Maybe it’s the business student in me, but after thinking about online video for a while, I came up with a list of the three main factors I see affecting digital video downloads: Price, Product, and Platform (the three “P’s”, not to be confused with the four “P’s” of marketing 
). For a video site to be successful, each of these factors has to be in tune with the others. People don’t want to pay too much for an inferior product, or store the movies on their desktop instead of that slick new ipod.
So here’s what I think of each of the factors:
Price - Online video has to find the right price considering what the consumer gets in return. All else equal, I’d buy a video from GUBA because it’s cheapest, and gives me essentially the same product as the other sites. If I wanted a mobile optimized format, though, I’d better use one of the other services.
Product - This factor encapsulates the technical aspects of the video (bit-rate, size), license rights, and catalogue size. MovieLink may be appealing because of their extremely large catalogue of movies, or Unbox might feed your need with it’s 2,500 kbps encodings.
Platform - Hardware matters. What might be right for an iPod is probably wrong for Windows Media Center.
Together - Digital movie providers need to find a way to balance all of these appropriately. If I’m going to pay a high price, I better get more license rights. If my platform doesn’t have a lot of drive space, movies should be streamed instead of stored.
I think the killer mix right now is a medium price (4.99 old/ 8.99 new) at a bit-rate of about 1299 kbps (cuz it’s good enough) made for a portable device. Targeting portable devices makes sense because it gets over user’s apprehension about licensing. Streaming from portable devices keeps me from sharing the file on p2p networks, while letting me play the movie on multiple computers without using up my 3 licenses (win-win). Selling it at less than DVD quality, with fewer features, and a lower price strikes the balance for my willingness to pay for the quality of the product while not entirely cannibalizing the retail DVD market. The iTunes model is ideal to take on this strategy. Let’s see if Jobs can herd cats and get some more studios on board so they’ll be selling more than 75 movies in the future.
Sep 15, 2006
