Services speed HD downloads

DIGITAL: Slow broadband connections, Blu-ray quality might be obstacles

By Jennifer Netherby -- Video Business, 7/1/2009

JULY 1 | DIGITAL: With millions of devices in homes now connecting HDTVs to the Internet, online movie services are poised to send a flood of high-definition movies down those digital pipes. The flow, however, might be less than smooth, given limited broadband connection speeds in U.S. homes and the superior video quality on Blu-ray Disc.

Vudu, Apple iTunes and Amazon Video on Demand have all added high-def titles in the last six months. This fall, Microsoft, via the Xbox 360, and Roxio CinemaNow are each planning a major new high-def push. In addition, almost every service is offering high-def viewing via instant-streaming so consumers no longer have to wait hours for those large HD files to download before they start watching.

But despite the push, few expect digital downloads to be a serious competitor to the Blu-ray format anytime soon.

Most consumers don’t have fast enough broadband connections to stream HD video and even if they did, most companies say HD streams can’t yet match the quality of Blu-ray.

PriceWaterhouseCoopers predicts in its latest “Global Entertainment and Media” report that digital sales won’t come near that of Blu-ray in the next five years. This despite the fact that there are already more digital delivery devices in the home connected to the TV than Blu-ray players, thanks largely to the Xbox 360. Microsoft had sold an estimated 15 million Xbox 360 consoles in North America through 2008, and there are probably another million-plus TiVos, Roku Digital Media Players, AppleTVs and Vudu players capable of streaming HD content in homes.

In comparison, there were 2.9 million dedicated Blu-ray players and 8.3 million PlayStation 3s in U.S. homes by the end of 2008, according to PriceWaterhouseCoopers.

The average consumer has only a 2.5-megabit per second broadband connection, explained Mark Ely, VP of strategy for Sonic Solutions, which owns Roxio CinemaNow. To stream HD content in the standard MPEG-2 compression quality requires an 18- to 20-mbps connection.

Vudu’s well-reviewed HDX streams, which the company touts as the highest-quality HD streaming, require a 10-mbps broadband connection, while their standard 1080p HD streams need a 4.5-mbps connection.

Because of broadband limitations, most companies in the space are positioning HD downloads as a complement to Blu-ray. It’s not surprising as many are planning to offer their services through Blu-ray players in an attempt to expand their reach into the home. Sonic and Netflix already have deals with LG Electronics to offer their services on BD players coming this fall.

“If you’re really focused on quality, Blu-ray is really convenient,” Sonic’s Ely said.

Acknowledging that Vudu’s HDX streaming can’t match Blu-ray, director of content acquisitions Rob Holmes said HD streaming and Blu-ray can co-exist. “We certainly don’t see ourselves as competing with Blu-ray,” he said.

Xbox Live Marketplace general manager Christina DeRosa said they’re “working towards having an instant-on solution so consumers can match the quality of what they would get on a disc.”

At the same time, she wouldn’t call Blu-ray a competitor, saying, “we’re focused on the end user rather than isolating who the competition is.”

Also limiting the potential growth of HD streaming and downloads is the amount and terms of content studios make available. So far, studios are releasing almost every new release, but as most HD new release downloads and streams are available as a rental, they are only available in the VOD window, sometimes debuting after DVD, and only for a limited time. Some catalog films are available, though not as many as have been released on Blu-ray.

Microsoft Xbox 360, which has been offering HD rental downloads since it launched its video service in late 2006, will begin offering nearly every film it can in HD with instant-on streaming after it migrates to Zune video in the fall. Currently, the Xbox Live Marketplace has 5,000 HD titles, compared to 18,000 in standard-definition.

DeRosa wouldn’t divulge numbers but said that since Microsoft launched VOD on Xbox, every year the ratio between standard-definition and high-definition sales have doubled.

Vudu says it now has 2,000 rental titles in HD and another 200 available as a download-to-own. Holmes said HD sales account for about half of download sales through the service, enough so that Vudu sometimes makes HD available before standard-definition. “Almost all of our consumers have HDTVs,” he said.

ITunes has offered select films as a high-def rental or permanent download. Amazon Video on Demand began offering high-def rentals last month.

A spokesman for Amazon Video On Demand would only say, “we’ve been very pleased with how Amazon Video On Demand customers are responding.”

Roxio CinemaNow’s HD library mainly includes documentaries and specialty releases, but like Microsoft, the service is planning a major HD rollout this fall. Unlike others, Sonic’s Roxio CinemaNow will offer streams in 780p to the TV rather than 1080p, to ensure consistent streaming.

Sonic’s Ely said it all comes back to ensuring a good viewing experience.

“At the end of the day, everybody wants to make sure the consumer has a good experience so they come back,” he said.