In an article on news.com.au, it has been said that "download services could replace DVDs". It's another one of those "[insert physical media type here] is dead" type articles.

While the author and the parties interviewed or at least referenced in the press releases which were used in the article have some good intent, sadly they're guilty of over-obsessive 'futurism'. While the business model and the distribution model have potential, they both have limited practicality and are likely to be under-subscribed. 

Of course, the studios involved are rather keen as it's a shorter distribution channel and involves only receiving licence fees. Paramount, who is part of this deal, is also involved in a deal with Kingston in a similar venture involving USB drives.  It's all part of the investor's wet dream - own it, sell it, still own it and sell it again. 

The fundamental objections that some customers will have to the model are tied to the delivery vector. Namely, the internet.

Based on statistics from a very popular internet speed testing site (www.speedtest.net), the average internet connection speed in Australia is around 5.14 megabits. Given that there are a number of users with ADSL2+ which has a speed range of up to twenty megabit and higher for some very lucky punters, and there are many other users with much, much lower speeds. Regional customers suffer with exceedingly sluggish connections, often not much better than dial up. Therefore, it's probable that the average on that site is flawed toward the high end - after all - its most common user type is someone who is a member of the technorati and more likely to be on a quicker connection. 

In the article, the bandwidth requirement to watch a movie in 720p is 3 megabit. The article goes further to claim that full HD (1080p) would be available with a stable 4 megabit connection.

About this, I have doubts. 

I have a fairly high end Pioneer DVD player in my home theatre system. It has an odd feature which shows what the bandwidth used for playback is - instantaneously. For a typical romantic comedy or something with a lot of talk and not a lot of action, the bandwidth used is around 1 - 3 megabit. During the busy sequences in an action movie it's never below 6 megabits and frequently more than 8. It's DVD, so the playback resolution is 720p. At 1080p the required bandwidth is substantially higher. 

Obviously, to get 8 megabits of bandwidth out of the stated three, there is going to be compression in the source. While the Xbox 360 is a technical tour-de-force on paper, as is ADSL2+ connectivity, the reality of the deliverables is somewhat questionable. Take into account the number of serious home theatre users out there with screens bigger than 42 inches and you're talking about jaggies, compression artefacts, reduced frame rates and other nastiness which will cause dissatisfaction. Much like subscription tv and its cousins.

Naturally enough, the target market of this joint venture is the rental customer and the price point has been set comparably. When there is such a difference in quality, why would it be considered as a fair alternative to some of the DVD rental houses that supply via mail?Add to that how inexpensive movies are to buy at retail and the offering is certainly less than compelling. If anything, it doesn't serve to segment or augment the market through product differentiation - it serves to obfuscate the market.

Want to make it worse? Movies then eat into your bandwidth allocation for the month. In the article, it states that Watchmen in HD is about 6 Gb. Ouch. OUCH. OUCH. Consider the price that a retail internet customer pays for their bandwidth and then take a hefty chunk out of it. Suddenly, what seemd to be about the same price as a rental becomes about the same price as a retail purchase of a DVD (assuming price ranges of $5 to $20 on sale, and assuming worst internet connectivity prices as available from the major telcos).

A further limiting factor for a stellar success for the venture? The playback platform. Xbox 360. The user needs to have already spent a minimum of $300 for the playback platform, let alone the expense of a router or ADSLxx modem and monthly subscription fees. How much is a DVD player these days? You can get involved for about $50 for a cheapie and get something with lots of bells and whistle with upscaling and more for under $200.

In short? If you want top quality vision and sound for home entertainment DVD can't be beat on a price to performance ratio. If you're more sensitive and an HD aficionado then you already know what to do. For everyone, this online delivery vector is only about convenience.

DVD killer? Not for quite some time.

Source article: http://www.news.com.au/technology/story/0,28348,26304156-5014239,00.html