The High Definition Downloads War - Who Will Win?

We've said it before and we'll say it again: The high definition format war was never HD DVD vs. Blu-ray. This month a series of news stories seems to be bearing this out. Most recently, Reuters posted that Blockbuster let go rumors that it will be partnering with some "undisclosed" manufacturer to bring a set top box to homes of consumers in order to facilitate movie rentals. Netflix isn't sitting on its laurels either. Despite that fact that rumors have been flying since 2006, it now appears that specific plans for a set top box are underway with LG Electronics and should be announced by the time CEDIA rolls around in September.

In this new era of high definition TV and high speed Internet, it's almost ludicrous to think that in the coming years people will be content to wait for a physical disc to show up in the mail. Still, here are some challenges to the world of HD downloads and what is happening to meet those challenges:

• Getting Downloads to Your HDTV without the Need for a PC
  This was the bane of the original Apple TV and largely the reason it never really took off. Apple's second go at the Apple TV made good on the direct-to-HDTV promise and is the model by which these types of products would really work. Microsoft's Xbox 360 is another good example of a box that allows HD downloads without the need for connection to your home PC. Cable and satellite boxes also, of course, model an adept solution to this problem. Should Blockbuster get into the game, they'll need an equally-compelling solution that allows user-friendly movie browsing and quick downloads.
• Quality Counts - Whether You Drink the Kool-Aid or Not
  If you think quality doesn't matter - just wait until all the systems are compared. In addition to cost and features, there are going to be lots of Internet threads comparing the quality of the various set top boxes. If Blockbuster is entering this market it had better pay attention to the quality and not deliver a sub-par HD image to consumers, lest they be almost instantly rendered inferior.
• Surround Sound and High Resolution Audio
  One of the greatest assets to Blu-ray is the presence of Dolby TrueHD, dts-HD and even Dolby Digital Plus. For a set top box to not include the ability to play back these new lossless high resolution audio formats - especially when they are present on their disc-based cousins.  Currently NOT ONE set top box (that we know of) supports these new HD audio formats. Blockbuster could really take control here if it incorporated a way to stream and decode this audio for consumers.
• Instant Start vs. Delayed Download
  The decision many manufacturers need to make is whether to allow near-instant viewing of rental movies, similar to Netflix' Watch Now functionality, or utilize a download-then-view model similar to Xbox 360 and the new 2nd generation AppleTV. My preference would be a smart caching system that could begin viewing as soon as enough of the download was completed to allow seamless play. This ensures the highest download quality and also the ability to play the feature in a more expedient manner. All in all, however, waiting for a high speed download will take much less time than either driving to Blockbuster or waiting for a movie to arrive in the mail.
• Studio Support
  For this concept to fully take off, movie studios need to embrace a singel (or multiple) technology solution. We'd just as soon see them all license the ability to stream movies to everyone - that way a competitive marketplace ensures a good value to consumers.
• Simple and Reasonable Pricing
  This is perhaps my biggest pet peeve. Currently Xbox 360 and Apple TV are treating movie downloads like cableTV companies treat pay per view. With the advent of Netflix and Blockbuster Online, movie rentals have migrated to a subscription model. In addition, this model includes an almost limitless amount of rentals with a "X at a time" model for receiving DVDs. An online model should follow this as closely as possible, perhaps limiting the total number of rentals per month instead fo the "X at a time" model - since obviously there is no physical media to load up or ship back. So far, however, the set top box market for HD rentals seems to be pricing each movie - and the pricing seems to be very old-school. It's simply too high at $3.99 per library movie and $4.99 for new releases. Compare that the the $17.99/month model of Netflix which nets me over 10 Blu-ray or DVD rentals easy.
  

So what's next? Well, we're watching closely to see what shakes out in the set top box market. It hasn't caught onto the mainstream just yet but we blame that solely on a combination of movie industry support and pricing structure. Should Blockbuster or Netflix allow for online downloads to your television and simply charge for the set top box - they are in for a windfall like you can't imagine. If they instead choose to nickel and dime - then consumers will simply wait.