD and video stores.
Starting today, viewers should be able to rent or purchase movies online from Amazon.com and watch them on some models of the Sony Bravia TV sets through the Bravia Internet Video Link device.
Earlier today, LG launched the BD300 Blu-ray player ($400) that also comes with the capability to stream movies and TV shows to Netflix subscribers for viewing on a TV set.
The $99 Roku box, which lets users connect to Netflix and stream movies on their TV sets via a broadband connection (including wirelessly as we’ve done), has already become a big hit in the U.S. since its launch in May.
Given the high price of the LG box (admitted, it has a Blu-ray player too but then Blu-ray discs are still expensive and not available for most movies), we think the Roku box is any day better value for money. We’ve been using the Roku box for about three months and have no complaints.
Soon, Microsoft’s Xbox 360 gaming console will also let Netflix subscribers watch movies online on their TV sets.
The Apple TV box, which starts at $229, also lets consumers rent or purchase movies and TV shows, including HD movies, that they can watch directly on their TV sets.
Given the growing penetration of the direct-to-TV streaming or downloads, we think the long-term outlook for those expensive Blu-ray DVD players or for that matter the DVD itself is not very favorable.
Content Moving Online, Legally
Netflix already offers 12,000 movies and TV shows that can be streamed and watched on a TV set or PC (gosh, we hate viewing a movie on a PC although we did it once with Manchurian Candidate). And that number should grow fast. By the way, some Bollywood movies are also available on Netflix for instant viewing via broadband.
Amazon claims to offer 40,000 movies and TV shows via its digital video service for streaming or downloading.
According to Roy Price, director of Amazon Video On Demand:
Amazon Video On Demand provides customers with the choice of how to watch their favorite movies and TV shows, be it on their PC or Mac, on the TV with TiVo or through Sony’s BRAVIA Internet Video Link device on compatible Sony BRAVIA TVs, or on the go with a portable video player.
Just Look at South Korea
The future is already here in South Korea, which not only has one of the highest broadband penetration rates in the world but also some of the fastest broadband speeds (average download speed is 50Mbps, far higher than in the U.S.).
Korea Times is reporting that Sony Pictures is shutting down its DVD operations in Korea after seeing falling DVD sales.
Here’s an excerpt from the Korea Times story:
Sony Pictures, which became the first foreign movie studio to enter the Korean DVD market in 1999 by releasing “Fly Away From Home,” is closing its domestic unit this month after enduring a decade of sluggish sales.
Sony was the last among major movie studios to grind it out in the difficult Korean market. Paramount, Universal, Buena Vista and 20th Century Fox packed their bags in 2006 and last year.
“Officials from our U.S. headquarters will visit Seoul soon to handle the withdrawal process,”said a representative of Sony Pictures Korea.
Selling DVD products is a challenge in a country with one of the highest broadband penetration rates on Earth. According to a survey by the Korean Film Council, 47.3 percent of respondents said they have downloaded movies from the Internet at least once. The number doesn’t include Internet users who paid for accessing unauthorized clips.
What about Video Stores?
As consumers start to download movies and TV shows over the Net, video rental stores will also be impacted.
In the U.S., Blockbuster has already been dealt a severe blow by Netflix’ online DVD rental service (although you order it online, the Netflix DVD in the red envelope still comes by mail) but as Netflix increasingly moves to online delivery of the entertainment content, it’s hard to believe that Blockbuster has a viable future left.
On Wall Street, Blockbuster closed at $2.29 on Wednesday while Netflix closed at $30.91. The market already believes that Blockbuster does not have much of a future.
We believe what is already happening in Korea will be replicated elsewhere too, albeit at different rates. Faster in the U.S. and Western Europe and slower in the Third World countries like India.
India has Miles to go
But don’t expect any of these things to happen anytime soon in India given the pitiful state of broadband penetration in the country.
Take a look (below) at the pitiful broadband penetration rates in India.
When you keep in mind that the Telecom Regulatory Authority of India defines broadband as piffling 256Kbps or more, the high-speed Internet situation in the country looks even more tragic.
Perhaps, it’s because of the pathetic broadband rates in India that we haven’t heard of any Indian company including the DVD rental services like Seventymm or BigFlix offer Indian audiences online entertainment content delivery in any meaningful way for viewing on TV sets.