Gary Dretzka
Noah Forrest
Leonard Klady
David Poland
Douglas Pratt
Ray Pride

LAS VEGAS – Last October, the CEOs of Apple Computer and Walt Disney and thrilled the ranks of international geekdom by announcing their intention to make select ABC and Disney Channel programs available for viewing on Apple’s new video iPod devices.

Naturally, the possibility of watching Lost and Desperate Housewives while at work, or sitting on the potty, attracted the usual flurry of media coverage, as well. While not entirely grasping the concept of downloading entertainment content for use on portable micro-screens – let alone, the economic and social ramifications of such techno-wizardry – airhead news anchors delivered the companies’ pitch with the same urgency usually reserved for high-speed police chases, drive-by shootings and Michael Jackson sightings.

The joint announcement by Steve Jobs and Robert Iger would open the floodgates on a veritable deluge of similar mergings of interest. A mere three months later, at the just-wrapped Consumer Electronics Show here, all manner of appliance manufacturers, content providers and Internet interests staked their claim in the emerging wilderness of portable video gadgetry.

It was if Hollywood had finally discovered the digital version of the Holy Grail. After years of delivering empty promises, the studios were provided with an economical and reliable way to deliver VOD to consumers, who ostensibly have been waiting with bated breath for just such an opportunity.

Hundreds of exhibiters at CES arrived fully loaded and anxious to provide retailers with the lightest, brightest, smallest and funkiest iPod and MPEG-4 appliances, in sizes ranging from small to “nano.” Apple may have been first out of the gate, but, clearly, this race would be a marathon, not a sprint.

Considering the rabid response to iPod and MPEG-3 mini-jukeboxes by music-hungry consumers – those too young to remember transistor radios, especially – video-on-demand seemed to be a natural step forward.

In addition to Lost and Desperate Housewives -- delivered via Apple's iTunes online music shop, at $1.99 per commercial-free episode -- Disney would soon make available more than 2,000 music videos, six Pixar short films and Disney Channel hits That's So Raven and The Suite Life of Zack & Cody. That menu would quickly grow to include the ABC drama Night Stalker, highlights from Saturday Night Live, condensed versions of four BCS football games and a slate of titles from ESPN.

Clear Channel, which owns some 1,200 radio stations, followed suit by offering free downloads of music videos from the catalogs of Universal and Warner. It soon hopes to add an ad-supported video-on-demand service and podcasting, as well.

Google, which uses Microsoft Media Center technology, announced that it would offer programs from CBS, NBA games, The Charlie Rose Show, vintage episodes of I Love Lucy, The Twilight Zone, The Brady Bunch, and music videos from Sony BMG. Competitor Yahoo is expected to employ its own free software, which, when connected to TV sets, will allow users to record and view its video content on both platforms.

At the vast Microsoft booth at CES, Starz Entertainment Group demonstrated its new subscription-based Internet movie/video download service, Vongo. Patterned after the Netflix, Vongo will provide on-demand access to more than 1,000 movies, as well as sports, music and TV content, for a $9.99 monthly fee. The only drawback would appear to be the Cinderella factor, which turns the DVD into a pumpkin after a few days of viewing.

Microsoft and DirecTV will work together, as well, on technology that allows content to flow between Windows-based PCs, satellite receivers, PlaysForSure-based portable media devices and Xbox360. EchoStar Satellite’s Dish Network will facilitate porta-podding through connective devices of its own.

Not to be outdone completely by news emanating from Las Vegas, the promoters of the Macworld convention, last week in San Francisco, also opened the floor to Jobs. There, he announced that the iTunes store had sold more than 8 million videos since the launch of the video iPod in October, up from 3 million video downloads, as reported in early December.

In another potentially significant test of New Media distribution, backers of Google Video Store announced at CES that its customers would be given first shot to see the indie thriller, Waterborne, using its "download to own" model. The film, which grabbed the Audience Award at the 2005 South By Southwest Film Festival, was made available to consumers last week for free, via streaming media, or it could be downloaded for $3.99, with no restrictions on future applications (including burning to disc).

According to writer-director Ben Rekhi, more than 15,000 "views" had been logged after seven days on the service. Figures for paid downloads weren't yet available, but Rekhi said he was excited by the response, which could build buzz for the film's release next month on DVD, with 45 minutes of bonus material.

Because on-line protocols have yet to be established, Rekhi has retained all rights to his film in the ancillary markets. A nice a bonus, even if the film’s Internet debut may have put a damper on any international sales potential.

One wonders, however, if iPod video and MPEG-4 will reach the same pinnacles as the devices used for musical enjoyment. The visual presentation afforded by the small screen leaves plenty to be desired.

This comes at a time when consumers finally have begun to warm to big-screen high-definition television (at CES, Samsung and Panasonic both debuted 100-inch-plus plasma screens). For them, the novelty of watching shows on a 2.5-inch LCD screen – smaller than most battery-driven Watchman-type devices – could wear thin after a while.

For example, content supplied via iTunes is available only in the iPod's native 320-by-240 resolution, while MPEG-4 offers 480-x-480. Even at discounted prices, a new iPod with 30GB of memory will cost between $269 and $325, or $347 to $420 for the 60GB model.

It also remains to be seen how many times the average consumer will be willing to pay extra for content they’ve ostensibly purchased already via cable or satellite services, and through an investment in a PVR unit, such as TiVo.

The extraordinary success of iPod and MPEG-3 can be attributed directly to computer-savvy teens and college-age consumers, many of whom have abandoned mainstream media sources. Staring at a minute screen, watching The O.C. -- while the rest of the world passes them by -- may not register as a particularly cool way to make use of their time.

As is the case with most new technologies, the economic model for iPod video likely will be tested first in the adult market. Long before Hollywood made dime-one from its on-line interests, purveyors of porn product had turned streaming and downloading into multibillion-dollar businesses.

Indeed, only a few weeks had passed before the Apple/ABC alliance spawned “iPorn” services, which used the same iTunes conduit as Disney’s G-rated fare.

"We're calling this ‘porn on the pod,’" said David Joseph, CEO of Red Light District and Platinum X. “I first got very interested when I heard projections of 40 million video downloads this year. We’ve always been known as a leader in technology, and iPorn will allow people to watch films – ranging from individual scenes, to entire movies -- in places other than the privacy of their bedroom.

“It’s more practical than putting a magazine in your pocket when you’re in an airplane, and want to look at some porn at your seat or in the rest room.”

January 16, 2006
- Gary Dretzka

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