Today, Apple, Inc announced that by March 2009, all 10 million songs sold through their iTunes (Gallop Forum) Music Store will be free from all Digital Rights Management (DRM) restrictions.  This will enable consumers to enjoy content they’ve purchased on all devices throughout their homes, vehicles, workplaces, and handheld devices without being limited by Apple or the supplying music studios.

As we’ve covered before, DRM can severely curtail consumers’ use of media throughout their lives.  In addition, it can hold consumers hostage to their media providers - when the provider goes out of business, or decides that maintaining DRM access is no longer a viable business service, the consumer is left without access to their music, movies, or other content.

UPDATE (9:05p EST): According to the Apple press release on these these changes, previously-purchased DRM-laden files can be “upgraded” to the newer non-DRM format for 30 cents per song, or 30% of the cost of an album file.  While that could add up for users with large music libraries, the value of removing Apple’s shackles on the content that was purchased could certainly outweigh the financial cost.

©2008-2009, Gallop Services, Inc. All rights reserved.

The state of New York has not escaped the current economic downturn and has seen its budget deficit swell.  In a recent proposal, NY Governor David Paterson announced his intent to implement a variety of new taxes - 88 in total - covering everything from gas and beer, luxury items like $60,000 cars or $500,000 planes and entertainment services such as movie theaters or sports venues.  Overall, these new taxes are expected to bring in an additional $4 billion in revenue for the state and plug some of its deficit.

As with the TARP program, Gallop Services performed an in-depth review of the specifics of the Governor’s Budget Briefing Book and 2009-10 Executive Budget Economic and Revenue Outlook.  Paterson’s proposed budget identified several areas which may impact technology services users including Cable and Satellite Television and Radio, Digital Content, Telephone and Internet Sales.  

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©2008-2009, Gallop Services, Inc. All rights reserved.

Blockbuster (Gallop Forum), the well-known movie rental company, announced on Tuesday that its customers will now be able to stream movies from the Blockbuster online library to their TV set.  The service will require a new device, the MediaPoint Digital Media Player, developped by new partner 2Wire.  The box will cost $99, which includes 25 free movie rentals.  Each additional rental will cost $1.99, for what is being called “DVD-quality” video.

Blockbuster, which has built a large consumer base during their 20+ years renting videos, has been struggling lately due to the fierce Internet-based competition in entertainment delivery services, especially that of Netflix (Gallop Forum).  Blockbuster’s move is clearly an attempt to catch up to the competition, but we cannot help but see the latest move as “too little too late.”

First, the fact that the player will deliver DVD-quality content is not a selling point, it’s a turn-off: iTunes (Gallop Forum) and Netflix both offer HD quality streaming content.  Second, they do not specify the size of their online library, only mentioning that includes “thousands of titles.”  Given the lack of specific numbers,  we can only assume that they are nowhere close to Netflix’s library of 12,000 online titles.  Lastly, their competitors have quite a head start.  The list of online entertainment providers is growing larger by the month, and a lot of them have been in the streaming business for some time: Netflix, iTunes, Blinkx (Gallop Forum), Hulu (Gallop Forum), Joost (Gallop Forum), Sling, YouTube…  Unless Blockbuster can come up with a true game-changer, all they will have going for them is their existing customer base, which has eroded significantly as consumers flocked to the early streaming services.

©2008-2009, Gallop Services, Inc. All rights reserved.

It would appear that AT&T (Gallop Forum) has decided to join most other cable providers in implementing monthly caps on internet usage.  Starting in Reno and expanding to other places shortly thereafter, AT&T will place caps ranging from 20GB to 150GB, depending on the speed of the plan purchased.  As with most providers, many customers using the internet for basic web and e-mail purposes will not be impacted.  But those who may be using their connectivity to take advantage of the flurry of data available, whether they are streaming or downloading movies from Netflix (Gallop Forum) or iTunes (Gallop Forum), using Vonage (Gallop Forum) or other VoIP phone providers, video conferencing, or online gaming, could hit their cap fairly easily.  

As we have examined before, most cable and internet providers have begun implementing bandwidth caps on availability with the exception of Verizon (Gallop Forum) which has said it does not plan to place limits.  This standardization of how services are offered continues to show the trend towards commoditization of bandwidth, as well as the need for service providers to create or otherwise provide tools allowing whole-home bandwidth monitoring.

©2008-2009, Gallop Services, Inc. All rights reserved.

Compared to the slew of new media delivery solutions that have developed over the past few years like  iTunes (Gallop Forum), Netflix (Gallop Forum), Hulu (Gallop Forum) or Joost (Gallop Forum), Cable TV seems a bit like a dinosaur.  Along with radio, it is one of the older content delivery services, and it shows.

Research group Parks Associates released a study in late October explaining that Cable TV has customer satisfaction issues compared to Satellite TV and IPTV providers.  Although the details of the study are not publically available, my thought is that this is primarily due to a shift in how much control consumers expect to have on what they watch and when they watch it.  The old, familiar model is that you need to tune in to the right channel at the right time.  You arrange your schedule around the TV network schedules and hope you don’t get interrupted.  What products like Tivo (Gallop Forum) and the Apple TV have introduced is the ability to make your own entertainment schedule.

The answer to this was Digital Cable, specifically Video On Demand (VOD) offerings which let you select movies, TV shows or documentaries out of a library of media that your subscription gives you access to.  But there are still problems.  First, VOD tends to have a more limited selection than the alternatives listed above.  Second, the interface is often sluggish and poorly designed.  Lastly, and perhaps most importantly, this offering still rides on a service that is very expensive: according to the FCC, cable prices have more than doubled over the last decade!

The main thing Cable TV has going for it is that it has a very large established consumer base, and old habits die hard.  But Cable providers should probably realize, for their own good, that we are in the middle of the danger zone: a tough economic downturn that makes everyone try to save money.  Once enough people realize the alternatives out there, Cable TV will need to make a choice: adapt or wither.

©2008-2009, Gallop Services, Inc. All rights reserved.

In what has become a recurring theme, Tivo (Gallop Forum) announced that its customers will soon have full access to the “Watch Instantly” streaming feature from Netflix (Gallop Forum).  The move brings over 12,000 titles from Netflix’s streaming library into the homes of TiVo’s many customers.

The service will be available at no additional charge for those who already subscribe to both TiVo and Netflix services.  While there is no mention of whether HD content will be included now or in the future, Netflix has already announced an HD streaming service, so it’s a safe assumption that TiVo users will soon have this feature as well.  The TiVo hardware that will support Netflix - TiVo Series3, TiVo HD, and TiVo HD XL - is all HD-capable.

Understandably, the press release focuses solely on the announcement of the partnership, but let’s take a brief look at the total footprint now served by the two companies:

• TiVo owners can access the traditional content recorded from their cable TV or other video provider, and use streaming services from Amazon (Gallop Forum) Video-on-Demand (Unbox), and now Netflix (Watch Instantly).
• Netflix customers can access the full library of over 100,000 DVD titles via the original by-mail model, and can stream a growing subset of that library by streaming to the Xbox 360, Roku set-top box, some Blu-ray players, home PC (and soon Mac), and TiVo units.

This development brings a number of benefits to consumers.  Aside from expanding the menu of choices, increased competition will drive prices down and innovations up.  For example, one factor in the development of this cooperative effort between Netflix and TiVo may be iTunes (Gallop Forum) growing customer base and wide availability of movies and TV content.

This convergence of media and products will only become more prevalent as broadband connections become as universally available as electricity and running water.  Consumers will also appreciate that they don’t need to purchase a different piece of equipment for each entertainment service that they use.

©2008-2009, Gallop Services, Inc. All rights reserved.

As we’ve previously discussed, the boundaries between types of content delivery have been slowly eroding for a while.  More than likely, hard media (CD, DVD, BluRay) will gradually become less prevalent while digital media (downloadable and/or streaming content) will become the norm.  It’s already very easy to buy or rent movies and TV shows digitally through services like Amazon (Gallop Forum) Video-on-Demand or Netflix (Gallop Forum).  The difficulty is that often you can only play your media on a few devices - sometimes just one!  For example, you may have bought the latest season of The Office from Amazon, but if you want to watch an episode on your Zune while working out, it may be a complicated endeavor due to the limitations of the notoriously pesky DRM implementations out there.

The industry is keenly aware of this fact and last week officially formed a group to discover a solution to this problem that would allow the content you’ve purchased to be viewable anywhere. Most of the big names among movie studios and media retailers are joining the effort, with the notable exception of Apple, Inc, which will no doubt continue developing their current solution to this problem: just buy all Apple products and you can watch your iTunes (Gallop Forum) purchases anywhere! (This solution has been working great for me, by the way.)

Regardless of whether or not this initiative succeeds (there are no details about it yet except for the fact that the group has been formed), this is definitely a step in the right direction and if anything shows that the industry is aware of this limitation and is actively trying to overcome it - and eventually will.

©2008-2009, Gallop Services, Inc. All rights reserved.