"WHAT AM I BID FOR THIS VIDEO?"
In the world of the stock market, one of the first steps to figuring out what the market in a particular stock looks like is to look at the "Bid-Ask" Spread. Most of the time, the spread is fairly narrow. But every once in a while, you see spreads that are pretty far apart, giving rise to the term "wide enough to drive a truck through".
Reading this New York Times article and this post by Fred Wilson today highlighted for me how wide the Bid-Ask spread really is for video on the Internet.
First the Times article. As Saul Hansell describes it:
"Will people pay $230 and hook a new gizmo up to their television sets so they do not have to drive to the video rental store?
That is the question to be answered by MovieBeam, a service being introduced in 29 major markets today. The service was originally developed and tested in three cities in 2004 by the Walt Disney Company. Disney has brought in new investors and streamlined the service's pricing to offer it on a broader scale.
MovieBeam is built around a technology that broadcasts movies slowly over unused portions of the television signals to set-top boxes that store them on a hard disk. Users will have a choice of 100 movies — mainly those that have been recently released on DVD's — with 10 new titles replacing old ones each week.
Consumers will buy the MovieBeam box for $250 from electronics stores. They can send for a $50 rebate, but must also pay a $30 activation fee, making the effective upfront cost $230. The service does not charge a monthly fee, but movies cost $3.99 each for current titles and $1.99 for older ones. (The company will also offer some movies in a high-definition format for an additional $1.) The customers will be able to watch the movie for a 24-hour period."
So, in this corner, we have a service that costs the user a fair chunk of change ABOVE AND BEYOND what they already pay for cable. It charges you for the box, for the activation, for downloading each movie, and then giving you a VERY generous 24 WHOLE hours to watch it in before vaporizing it from your box forever.
And if you'd like to access the movies in a different room and on a different TV than the one with the Moviebeam box, why you'll have to get separate boxes for those TVs as well of course.
BUT, wait, you get to watch the movie in High-Definition (HDTV). That's the big differentiator here.
As this Reuters story explains it:
"MovieBeam bypasses network bottle-necks through a technology called "datacasting," which broadcasts up to 10 new movies a week to subscribers using an exclusive transmission deal to send data signals over the Public Broadcasting System network.
Delivering high-definition (HD) videos to consumers has been restricted by the limits of high-capacity networks needed to deliver feature-length videos to millions of consumers via satellite, telephone or cable TV networks."
The new service has some heavyweights behind it, as Reuters explains:
"MovieBeam, which was founded by Walt Disney four years ago, appeared to have run out of steam when Disney took a $24 million write-down on the company last summer. It was revived last month with a $48.5 million cash infusion from Disney, Cisco Systems Inc. (Nasdaq:CSCO - news), Intel Corp. (Nasdaq:INTC - news) and three venture capital firms."
Despite the high cost of entry, the service does represent an honest effort by mainstream content and technology company to try and bypass the oligopolies of the cable and telephone companies, something I've posted about in the past.
In the OTHER corner, is this experience by VC Fred Wilson, captured in this post titled "Exploding TV":
"I don't watch much TV, largely because it doesn't really fit into my busy day.
But that means I miss a lot of good stuff.
Not anymore thanks to people like ToastyFun and others who record it, YouTube and other services who host it, and friends like Raj who tag it for me.
Here's what I am talking about. Sigur Ros played on Conan the other night. I missed it on TV but not on the Internet!"
Now the second experience was of course great for Fred, and in general is terrific for consumers. Getting the ultimate convenience of watching JUST the piece of video they want extracted from the traditional package of a bigger, media program. The quality of the video in most cases is far grainier and tinier than regular TV, let alone HDTV, but the price is just right. You can see the piece Fred was talking about for yourself below.
But as some of Fred's readers observe in a subsequent post, it'll probably have the traditional media industry come down on it like a ton of bricks, much like the traditional music industry did in the original Napster.
But the two corners represent the two sides of the market in a way, the current Bid-Ask spread for video on the internet.
It'll be interesting to see whether the bulk of the mainstream trades occur closer to the current Bid or the current Ask in the fullness of time. Stay tuned.
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