Blog Maverick:
HDTV, DVD, Hard Drives and the future. "Right now in the entertainment world, the conventional wisdom is that both sides on the HD DVD vs Blue Ray DVD will battle it out and a standard for HD on DVD will emerge. No one is trying to rush to a compromise because the big media companies want to squeeze as much money as they possibly can out the current DVD business cycle... The longer it takes, the less chance any format of DVD has of having a place in the future of home entertainment. Don’t look now, but the price and size of hard drives have fallen like a rock, while capacities have soared, with no slowdown in site.
Personally, I like putting content on rewritable drives... After having such a great experience with putting my DVDs on the keychain drives, I decided to test HDNet content in HD. The keychain drives, even the 1gb didn’t have enough capacity to hold a full movie, so I tried just some of our promos. They were short enough that they would fit in 512mb, but long enough to let me see if it worked.
The increased capacity means not only that I can stick more HDNet movies or TV shows on a drive and sell them to consumers, but it also means that I can increase the quality of the picture substantially... What few people realize is that when we shoot something in HD for HDNet, the quality we capture the content at is far, far better than the picture quality that you see on your HDTV. We have to compress it to fit in the bandwidth defined by broadcast standards. That compression reduces the quality of the picture you see. Your TV can handle the quality we capture it at, but we don’t have a way to get it to your TV at that quality level — yet.
We can take advantage of new cameras to capture at better and better qualities, and of new compression schemes that approach future camera capabilities, only because we have ever expanding storage. That’s something DVDs will never have. So by delivering content on Hard Drives rather than DVDs, we will be able to continue to increase the picture quality for years to come.
The other cool part is that the video playback devices that will be in your home over the next couple years will have the ability to connect via USB or Firewire to these drives. PVRs, Set top Boxes, Media Center PCs,even DVDs designed to play today’s DVDs and whatever future DVD standard is settled on, all will have the ability to connect to Hard Drives in some shape or fashion, or people wont buy them. There is going to be a big, big war to host your content in your house. Whoever does it the best, provides the most flexibility, and expandability at the best price, will win.
Next on my reasons to love this approach to distribution is that it basically kills off the “Piracy is going to kill us” threats from the big movie companies. Hard Drive storage is expanding far more quickly than upload or download speeds to our homes. The ability to use that hard drive storage to increase the quality and file size of a movie, makes it practically impossible to distribute it over the net... I ask if anyone in the room has ever downloaded or uploaded a movie or TV show in HD quality to or from a P2P network. No one has ever raised their hand. That is in spite of the fact that HDTV has been in the clear, over the air since 1998. EVERY SINGLE SHOW that has ever been broadcast over the air, and continues to be broadcast today, could be picked up and copied by any of quite a few different, now under 200 dollar HD encode/decode cards and then put on the net. It hasn’t and won’t happen, because shipping around 18gbs per 2 hour movie isn’t going to be fast anytime soon. Make the file sizes bigger to accommodate better quality, and forgettaboutit.
When we get to TB hard drives for under 250 dollars, we will be able to fit 50 movies in HD quality on that drive. More than ONE THOUSAND movies in DVD quality on that drive. The keychain drives will be able to hold an entire HD movie and cost under 20 dollars. That same keychain drive I talked about earlier, in the next 2 years or so, will be able to store a DVD and cost under 10 dollars. So which is the better way to deliver a movie or movies? On a DVD with a boring, lifeless future, or hard drives?
The bigger question, the Billion Dollar question is how to deliver content on or to hard drives, regardless of size and capacity, in a way that consumers will enjoy it, and do it cost effectively today?
There is no major media company who is going to disrupt their DVD cash cow to take a chance on a new business like this. The “if it ain’t broke, don’t fix it” mentally is big. But again, that’s a good thing for entrepreneurs with content. While they hope it won’t break, we can be out there trying to break it, and then they usually can’t fix it.
Probably the best short term solution is to work with high end home theater installers. The best belong to CEDIA (www.cedia.org). They are the folks that are most capable of integrating Media Center PCs, Hard Drive based storage systems , HDTVs and all the media devices in your house. I can only guess that they would have a field day selling hard drives full of HD quality or better movies to their high end customers who want to truly enjoy their home theater systems.
There are a lot of open ended questions and challenges in this, but that’s what makes business fun. What kind of device will be the content server in the home? Who will sell it? How will content be delivered, and by who? What will the pricing be? What will the business model be?
The biggest decision facing HD cable and satellite distributors today is quality vs quantity. Right now most are looking at using compression to squeeze more channels into the existing space they have rather than squeeze a better picture into the same bandwidth that channels take today. The reason it’s a huge decision is that once they decide to fit in more channels, they can’t go back. You can’t all the sudden decide you need 15mbs per channel to deliver a picture that compares to a competitor’s better picture after compressing down to 6or 8mbs per channel.
In a world of multiple Terrabye drives, is VOD a good business? One of the things I learned at broadcast.com is that when you give thousands of choices on demand, people go to the little things that they couldn’t find anywhere else... Thousands of choices, thousands of people using different movies, particularly when the expectation is for HD quality, and there is a huge problem. The cost of delivery per movie if the system is used a lot is incredible. Unicasting DVD or higher quality video is an incredibly inefficient business. (Unicasting is where there is one connection per user to the movie being shown. Each user has to have his own bandwidth, they cant’ share streams) It’s why movie delivery over the net will never be a big business.
The real solution for VOD is TIVO/PVR from the main office. PVR customers are becoming trained that when you fill up the hard drive, you have to delete something to get something. Put some PVR software on the front end, and allow users to pick from a menu of content that they can add. Then overnight, they are multicast the content , whether its via cable or satellite, it’s saved to the hard drive. If they watch it, they get billed for it and everyone is happy, and distributors maximize their revenue per bit." When you are on the bleeding edge of the technology to create content, you have to look few years beyond today to exploit the next waves of opportunity. I'm more than preparing myself to be at the center of that opportunity when time comes to replace DVDs. (One of main reasons I'm selling my DVD collections.)
