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Amazon remodels Unbox

Amazon_unbox_logo_2 Here's an interesting Adams Media Research stat I learned from Scott Hettrick's fine Hollywood in Hi-Def blog: revenue from Blu-ray disc sales this year is expected to be three times the entire market for downloadable movies. Perhaps that explains why Amazon is adding a costly (to Amazon) new feature to its online movie service, Unbox: on-demand streaming. Instead of having to download DRM-encumbered files that can't easily be moved onto TV sets or portable devices, customers now have the option to stream them from Amazon's video jukebox in the ether. Well, those who sign up for the beta program can do it now; everyone else will have to wait until the general release. Even more interesting, Amazon is offering online storage for the movies customers buy, too, so they can stream the films to any compatible device.

Streaming isn't exactly the advance over downloading that cable VOD was over driving to the local video store, but it does have its advantages. It offers near-instant gratification, whereas even progressively downloaded movies spend minutes buffering before playback can begin. More important to renters, perhaps, is that streamed films don't take up gigabytes of space on one's hard drive (not that anyone with a 500 GB hard drive worries about running out of room). But a non-trivial disadvantage of streams is that the video quality can be victimized by the vagaries of Internet connections, a problem that downloads are immune to. Amazon can mitigate the connection issues by working with a CDN, but that raises its costs -- and it can't overcome congestion on local networks that aren't yet up to global broadband standards.

The online storage option solves one of the problems caused by the studios' anti-piracy obsession, but creates others. Like the major record companies before their awakening, the studios insist that permanent downloads be wrapped in DRM -- specifically, one that bars the films from being burned onto conventional DVDs and restricts transfers to either iPods or devices compatible with Microsoft's anti-piracy technology (but not both). As a consequence, these files aren't as useful as packaged DVDs. They're hard to move around the home, and they may not work on all the movie-watching gear you've bought. (In fairness, the studios' insistence on anti-copying technology isn't new. Some version has been on every home-video offering, from VHS tapes to Blu-ray discs.) By storing the files in an Amazon locker, buyers can make the DRM issues evaporate.

Unfortunately, in eliminating one compatibility problem, the lockers create another one. Not every Internet-connected device will be able to handle Amazon's streams. There are lots of different compression and transmission protocols for video online, with more appearing all the time. Computers aren't troubled by the ever-shifting array of files -- they simply download more software. But portable devices, set-top boxes and smart TVs aren't as flexible. Sony is adding support for Amazon's streams to its Bravia Internet Video Link, a $300 adapter that enables its Bravia flat-screen TVs to connect to some websites. That will give Amazon a toehold in the living room, but it's a weaker one than Microsoft (XBox 360), Sony (PS3), Apple (Apple TV) and even Netflix (Roku Netflix Player) already have.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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