Movie Rentals without the DVD

What if you could rent movies to watch at home, and not have to go to the store to pick out the DVD? Or even go to the mailbox to get the DVD that was sent to you by NetFlix or Blockbuster? What if there was no disc at all? What if you didn’t have to choose between HD DVD and Blu-ray for high definition movies?

If you’re like me, you’d probably view all this as a good thing. (I don’t want to spend $300 to $500 to get a new DVD player just so I can get high definition movies.) A lot of companies are betting that you’d agree. Enough U.S. homes now get broadband service and hard disk storage capacity is insanely inexpensive, making movie rental delivery over the Internet a practical idea. Even if you have to wait overnight for a high definition movie to download, it’s faster than mail and easier than driving to the video store. It’s sort of like using TiVo to record a show to watch later.

Apple’s iTunes and Amazon’s Unbox already let you purchase or rent movies and download them. The news is that other well-known companies are also looking into this distribution mode. In a conference call with analysts last month, the CEO of the movie studio Lionsgate mentioned that the company had reached digital distribution deals with Apple, Amazon, Best Buy, and Blockbuster, among others.

Now, Best Buy and Blockbuster have not publicly announced plans for movie download services, but it makes a tremendous amount of sense. Whether you’re selling or renting, digital distribution elminates the cost and hassle of maintaining and distributing physical discs. And from a rental perspective, it makes the problem of lost or damaged discs just go away. And it makes the question of HD DVD or Blu-ray format unimportant.

The remaining problem is making it as easy to watch a movied downloaded from the Internet as it is to watch a show you’ve recorded on your TiVo or digital video recorder. (Amazon has made some limited steps in this direction with Unbox and TiVo.) I expect that we’ll soon see a generation of video recorders that are programmed to make movie purchase or rentals as easy to select as it is now to schedule a show for recording. Maybe even easier. The first company to solve this is likely to have a competitive advantage similar to that enjoyed by TiVo when it first came out. It’s not a question of whether this will happen, but when.

Hitachi Drops Rear Projection

Hitachi announced yesterday that they will drop their rear projection product line, so that they can focus more on their flat panel HDTV business. The company will offer 10 plasma models and four 1080p LCD models. The LCDs will come in 42″ and 47″ sizes, while the plasma models will range from 42″ to 60″ sizes.

The company also announced their new 60″ P60X901 ($7,999 list) and 50″ P50X901 ($4,299 list) 1080i plasma displays that are scheduled to ship in August, and sell through specialty A/V dealers.

Hitachi is not one of the major players in the HDTV market, but they have backed all three approaches – rear projection, plasma, and LCD — for many years. Given the weaker performance of rear projection, it makes some sense that the company would focus its efforts. The flat panel segment is extremely competitive, however, and this conservative strategy may not be successful in the long run. We’re already seeing signs of consolidation in the flat panel manufacturing business, and it is increasingly difficult to get distribution and shelf space for all the brands that are on the market. Companies at Hitachi’s level will have to be nimble and creative to survive the pressure applied by the larger and smaller companies.

Which display technology is best for your needs? Find out in Professor Poor’s Guide to Buying HDTV, now available in paperback from Amazon or other fine booksellers.

Keeping Up with the Jones’s HDTV

According to a press release from the Consumer Electronics Association (CEA), 30% of U.S. households have one or more HDTVs. The group also expects that this will increase to 36% as they forecast that 16 million new HDTVs will be bought in 2007. And more than one third of households with HDTVs have at least two.

Still, the CEA reports that more than half of the households that have HDTVs do not receive HDTV content. According to their survey, main reasons are that HDTV programming is too expensive, or the owners just aren’t interested in it.

Of those receiving HDTV content, two thirds get it through a cable company. 27% have satellite service, and just 8% get it for free over the air. An interesting development is that 3% get it over fiber optic (presumably from a telephone company such as Verizon) and 3% from the Internet. (Yes, these add up to more than 100%, because some households have multiple sources.)

It’s clear from these numbers that we’re well beyond the early adopter segment of the market, though we’re still short of the fat middle part of the market. It will take further price decreases before the average consumer will be willing to get rid of their old CRT picture tube — that is still working fine — and make the switch to a digital TV.

Sony’s New Rear Projection HDTVs

I continue to be a believer in rear projection HDTV, as I think it offers the best value in large screen technology for the average home installation. And these HDTVs can produce some of the best images you’ll see from any technology. A lot of people dismiss rear projection out of hand, but it’s still a significant portion of the market. According to figures from Pacific Media Associates at the Projection Summit 2007 in Anaheim last week, rear projection accounted for 17% of the 25.6 million displays sold worldwide in 2006 that were capable of displaying an image 40″ or larger. (If you take out the front projectors from this calculation, the share jumps to more than 21%.)

Sony clearly recognizes that there’s life in the rear projection market, and the company is betting that the high-end buyers are going to agree. Sony’s SXRD version of LCoS imager technology has an excellent reputation for picture quality, and earlier this month, the company announced five new models. Three new models are in the A3000 line in 50″, 55″ and 60″ sizes: the KDS-50A3000, KDS-55A3000, and KDS-60A3000. According to Sony, these are about 20 percent slimmer than last year’s models, which address one of the key complaints about rear projection models. The 60″ KDS-Z60XBR5 and 70″ KDS-Z70XBR5 have been squeezed even harder, at 40 percent thinner than last year’s models, without an increase in height.

All five models have 1080p resolution, and support 120Hz frame rates. One big advantage of the higher frame rate is that it is an even multiple of 24Hz, so no pull-down conversion is required for 24 fps source signals. These new models are not inexpensive, as their estimated pricing shows:

KDS-50A3000: $3,000
KDS-55A3000: $3,300
KDS-60A3000: $3,500
KDS-Z60XBR5: $5,000
KDS-Z70XBR5: $6,000

The A3000 models are scheduled to ship in August, and the XBR5 models later this fall.

Sam’s Club and Costco Start HDTV Install Service

One reason that everyone seems to want a large flat screen HDTV — either LCD or plasma — is that they want to hang it on the wall so it doesn’t take up much space in their room. As I’ve repeatedly pointed out, most people don’t actually do this; they typically end up putting the display on a stand and setting that on an existing or new piece of furniture. In most cases, this is easier and less expensive than hanging the set. Keep in mind that a flat panel 42″ or larger can weigh 100 to 150 pounds or more, so this is not as easy as hanging a framed photo of the kids. And then there’s the question of where to run the wires.

Well, the discount club stores like Costco and Sam’s Club have generous return policies. Until recently, both offered unlimited returns on any purchase. While Sam’s Club continues that policy, Costco has limited returns on HDTVs, digital cameras and other electronics to just 90 days. Managing returns is a big problem for both companies, as customers can return a unit when a lower-priced and better alternative comes out, and keep the savings.

Both companies have tried to slow the returns by making it easier for customers to install the sets on their walls (and presumably, this makes it more difficult for them to be returned). Costco now offers third-party installation service. Sam’s Club started a similar program this past spring in stores in Florida, Texas, and Minnesota, and is evaluating the results before they roll out the program nationwide.

Will this install and mount service have an impact on returns? Or will the slower pace of price reductions dampen the motivation for customers to “trade up” to a newer set? Stay tuned….

SlingBox Makes a Power Connection

Home networking is becoming more popular, but adding connections to a home can be difficult. New construction often has Cat5 Ethernet cable strung everywhere, but in old homes — such as our old mill with stone-filled outside walls — it can be difficult and expensive to run wires. WiFi eliminates the wires, but there can be bandwidth or performance issues; a friend has a home with plaster walls on expanded steel lathe that effectively makes each room a Faraday cage that blocks radio transmissions.

Until recently, home networks were primarily used to share Internet connections for access to the Web and email. As a result, it was the more techie users who put them in, willing to struggle with the wiring and connection issues. Home network use is expanding, however, as a means to distribute digital audio and video content throughout the home. People want to access all the music they’ve purchased from iTunes or ripped into MP3s from their CD collection. And they want to see the video that they have stored on their digital video recorders.

This has revived interest in an idea that has been around for a long time, but that is beginning to gain new traction: using the electrical wiring in your home for a digital data network. The HomePlug Powerline Alliance was founded in 2000, and the HomePlug standard was released in 2001. It lets you plug network interfaces into power outlets in your home to create Ethernet connections.

HomePlug got a big boost this week when SlingMedia — makers of the SlingBox — announced two new SlingLink network adapters. You plug one adapter in an AC outlet near your network router, and the plug the other one in the room with the networkable AV device, such as a SlingBox, XBox, or TiVo. This means that you no longer have to run a wire from your computer or Internet connectio to your home entertainment center. Two different models offer one or four Ethernet connections, and list for $99.99 and $149.99, and are available from the SlingMedia Web site, or many major retailers.

The cool thing is that these devices don’t just work with the SlingBox, though they do make it much easier to install and use one. You can now add a network connection anywhere in your home just by plugging these into your power outlets. I expect that the SlingLink adapters will be successful products.

Fighting E-Waste

As I’ve mentioned repeatedly, this is going to be the first year where environmentally “green” marketing is going to be essential in the consumer electronics market. One end is the production and use part of the product lifecycle, so “friendly” materials and lower energy consumption will be important. But the other end of the lifecycle is also important; getting rid of the products when they’re no longer wanted.

A huge electronics recycling industry is growing in this country and around the world. Many communities are offering recycling events where you can bring your electronics for disposal. One good example is a recent event at Cal State University, Bakersfield, which netted more than 90,000 pounds of televisions, monitors, computers, cell phones, and other electronics. What’s more, the event earned the university $9,300 in the bargain.

If you have electronics equipment that you no longer want, please don’t just send it to the landfill. Check with your community for recycling events, and if there isn’t one, consider trying to help get one off the ground. You can find out about local events and recycling companies at a Web site published by the Electronic Industries Alliance , a national trade organization of U.S. manufacturers. You may also be able to donate working equipment to charitable services such as Goodwill Industries or other non-profit thrift shops.

The Environmental Protection Agency has a free booklet to download that has more information about e-waste and various companies that will accept electronics for recycling.

Satellite Services Lead in Satisfaction

The 2007 American Customer Satisfaction Index results from the University of Michigan were released last month, according to a report in The Bridge. First, the good news: the two satellite TV services lead the cable companies by a significant margin. DISH Network and DirecTV are tied at the top with a 67 score. (In 2006, DirecTV had a three point lead over DISH at 71 to 68). The bad news is that everyone except Cox (63 points) and Charter (55 points) scored lower than in 2006.

Cable companies seem to be the utility that customers love to hate, which tends to happen when you’re dealing with a monopoly. (It seems that “Ma Bell” had a similar reputation when I was growing up.) Satellite companies are in direct competition with each other, and so may be a bit hungrier for your business which may be why they are perceived more favorably by consumers. Still, the satellite and cable industry as a whole only scored 62 points, which is considerably lower than some other industries; the average ACSI score for hotel chains was 71 points. As telephone companies and the Internet give people more options for their video content services, perhaps the increased competition will help raise the level of service and boost the industry’s satisfaction scores.

Which satellite service would be best for you? Compare for yourself at http://hdtvprofessor.com/SatelliteTVService/satellite-comparison.html.

Westinghouse Adds High End LCD HDTVs

At InfoComm 2007 in Anaheim, CA, Westinghouse Digital Electronics today announced a new line of high-end LCD HDTVS that are aimed at the custom installation market. The new TX Series models all have 1080p native resolution, digital and analog tuners, and an impressive four HDMI connectors. They come in three sizes: the 42” TX-42F430S, the 47” TX-47F430S, and the 52” TX-52F480S. According to a release by Westinghouse, these models are available now. No prices were listed.

The announcement also lists a full line of tuner-less models aimed at the professional application market, including digital signage and in-room entertainment for hotels. Those models range in size from 26″ to 52″.

These new models are interesting in that Westinghouse is apparently trying to expand its reach beyond the low-price segment where it has been successful to date. The high-end and professional application markets are much smaller – and the competition is even more fierce, if that’s possible — but they do hold out the promise of better margins if you can make a sale. It will be interesting to see how Westinghouse fares with this new strategy.

Big News for Blu-ray

Associated Press reports this morning that Blockbuster will announce that it only will stock Blu-ray high definition DVDs in 1,400 stores later this month. Having tested Blu-ray and rival HD DVD formats in 250 stores for the past year, the company reports that customers requested the Blu-ray titles 70 percent of the time. As a result, the company has chosen Blu-ray as the one that they will carry.

On the one hand, this seems to be a no-brainer for Blockbuster. If nearly three out of four customers want Blu-ray, they’d be foolish to stock HD DVD instead. And then there’s the fact that all but one of the major studios are releasing their films in Blu-ray format (as characterized by AP).

Okay, I’m frequently accused of spitting into the wind, but I’m going to do it again. I think Blockbuster is wrong. Sony has an excellent reputation for consumer electronics, and many of the early adopters have the disposable income to buy what they perceive to be the best — or highest status – equipment. Add in a bunch of PS3 owners looking to try out the Blu-ray players that are built in, and you have an initial market that is probably weighted in favor of Blu-ray. But the financial advantage still lies with HD DVD. The recent round of price cuts still leaves the entry level models of HD DVD players at about half the cost of Blu-ray, and as the prices get lower, more and more consumers will choose the less expensive technology, because they will be more price sensitive than the early adopters. And all but three of the major studios are releasing movies on HD DVD format.

AP also reports that the North American HD DVD Promotional Group believes that the success of some of the big hit films released on Blu-ray this year has helped skew the results.

There’s no doubt that Blockbuster’s decision will provide a big boost to Blu-ray, but I’m not ready to coronate it as the winning format.