Digital video and DVD to be released simultaneously

Big day in the history of online video today when the film studios finally relented and agreed to release their product simultaneously on disc and online. Yesterday Time Warner admitted they had trialled dual release and saw little cannibalisation of their lucrative DVD channel. CEO Jeff Bewkes let the cat out of the bag when he told analysts digital releases had three times the profit margin of disc (and finally announced TW was splitting out its cable business from its content play.)
The move by the studios was announced by Apple but is not exclusive and suggests the DVD business has seen its best days, although to date there are few who have been able to succeed with digital delivery. There have been some big name failures including WalMart and the pure play, Cisco/Intel backed MovieBeam retired late last year with less than 1800 subscribers. Another start up, Akimbo decided the market was not ready for its proprietary box last year.
But with research showing consumers would be far more interested if the digital copy was released at the same time as the disc, the scene is now set for what should be a fascinating battle as players seek to gain brand dominance in a potentially lucrative market.
Apple is hoping to leverage its music dominance with iTunes into the video world --although it will need to abandon its highly proprietary approach if it really wants to compete in the already disaggregated online video market place. Apple of course already has some experience with the video on demand market through its Apple TV box (Steve Jobs infamously described Apple TV as a hobby).
Other players in the rental space include both Blockbuster and Netflix which are also hoping to migrate their offline businesses. Earlier this year Netflix abandoned its own set-top box ambitions and announced it would go with a purpose built LG box. The box will enable Netflix to migrate its 7 million DVD subscribers to a networked HD streaming service beginning mid this year. No pricing was released and follows Netflix tentative step into the internet download game with its Watch now service that streams a limited number of movies to customer PCs.
The home video giant Blockbuster is developing a set-top device for streaming films directly to TV sets and is expected to announce the offering sometime soon. Blockbuster acquired Movielink last year a service which enables consumers to watch films licensed from the major studios on their PCs. Movielink was created in 2002 by MGM, Paramount, Sony, Universal and Warners and was sold in 2007 to Blockbuster for $6.6 million. Blockbuster gets online rights to about 6,000 movies fro the deal although there are questions if this extends to TV viewing.