Blu-ray “Circling the Drain”

Bill Gates once asserted that HD-DVD vs. Blu-ray would be the last format war. At the time my opinion (which I did not immortalize in this blog) was that it was already irrelevant. DVD was the last format. The reason I didn’t blog about this was everyone I spoke with on the topic agreed with me. My opinion was neither unusual nor controversial.

But apparently it’s news to ZDNet’s Robin Harris:

16 months ago I called the HD war for Blu-ray. My bad. Who dreamed they could both lose?

Well, pretty much anyone with a clue, evidently. There’s a reason Apple has assiduously ignored Blu-ray in both its hardware and software offerings — no-one cares.

DVDs and CDs before them were successful in large part because they were relatively cheap and robust compared with laser disks, video tapes, audio cassettes, and records. (If you’re old enough to have owned a significant number of LPs, you probably remember making tapes of your records to save wear and tear on the records, and replacing favorite tapes at fairly regular intervals as they stretched or got mangled by car tape decks.)

Well, guess what? Digital downloads are cheaper and more robust than DVDs or CDs, and don’t lock you into hardware standards that will be obsolete before a given technology reaches critical mass.

So Blu-ray is simply not penetrating the market, no-one cares if there are cheap players. People are buying PS3s in droves but not playing Blu-ray disks on them (recall that for a long time the PS2 was a very good deal for playing DVDs). Meanwhile, the end of television as we know it, which I’ve been predicting was five years away for about ten years, looks like it’s happening right now. Finally, it seems to me that our state of economic turmoil will favor technologies with good cost characteristics, and that’s very bad news for all physical formats.

Digital Photography in Flux

It seems to me that this is a terrible time to buy a new digital camera, certainly a terrible time to buy anything other than a sub-$200 point-and-shoot.

Mid-range compacts ($200-300) are going to be made obsolete pretty soon as the high-end compacts ($300-500) are heavily discounted and then their features are moved into the more inexpensive models. Why? Because DSLRs are starting to sell for under $500 and the Micro Four-Thirds system is going to make small sensor compacts look like the garbage they are.

High-end compacts, such as the Canon G10, are expensive but fundamentally inferior to low-end DSLRs in image quality. The only reason you would buy one of these cameras is because it’s smaller than a DSLR, but they’re still not exactly compact and their image quality is only a small notch above cheaper cameras. New Micro Four-Thirds cameras will be as small or smaller, offer interchangeable lenses, and (very near) DSLR-level image quality.

Meanwhile low-end DSLRs are getting cheaper as they face competition from Micro Four-Thirds compacts, each other, and heavily discounted mid-range DSLRs (e.g. the street price of the Nikon D80 body is around $600 now — that makes a Nikon D60 or Canon XSi at a similar price just look silly).

As we get to the mid-range and high-end DSLRs we have a bunch of cameras that are already obsolete, except (arguably) for the Sony A900 (with its new 25MP full frame sensor, but it’s a Sony…) and the much hyped Canon 5D mkII (with its outmoded AF). Nikon’s D300, D700, and D3 all are beginning to look a little behind the times (they were introduced with fairly low pixel counts, and the market has just accelerated away from them). Canon’s new low-end range has the main virtue of being (relatively) cheap. The D90’s innovative video mode is already looking like a beta-quality product (Costco is taking pre-orders for D90 kits and the D90 isn’t even out yet). I love Nikon, but the D90 is looking like a loser. It has a video mode that doesn’t quite work, 12-bit image processing, and a price point sandwiched between the Canon 40D and 50D, both of which beat it on build quality, responsiveness, and still image quality. The sad thing is that while the 40D and 50D make the D90 look silly, they’re also both obsolete. Canon has already announced that the 50D’s successor will probably feature video capture.

Some time in the next year we’re going to see:

  • Micro Four-Thirds system cameras with in-body vibration reduction, HD-video capture, and a selection of superb lenses that don’t lock you to a single high-quality vendor (i.e. you’ll probably be able to buy Leica and Zuiko lenses for them at a minimum). At last we’ll be able to buy a pocketable camera that takes photos that are nearly as good as anything we could take with a “full-sized” camera.
  • Reasonably-priced Canon or Nikon bodies with HD-video capture that doesn’t suck, 15+ MPs (with no appreciable image quality reduction), usable ISO 6400 (the D90 is damn close), 14-bit image processing, and — just possibly — in body vibration reduction. I wouldn’t be surprised if full frame sensor cameras appear in the $1500-2000 price range (heck, Sony will probably be there with the A900).

Obviously, if you’re a pro, your camera pays for itself, and next year’s camera doesn’t matter. But for most of us, we don’t get to drop $1000 on a camera every year, and this seems like a truly awful year to buy a camera.

On top of all this, the economic downturn is going to force camera companies to cut into their hefty margins on higher end gear to keep volumes up. Once consumers become used to $300 entry-level DSLRs, they’ll never be able to bring the price back up (nor should they).

HBO on iTunes

HBO’s stuff is going to appear on iTunes. So far, I only see the first seasons of the shows I’m interested in (Rome, Deadwood, and most of all The Wire) but I assume it won’t be long.

The first thing a lot of folks latched onto was Apple being “forced” to be flexible on pricing by making some of the shows $2.99. Since most HBO shows don’t have ad breaks, and sometimes don’t even fit inside an hour, and are made to higher standards than typical network TV shows, this is hardly unreasonable. Two episodes of The Wire equals three episodes of Law & Order. Fair enough.

It’s worth noting that it’s $1.99 for some pretty short format stuff on iTunes, and that many super-long music tracks are “album only” in the music section. So this doesn’t seem, to me, to be comparable to Apple caving to HBO where it didn’t cave to NBC.

Oh yeah, and Cable TV: I think your number is up.

P.S.

By the way, here’s a letter by David Simon to fans of The Wire after wrapping up the final season. It’s a rather depressing commentary on the state of US society and politics.

iTunes Movie Rentals: It’s the Usability, Stupid

One of the best things iTunes Store has going for it is usability, but the Movie Rentals section (which, basically, doesn’t exist) is simply broken. The categories don’t let you filter for rentable movies, so (as of writing) it’s almost impossible to find movies to rent unless you just choose popular picks or new releases.

Next, the iTunes Store suffers a major weakness relative to Netflix which isn’t so apparent when shopping for music, but is horrible when looking at movies. Here’s a clue: Coyote Ugly is rated 4.5 stars, and the only reason it’s 4.5 and not 5 is that a few people are annoyed at the nudity in the unrated version (which seems a bit like complaining a nature documentary is full of animals). Meanwhile, “An Inconvenient Truth” is rated 2.5 stars owing to a huge number of 1 star reviews from, basically, insane people. (Rating it 1 star doesn’t make you insane, saying that the scientists quoted in the film have been disowned by the majority of the scientific community and the claims have been disproven by NASA does.)

Basically, the movie reviews are of similar quality to the reviews on YouTube, which is to say horrible.

Now that iTunes is competing head-to-head with Netflix, Apple really needs to lift its game in the reviews department. Netflix’s reviews are very well done — they basically weight reviews by people with tastes similar to yours more strongly, and reviews by other folks less strongly.

It seems to me that Netflix is to video what iTunes is to music — a very successful business that is undermining the way that the content distributors prefer to do business. A person pays NetFlix $20 (or so)/month and sees all the movies he/she can be bothered to see. After a while he/she stops going to movies and largely stops buying DVDs. When my wife or I see an interesting trailer, we usually just add it to our Netflix queue — thus making the studio, what, $0.25? $0.10? I don’t know how much Netflix pays for a DVD (including rights to rent it out), how long a DVD lasts, whether Netflix pays full replacement cost for damaged DVDs, whether Netflix pays royalties per rental, etc. etc. but I can’t imagine it all adds up to much more than say 25% of the cost of a DVD divided by 20.

The apparent high participation of studios in iTunes rentals reflects the fact that the studios are going to earn FAR more from the iTunes rental model than from the Netflix rental model (or Blockbuster’s imitation). For now, the iTunes rental library is slated to be ~1000 movies by the end of the month; last time I checked NetFlix’s library was 60,000, and there’s plenty of stuff that hasn’t made it to DVD.

If and when there are 1000 or more movies to rent on iTunes, I don’t think anyone will be able to find them. E.g. if I type “Robert DeNiro” into the iTunes search widget, it doesn’t bring up “RONIN” — one of the current top rental titles. If I search for “Pixar” it doesn’t find any of Pixar’s feature films.

Improving iTunes Rentals

Obviously, you need to be able to filter for movies you can buy vs. rent. I imagine this will happen pretty soon.

Next, the search function seriously needs to be fixed, and it’s something an intern could probably do in a day or two (while the library is so small), but it will become a bigger deal as the library gets bigger.

Apple seems to be stuck with a broken user review system — but I guess on the positive side it can probably all be fixed in one place (just look at the way the same system works in apple.com/store). One of the major problems with this kind of review system is that lots of people treat the system as a way of giving feedback on the shopping experience or some random other thing (like price, or upgrade policy, or whether some other product they’ve gotten confused with this product was good). For movies or songs where the price and shopping experience are (generally) fixed, this is probably less of a concern.

Then there are obvious synergies — such as discounting the purchase of a movie you’ve just rented (the way they discount albums if you already own tracks). This kind of thing will let Apple compete with DVDs and Netflix in ways that don’t let them fight back.