All Things Digital

Now that Sony has completed its transformation from disruptive innovator to struggling consumer electronics player, it’s embarking on its next big corporate makeover: reinvention as “a global provider of networked consumer electronics and entertainment.”

And so the company has begun offering a video-downloading service for its PlayStation 3 videogame console. Announcing the service at the gaming industry’s E3 conference in Los Angeles, Sony (SNE) said TV-show rentals will cost $1.99 per episode and movie rentals $2.99 to $5.99. Movie purchases will start at $9.99 and top out at $14.99. Not bad for content from Sony Pictures, Fox Film & Television (NWS), MGM (MGM), Lionsgate (LGF), Warner Bros. (TWX), Disney (DIS), Paramount (VIA) and Turner Entertainment (TWX). Certainly a compelling proposition for the 10 million or so PS3 users in the U.S., who no longer really need to buy an Apple TV (AAPL) or Netflix Player (NFLX) to deliver downloadable video to their TV sets.

Still, PlayStation Network’s video delivery service faces stiff competition from those rivals and from Microsoft (MSFT), which on Monday announced a deal with Netflix to stream movies over the Internet to the Xbox 360 game console. That said, Sony doesn’t seem much concerned with Microsoft, which it seems to view as a bit behind the curve. “The Xbox 360 is irrelevant in Japan, and in Europe PlayStation 3 sales have passed the Xbox 360,” said Peter Dille, senior vice president of marketing for Sony Computer Entertainment America. “We have a good dog fight in the U.S. but worldwide, when you look at a global footprint, the PS3 is the only console that can offer developers the ability to amortize costs over three markets. We’re looking at this as a marathon and we’re confident that the PlayStation 3 will win the crown.”

Hollywood is finally embracing day-and-date film releases.

Yesterday, Time Warner (TWX) CEO Jeffrey Bewkes said that Warner Bros. plans to experiment with VOD releases day-and-date with DVD later this year. And now this morning, Apple (AAPL) announced that a number of major and independent movie studios have agreed to make their films available on iTunes day-and-date with DVD–$9.99 for library title purchases and $14.99 for new release purchases. Among the studios participating in the deal: 20th Century Fox (NWS), Walt Disney Studios (DIS), Warner Bros., Paramount Pictures (VIA), Universal Studios Home Entertainment (GE), Sony Pictures Entertainment (SNE), Lionsgate (LGF), Image Entertainment (DISK) and First Look Studios (FRST.PK).

An impressive lineup and one that clearly heralds a shift in the movie industry’s view of digital distribution. A shift in iTunes movie purchases as well–upward. The removal of Hollywood’s typical 30-day lead time on DVD releases will no doubt boost new-release sales on iTunes, assuming customers don’t mind paying $14.99 for films that lack the extra features and picture quality of their DVD counterparts. It will boost movie studio revenues as well. With no manufacturing and reproduction costs to speak of, margins from day-and-date download releases are presumably quite high.

So much for that hard-fought DVD format war …