All Things Digital

Apple’s iTunes movie store just got its first legitimate rival: Amazon Video on Demand. Launched Wednesday night, the new service replaces
Amazon Unbox, the mediocre, odiously restrictive, Windows-only download service the retailer launched last year. Amazon Video on Demand offers Amazon’s entire catalog of 40,000 movies and TV shows for ad-free streaming to Macs, PCs, and Internet Video Link-equiped Sony Bravia flat-screen TVs. Previously Amazon (AMZN) had sold movies and TV shows as downloads, and then only for PCs, TiVo and Windows Media Center devices, so this is quite a change. Movie rentals run $2.99-$3.99; TV rentals are a flat $1.99 per episode or segment–with savings available through season passes. All rentals expire 24 hours after purchase.

One-click cinema. Sounds pretty slick. At least until we find out what Apple has up its sleeve next Tuesday.

About the best thing to be said about Amazon Unbox, the mediocre, odiously restrictive, video download service the retailer launched last year, is that it was … er … Windows-only, I guess. Which, obviously isn’t saying much. Amazon (AMZN), of course, knows this better than anyone. Which is why the company is enhancing Unbox with a new video store that its customers may actually want to use. Called Amazon Video on Demand, the store streams movies and television programs just like a cable video-on-demand service. “For the first time, this is drop-dead simple,” Bill Carr, Amazon’s vice president for digital media told The New York Times (NYT). “Our goal is to create an immersive experience where people can’t help but get caught up in how exciting it is to simply watch a movie right from Amazon.com with a click of the button.”

Ah, one-click cinema. Seems that Amazon’s finally realized that there simply aren’t enough media junkies to support the download model it embraced with Unbox. “The people who pay to download video are extreme media-philes,” Forrester (FORR) analyst James McQuivey told Variety last year. “They are not the tip of an iceberg. They may grow their own spending, but there aren’t many people like that left. In the video space, iTunes (AAPL) is just a temporary flash while consumers wait for better ways to get video. They’re already coming.”

It appears there may be a bit of a boxing match shaping up between Apple and Netflix. Amid reports that Apple has inked a video-on-demand deal with Twentieth Century Fox, Netflix has announced plans to develop a set-top box that will give consumers the ability to stream movies directly from the Internet to HDTVs. The DVD-by-mail pioneer has enlisted South Korean manufacturer LG Electronics to build a set-top box that will extend its Watch Instantly online movie-delivery service from the PC to the TV. Netflix plans to offer the service–expected to roll out in the fall–for free to its subscribers and the box for a price that’s yet to be announced.

“We think we have solved the real fundamental problem, which has been that choosing movies on a television has been extremely challenging,” Netflix CEO Reed Hastings told the New York Times. “Video-on-demand companies worked at it for a long time, but choosing movies on the TV just doesn’t have the power of the Web. We want to be integrated on every Internet-connected device, game system, high-definition DVD player and dedicated Internet set-top box. Eventually, as TVs have wireless connectivity built into them, we’ll integrate right into the television.”

A compelling vision of Netflix’s future and one that may sound the death knell for Blockbuster, Amazon’s Unbox and Vudu as well. Or perhaps not. Certainly, this little bit of legalese at the tail-end of the press release announcing the services belies Hastings’s optimism just a wee bit.

This press release contains certain forward-looking statements within the meaning of the federal securities laws, including statements regarding the development of a set-top box for delivery of content over the Internet to television sets, the delivery of a compelling online home entertainment service, Netflix’s strategy and positioning in online delivery of content, and the future of Internet to the television. These statements are subject to risks and uncertainties that could cause actual results and events to differ, including, without limitation; the risk that the development of the set-top box or its associated online delivery service may not meet technical requirements, consumer expectations, or otherwise be implemented by the parties; that certain studios will not grant either of the parties necessary rights or otherwise impose limitations on such rights that might impede implementation or hamper consumer adoption; Netflix’s ability to create other partnership opportunities for the delivery of digital content to the television; and possible technological or content licensing impediments.”

If NBC Universal is going to win concessions from Apple in its dispute over the pricing of television shows on iTunes, it’s going to have to do a bit better than spitefully peddling episodes of its new fall television shows on Amazon’s Unbox. Just days after announcing it would not renew its contract with Apple’s iTunes, NBCU said it will sell shows like “Heroes,” “The Office” and “30 Rock” through Amazon’s mediocre, odiously restrictive, Windows-only video download service. Episodes will be available on Unbox the day after they are shown.

“Amazon is somebody who understands the wholesale-retail relationships and understands the need for wholesalers to price their content flexibly,” Jean-Briac Perrette, president of NBC Universal Digital Distribution, told Bloomberg. And we’ll have to take him at his word on that, since the initial pricing under the deal looks looks vaguely familiar. NBC shows will be sold for $1.99–the same price Apple charges on iTunes. What was it Jupiter analyst Michael Gartenberg said about NBC Universal’s handling of its iTunes contract negotiations again? “Sometimes I think God put video content guys on the planet to make the music guys look progressive and visionary.”