Art Of Geek

Amazon Unbox: Reading the fine print

September 8th, 2006 at 12:30am madgunde

So Amazon launched a TV and movie download service today, and at first glance, it would appear they have put together a compelling solution for consumers. Strong support from studios, realistic prices and some pretty nifty features, including the ability to purchase a movie or TV show on one computer, say at work, and have it download on a different computer, maybe at home, provided the Amazon Unbox client software is installed and running on it.

Most movies can be rented for $3.99 or purchased for $9.99 to $14.99. TV shows sell for $1.99, the same price as they go for on the iTunes online store. But there is one major difference: Amazon’s offering includes both a DVD quality version as well as a lower bit-rate version for playback on handheld devices. This is the key differentiator, since Apple only sells iPod-quality videos, which are much lower than DVD-quality.

Amazon has garnered the support of a fair number of big television and movie studios, as can be seen from the list of well known names:

Participating Television Networks
A&E, Adult Swim, Animal Planet, BBC, The Biography Channel, Cartoon Network, CBS, Comedy Central, Discovery Channel, Discovery Health Channel, Discovery Kids, E! Entertainment Television, FINE LIVING TV Network, FOX, Fuel TV, FX, HGTV, The History Channel, KBS (Korean Broadcast System), Logo, MTV, Nickelodeon, Nick at Nite, The N, PBS, Speed, Spike, Travel Channel, TV Land and VH1.

Participating Movie Studios
20th Century Fox, Paramount, Sony Pictures Home Entertainment, Universal Pictures, Warner Bros. Entertainment, Lionsgate and Metro-Goldwyn-Mayer Studios, Inc.

So did Amazon beat Apple to the punch? Could this be the end of Apple’s dominance of online media? Don’t start selling your Apple shares just yet. There are a few weak links in Amazon Unbox’s chain that might prevent it from being the success they are hoping for. Given that Apple is all but assured to be launching their own Movie download service next Tuesday, Amazon’s thunder could be all but extinguished in just 5 days time if Apple has found ways around just one or two of those weak links.

So let’s get the obvious things out of the way. The Amazon service requires you to install the Amazon Unbox client software on the PC you wish to download and watch movies from. Because they are using Microsoft Windows Media VC1 format, this service requires Windows XP (Home, Pro, Tablet or Media Center Edition). Of course like every other service that is a slave to Microsoft, this will not work on computers running Mac OS X or Linux. No big surprise here. It has been pointed out by some how ironic that Amazon’s video download service doesn’t work with the top selling brand of computers Amazon sells.

The Fine Print

So what about portable video players? We know the iPod is out, due to reliance on Windows Media format. But this is where the huge Windows PlaysForSure ecosystem is really going to shine, right? Well, according to Amazon’s Unbox website:

Supported Devices
The devices in the list below have been tested with the Unbox Video Player. If your device is Plays for Sure compliant it may work, but we cannot guarantee performance on untested devices.
Creative Zen Vision: M
Creative Zen Vision
Toshiba Gigabeat S
Archos AV 500
Archos AV 700
iRiver PMC (Portable Media Center)

Oh the irony! So if you have a PlaysForSure device, Amazon can’t be sure it will play. There’s strike one, right there. Not only does the service not work with 75% of the mp3 players in the US market (iPods), but it doesn’t work with the majority of the rest, either. So right out of the gate, Amazon’s offering works with at best 5% of the devices on the market.

So lets forget that the majority of people won’t be watching their Amazon Unbox purchase on their portable media player. That’s not such a big deal, since most people watch movies and TV programs in their living room on their big screen and surround sound system. So we’ll just burn a copy to DVD and pop it in our trusty DVD player, right? Wrong. Video purchased using the service cannot be burned to standard DVD video discs and so can’t be played on standard DVD players. So if you want to watch your downloads, you’re going to have to find a way to hook your TV up to your computer.

Given that most people’s computers either don’t have outputs to connect to their TV, or are installed in a completely different room from their home theatre, not to mention most consumers don’t know the first thing about how to hook their computer up to their TV, this scratches the majority of consumers off the list right there. So now we’re left with computer savvy consumers who either have a Windows Media Center PC (like there are a lot of those), or a notebook PC with compatible video out.

One thing that a lot of tech savvy users are known for is having multiple PCs in the house. They’ll primarily be using their Media Center PC to watch movie downloads, and then maybe transfer the file to their notebook to watch on a long flight or train ride, or to another family member’s PC. It’s important to note then that Amazon Unbox videos can only be authorized to be played on 2 different computers at any one time. Each one of those PCs can transfer the video to one compatible portable media player. These tight restrictions on usage, and the inability to burn and playback on standard DVD players are probably going to be the biggest hindrance to widespread consumer adoption.

So what about the software? Surely Amazon Unbox’s client software must have take a cue or two from the design and functionality of iTunes, the gold standard in media players, right? Nope. Amazon Unbox’s player can only play content purchased from the Amazon Unbox store. No other media will work with it, period. So consumers will have to use one program to manage and watch Amazon content, and another to manage and watch non-Amazon content. How’s that for user experience? I’m not sure if it was Amazon wanting to control their user experience, or whether it was for technical reasons that they had to design their own client, but they haven’t learned anything from Apple’s success. Where Apple offers a single, unified experience for doing EVERYTHING with ALL your media, Amazon and Microsoft require users to use two different programs. That’s one more program than necessary if you ask me.

So is it going to flop? Probably. With you typical 2 hour movie being 2.4GB in size, requiring hours to download, and all the other points I raised, it’s hard to imagine too many people getting excited about paying DVD prices to watch movies on their computers. If you could burn standard DVDs and weren’t limited two only 2 computers, then Amazon would probably have a winner on their hands. The success or failure of this service is probably going to rest on what Apple announces on September 12.

It’s Showtime

As it stands, the rumors that are floating around are that Apple will announce movie sales from $9.99 to $14.99. Not much else is known, but the scuttlebut on the ‘net is that Apple will be launching with only Disney studios’ catalogue of content, which is going to seem like not much at first, but you have to remember that Disney owns the Buena Vista Motion Pictures Group made up of Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures and Miramax films. Disney also own Pixar Animation Studios in addition to their own animation studios. So if the rumors are true, Apple may not be starting out of the gate with as big a list of movies, but they already have a large selection of TV shows for sale, and they will no doubt sign more studios on board over time as was the case when they launched TV downloads with only a small catalogue of ABC programs.

An Apple iMovie download service would most likely have the same liberal usage rights as they have become known for: authorization of up to 5 computers, and an unlimited number of iPods. But as mentioned before, iTunes video purchases are optimized for playback on an iPod, which has a very small screen. If Apple launches their movie download service without bumping up the resolution of the files, this could be the one chance Amazon has for some limited success. Essentially, they would be offering higher quality video content for about the same price. DRM restrictions and poor user experience aside, that does give them a competitive edge.

Anyone who thinks Apple hasn’t anticipated (or known) about Amazon’s offering isn’t giving them much credit though. Rumors are also swirling about an upgraded AirPort Express base station with the ability to stream video from your computer to your home theatre over a wired or wireless network. Such a device could be the key to cracking the digital movie download market wide open.

Regardless of whether Apple matches Amazon’s video resolution or releases an AirPort Express Video device though, Apple already has a leg up in several areas which nearly guarantee it’s success: it’s service will work with the most devices in consumer’s hands. The iPod has the lion’s share of the market, and Apple’s solution works with both Microsoft Windows and Apple Mac OS X, the latter which is seeing a strong comeback and is expected to have a bumper holiday season this year and tends to sell to more media-savvy consumers.

The bottom line is Amazon is doing some things right, but a lot of the same things wrong that have proven to not be popular with consumers. They are selling content to a very limited market, and have yet to make a name for themselves in the digital download market. Apple, assuming the most conservative estimates are true, has a guaranteed winner on their hand with a large installed base of existing and potential customers, the dominant brand, more liberal usage rights, the better end-user experience and maybe a trick or two up it’s sleeve to seal the deal. If I was Amazon, I’d be hoping Steve Jobs doesn’t have ‘just one more thing’ to talk about at the end of his presentation this coming Tuesday.

Entry Filed under: Apple, Business, Entertainment, Software