Apple MacBook won’t let you watch iTunes movies on some displays

This one is slowly bubbling to a frenzy. The new aluminum MacBook has turned up the heat on how aggressively it will protect iTunes video content from being output to an external display. In plain English, if you hook your new MacBook up to a display that is not DPDC-compliant, you will get an error message and you will not be able to play the movies you bought on iTunes. For technical details read this excellent summary from Ars Technica, always a reliable source. 

There are many angry posts going around online, including on Apple’s user forums where people are, appropriately, miffed that they can’t watch content they’ve paid for on legitimate devices (notably, projectors and older TVs, anything that requires a conversion from a digital to an analog or non DPDC-compliant digital signal).  My favorite comment on the user forum was from Al Knowles, who said:

Same problem here as well. I guess they want to be sure we HAVE to buy an
Apple TV.
Not gonna happen.
I’ll buy DVD’s at my local retailer before that happens.

Talk about drastic measures! As easy as it would be to flay Apple for this one. I have to point the finger at the people behind this: the movie studios. They are certainly the ones forcing Apple to do this, since Apple has created a very open platform for video that requires downloading entire files in order to view them. Files which the industry fears are then subject to offline manipulation and sharing. This is in contrast to Netflix streaming, which never lets a complete copy of a movie make it onto any device. 

The industry fear is obvious: you’ll rent an HD movie on iTunes, connect it to your DVD recorder instead of your TV and output a permanent copy for your library archive. Or worse, you’ll then make copies for all your friends. So they figured they can just rely on technology to prevent you from connecting to an unapproved device. The rub comes when you find out how many “unapproved” devices are still legitimate — at least from a consumer’s perspective. And in the end, it’s the consumer’s perspective that will determine whether people turn to alternate means to scratch the video itch. And yes, under alternate means I am including piracy.

What about you: bad call for Apple? Is this just the big, bad movie studios? Do you think Apple will have to relent in response to user outcry?

Did Sony block its movies from Netflix’s Xbox 360 player?

Interesting little fight brewing in the obscure world of online movie streaming. It seems that when Netflix agreed to send its streaming movies to the Xbox 360, at least one of Sony’s movie studios (Columbia Pictures, according to this Engadget report) took issue with that. 

Whether this was malicious on the part of Columbia Pictures is open for debate. If this were a Sony strategy, it would be likely that all Sony Pictures Home Entertainment content would drop out as well, but it hasn’t. Official word from Netflix suggests that this is normal in the course of licensing content — the original licenses probably didn’t include specification of all the possible outputs for Netflix. It’s reasonable to assume that there’s some renegotiation likely to occur.

Whether this was something Sony did on purpose or whether it was a coincidence (the timing is suspect because today was the launch of the new user interface for the Xbox 360, including prominent display of the Netflix streaming option), I don’t think this will stick. For two reasons.

1. The public sentiment is already turning sour against Sony. Without evidence that Sony was acting out of malice, the gamer/movie viewer community is already moaning and complaining loudly. Just read any blog comments on this topic to find plenty of Sony vitriol to go around. It’s almost as bad as the political season we just went through.
2. Sony doesn’t really work like that. It would be very unusual for Sony’s video game unit to be able to exert such specific pressure of a subsidiary of the Sony Picutres side of the house. I won’t offer specifics here, but suffice it to say that Sony is not ruled by one point of view. It’s a house of many different views and I find it unlikely that this would be part of a master conspiracy to punish people for having an Xbox 360. Think of it this way: Sony doesn’t prevent you from watching Sony DVDs on Samsung DVD players, right?

Maybe I’m just a nice guy. Do you think I’m wrong? Is this a nefarious plot? Or just awful timing for a rights negotiation to come up?

Om Malik tackles web video’s dirty secret: It doesn’t always work

Interesting post from Om Malik on GigaOm yesterday pointing out one of the problems with online video that people like me who believe online video is the game changer that VOD and iTunes could never be often gloss over. After trying too hard to find and finally watch a jerky, freezy 60 Minutes interview with Barak Obama, Om rightly says:

There are too many points of failure when it comes to web video. These problems are only going to increase in the near future as more and more of us are going to watch more and more video online.

He’s right, of course. You and I are watching an average of 56 minutes of online video a week. That’s only 3.5% of our total viewing minutes, but it’s rising. The longer you do it, the more likely you are to do it a lot. And once you start watching full-length TV shows online, forget it, you’ll blow right past 56 minutes into 2.5 hours-per-week land. 

People at Akamai have been warning me about this forever. They have their hands on 25% of all the web content in the world. And they see that more online video + more of it at HD (let’s admit, 720p) resolution will take network congestion to new depths. As rhapsodic as I wax about the potential of online video (and I need to confess, in our home we watch at least 10 hours of online video a week between Hulu, Netflix, YouTube, and a million viral videos my kids and my wife come across), it is true that it can be spectacularly bad.

Take last night, for example. I recently had been treated to an early preview of some movie trailers at a meeting with Paramount marketing execs. I came home to report to my family on the best of them, including the terribly tasteless but funny Dance Flick. So when the preview finally hit the web, they were eager to check it out. I wasn’t home to witness it, but I was told it was a disaster. The video stuttered and stopped so often that they didn’t come away thinking the movie was nearly as funny as I did, after watching it in large screen glory in a private conference room.

And that’s one of the issues hanging over us: when the video stops and starts, our brains don’t engage the content as fully. The benefits of the medium are lost on us. Advertisers don’t get the intended benefit, content producers suffer from the inability to reach us with their creative output. Oh, yeah, and it’s annoying.

What do you think? Are you generally satisfied with the quality of video you’re watching online? Does it work as well as you think it should?

Blockbuster’s Jim Keyes promises set top box

If you’re a faithful reader of this blog you know that just last week in Dallas I had Jim Keyes, CEO of Blockbuster on stage at our Forrester consumer forum. He gave a great speech with amazing detail. But one of the things he was clear on was this: Blockbuster wasn’t going to do a set top box this year. I pressed him on this in Q&A and he said that consumers weren’t ready for it — it was a case of “getting ahead of our headlights” to quote his exact colorful speech.

It appears that set top box question has been reopened. In a conference call with Wall St yesterday, Keyes said that a set top box would indeed be out by year-end.

Either Jim was playing hard to get last week on stage, or, rather, Blockbuster has seen the aggressive announcements from Netflix in the past two weeks and concluded that it cannot afford to let Netflix get too far ahead in this race.

If that’s his thinking, then I agree. We actually urged this kind of thinking back in our July report on the future of the set-top box. We said then that most of these boxes were doomed, but that they were important to invest in anyway. We wrote:

Even following our suggestions, the best that the most successful of these players will do in the short run is to sell 2 million boxes. Our money is on the Netflix/Roku box, as it has the fewest barriers to adoption and sufficient functionality to appeal to consumers’ desires — especially if it rapidly evolves to include more content and additional services. Without modifications to create more appeal and overcome major barriers, we expect the others will all fight to surpass a million — and most will do far worse. For those that do eclipse a million, is it enough to get the foothold they’re shooting for? Yes. But their mistake is in thinking that the foothold that matters is the device’s penetration. It’s not. It’s actually the penetration of the video service that the device features, as the ideal scenario for future take-up is one in which a viewer has a content subscription that is accessible from multiple devices.
source: Competitive Product Ranking: Picking a Winning Set-Top Box, 17 July 2008. 

That’s the key. It’s getting the Blockbuster service into people’s homes, much the way Netflix is doing with its multitude of announcements. So even if Jim didn’t tell us the whole truth, we’ll still approve of where he’s headed. Of course, we have no details on how he’ll do it. If he follows through on the subscription model he hinted at on stage, that will be intriguing. Stay tuned.

As Netflix rises, Roku drafts nicely behind

Every time I turn around, it seems Netflix is announcing something new. These past few weeks my little fingers have typed furiously to keep up with Netflix, which I will now refer as the company formerly known as the DVD-by-mail company. Two weeks ago, I wrote about Samsung adding Netflix to some of its Blu-ray players. Then there was the announcement that Netflix had finally enabled streaming on the Mac (okay, okay, Intel-based Macs, but still). Then there was the revelation that said company would provide HD streaming on the Xbox 360 and other devices. Finally, I posted just last Thursday that Netflix was partnering with TiVo to expand its streaming to yet another device. (Convenience note: you can mouseover these links to see the text of the page without actually clicking on them)

Just remembering typing it all inflames my carpal tunnel. Now that I’ve had some time to think this through, I’m still impressed with Netflix. But wait a minute. In all this, there’s one definite winner behind all the announcements: Roku.

btw, this is not an ad, this is just the most attractive picture I found on the website: I don't get paid anything if you click on this and order

Yes, I’m talking about the maker of the $99 streaming video box that in my back-of-the-envelope estimations has probably sold more than 50,000 units in the six months since its launch. This is the box that I proclaimed the winner in the over-the-top set-top-box shootout I wrote in July. But secretly, after writing that report, I started to fear for the box’s survival in a world where Netflix is off enabling every other device you’re thinking of buying this holiday season.

Then the recession hit. Follow my logic here: you hear that Microsoft Xbox 360 Live members can stream Netflix to their TV sets. That sounds cool enough to try, you are one of nearly 9 million Netflix subscribers aftera ll, but then you add up the additional costs — $199 for the low-end Xbox 360 Arcade plus a $7.99 a month subscription. Add that up for a year and you have $295. (Of course, the plan from Microsoft is that you already own an Xbox and this motivates you to sign up for the Xbox 360 Live Gold Membership, but just humor me.)

So you then hear that select Blu-ray players from Samsung and LG now allow for Netflix streaming. You were considering a Blu-ray player anyway, so you look into these and find they retail for $349 to $399. Then you hear that TiVo will offer Netflix, but you have to get the $299 TiVo HD at a minimum, not to mention the monthly service charges. You’re starting to feel daunted, so you go to Netflix.com and see all these options on one page so you can figure out which one is best for you.

You find the Netflix Ready Devices page, which shows you all of these options, and what do you see? Roku listed at the top, at a nice $99 price. Oh, and by the way, it’s the only one that comes with built-in wireless connectivity for those who don’t have ethernet in the living room. Especially in a recession, the Roku seems like a low-risk option.

I shared this line of logic with Tim Twerdahl, VP of Consumer Products at Roku, an ex-Netflix guy on Friday. I could practically hear the smile on his face over the phone as he agreed with my logic. Then he confirmed it: “Our sales are up dramatically in October.” And that in a recession.

Of course, the point of all the other boxes is that they do other things, not just Netflix. The Xbox does games, TiVo does DVR, the other guys do Blu-ray. When I shared this concern with Tim, he responded very confidently that I should stay tuned. What I have long been calling the Netflix/Roku box will soon shrug off the Netflix moniker by adding other premium content. This will only drive up sales on this box even more. Soon it will outsell the Roku Soundbridge home audio device that never really got past 100,000 users in four years of selling. There’s a business in this box; Roku is here to stay.

Netflix streams through TiVo

I recently called Netflix the little engine that could, with its announcement that its streaming content would be available through select Samsung Blu-ray players. 

Well, that little engine made it even further up the hill this week, adding TiVo as a streaming partner, as reported in the NY Times today. The score is now officially Netflix 5, everyone else 1. Meaning that Netflix has 5 different ways to get content into your home. That blows everybody else away.

I spoke earlier this week with Jim Keyes, Blockbuster CEO, on stage at the Forrester Consumer Forum. He made the case that Blockbuster didn’t want to marry itself to one device as iTunes does with the Apple TV. Instead, he wants Blockbuster to be available through any disc device (DVD or Blu-ray) and eventually any digital platform. But he didn’t see the digital platforms ready yet (despite buying MovieLink). And I buy that argument for the most part, but when you see what Netflix is accomplishing, it appears to be single-handedly fueling the market for digital platforms, one streaming partner at a time.

It appears Netflix streaming will go HD with Xbox 360

The details are still coming together, but while I was busy at the Forrester Consumer Forum, this little tidbit came out, as trumpeted by Gigaom via the New York Times. 

Yes, I knew that the new UI for the Xbox 360, due out in late November, was going to feature Netflix streaming. That wasn’t news. But the interesting bit is that apparently, there will be HD movies as part of the deal. Reactions are quite positive so far, from the tweets I’m reading on Twitter. UPDATE: It appears Netflix has plans to roll this out to all its non-PC streaming platforms, not just Xbox 360 — read this post at CNET for details, including the high bandwidth requirements.

And I have to say that while this is a good move, and a relatively easy move, it’s more of a symbolic victory than anything else. For Netflix, the symbolic victory comes in being able to say it will be streaming HD quality movies to the TV not the PC (Hulu.com already streams hundreds of movies to the PC), something that cable companies charge much more for. For the Xbox 360, it will finally elevate the device’s chances of breaking through as a gaming machine to a home entertainment machine. When you add up how many people have watched video on the Xbox 360 — Microsoft says its about 30% of it’s 14 million Windows live customers, or more than 4 million people — that makes it more important than TiVo or the Apple TV in terms of the number of people it’s reaching, as I’ve said before. So going this next step makes sense.

But the move won’t push either company into new revenue or subscriber growth mode. Instead, it will confirm existing subscribers and remind them why they have already signed up in the first place. That’s always a worthwhile goal, especially in a recession, but a modest one.

It’s the long-term effect I’m interested in and I suspect that’s what Netflix is positioning for. Today, when you want to watch a movie, what are your top 5 choices? How different will that list be in two years? Maybe the better way to ask it is, where did you get the last 5 movies you watched? For me, without straining too hard to recall, it’s probably:

1. Hulu.com streaming (watched bits of John Carpenter’s The Thing just yesterday while eating room service)
2. Netflix by mail
3. DVD rental from Hollywood video (it’s like, 2 mins away)
4. Netflix streaming to Roku box
5. Little bits of a movie my daughter was watching on ABC Family.

Here’s what’s not on my list even though I have these options: Apple TV, Xbox 360, premium movie channels, or cable VOD. What’s your five? Go on, surprise me:

Jim Keyes, Blockbuster CEO, taught me 5 things

I’ve been around the block a few times. By that I mean I have been to more than a handful of big conferences where CEOs talk about why their companies are the cat’s meow. And many times, these CEOs disappoint, falling into the role of simple cheerleader for their brands. We work hard to make sure Forrester Forums escape that pit, but it doesn’t always work.

That’s all in preamble to what I just heard from Jim Keyes, CEO of Blockbuster, who delivered. He took the stage for 45 minutes and told this audience the nitty gritty details of what it’s like to take a company many people have pronounced dead and transform it into a leader.

Jim sold me. Here are five important things I heard from Jim about the future of entertainment:

1. One customer, many channels. Jim made a compelling case that Blockbuster is the company best positioned to have a true multi-channel entertainment offering: rental, purchase, kiosks, digital downloads, even a set top box strategy which he publicly acknolwedged but indicated would not happen this year. No competitor has the same opportunity to deliver through all possible channels to all possible devices.
2. The over-the-top set top box business is not there yet. This is probably why Steve Jobs keeps publicly referring to the Apple TV as a “hobby.” While Jim acknowledged that Blockbuster will offer the same kind of product, when I asked him in Q&A to go in more detail, he said that these boxes are ahead of the customer right now and it doesn’t make sense to get one out there just to have one out there. He could subsidize, like he thinks Netflix is doing, but it didn’t make sense right now.
3. Convenience is king. Putting aside for a moment that in the entertainment business, content is the real king, when it comes to the companies who want to deliver entertainment, convenient access to content is what matters. Jim discussed in great detail (including assumptions about pricing and consumer strategy that were alarmingly frank for a CEO speaking in public) about the business model implications and challenges they face in trying to make access to content convenient. Oh, and he used my Convenience Quotient model from earlier today, so of course I liked it :)
4. Change is best when it comes from the top. One of the questions we get at every one of our events is, “how do I drive change in my organization to participate in this digital revolution?” Jim led his speech by saying he had a great opportunity if he could “inject change.” So I took the opportunity to ask him just how he planned to do that. His answer was as detailed as all his other comments, but the short of it is that he personally takes the responsibility to inject change, including communicating to every store manager each week. That way he can personally infect them with his own enthusiasm and ideas for the company’s future.
5. You can’t get too far ahead of your headlights. Those were Jim’s words in response to me asking him the question about whether he’s actually innovating too fast by trialing kiosks and multi-channel experiences. He admitted he might be ahead of consumers just a bit, but was willing to experiment. As long as, he then confessed, that he didn’t get ahead of investors. I think that’s a lot of what is going here: Blockbuster isn’t just managing to customer’s expectations, but to Wall Street’s as well. From what I see, Jim is doing a good job of both. 

As you can see, I’m impressed by what I saw. Jim’s a guy who knows what he’s up to. If Blockbuster is going to turn itself around, I can’t imagine anyone more prepared to do it. More from the forum as it unfolds.

Netflix finally includes Macs in its streaming plans

The word at MacWorld is that the Netflix “instant watching” feature is being upgraded to support Firefox as well as Intel-based Macs. This is something the Netflix blog brought up early on as a goal. The Intel-based part means it’s not exactly Mac-friendly, but Netflix says that three-fourths of their Mac users are based on Intel machines so they’re satisfying the biggest number.

Many Mac people will be angry about this, to be sure. Netflix doesn’t seem to be apologizing, though, and is instead likely to position this as yet another in a log line of devices Netflix intends to support: LG Blu-ray players, Samsung Blu-ray players, the Roku/Netflix box, the Xbox 360, and now, the Mac.

Angry Mac fans aside, this is further evidence that the Netflix people know what they’re doing.

Device by device, Netflix is making its modest little service relatively ubiquitous. Unlike iTunes or MovieLink or anyone else, Netflix is shooting to become the base option in video devices intended for the living room. Very smart move.

Do you connect your PC to your TV?

Of all the fancy technologies I track that can provide video to the living room — the Apple TV, the Netflix/Roku box, and so many more — there is one surprising one that is making a stealth rise to power: The PC.

Unfortunately for Microsoft, I don’t mean the Microsoft Media Center experience with its 10-foot UI (that’s geek talk for a user interface that lets you sit on the couch and operate it via a remote control). No, that Media Center never caught on. I’m convinced the majority of people who own Media Center PCs don’t even know it.

What I’m talking about is a surprising rise in the number of people who tell us in surveys that they are connecting their PCs to their TVs at least occasionally. The number is now at one-fifth of online people who have something (cable box, DVR, etc.) connected to their TVs.

I think the factor pushing all of this is the mass of flat panel HDTV buying that has occured. These screens all have VGA inputs on them, it makes connecting the PC much, much easier than it used to be (moment of sympathy for those of us who have actually connected our PCs to our TVs via s-video cable).

And just what do people do with this connection? After playing video games, the thing they do most is watch online video. Online TV shows, is my hunch, but I didn’t ask that in the survey.

This is a small change in consumer behavior that could have tremendous consequences. Who needs fancy set top boxes when you have a PC connected to the TV? For that matter, who needs cable? So it’s your turn to sound off. Comment on this one, tell us, have you connected your PC to your TV? Do you do it a lot? Do you think you’ll do it more? Is this going to become the dominant way people get on-demand content to the TV?