Analysis: Amazon sets the bar for online movie service

If Apple unveils a movie download service at its September 12 press event as it’s widely expected to do, it will have some company. What’s more, whatever service Apple wind up announcing will follow on the heels of a digital video store launched by another tech industry giant.

Online retailer Amazon.com took the wraps off its Unbox Video Store on Thursday. The store boasts thousands of DVD-quality videos from more than 30 movie and TV studios; users can store downloads on up two PCs and two portable video players. In addition to offering movies and TV shows for purchase, Unbox also features $4 movie rentals.

By combining TV show purchases with movie downloads, Unbox invites inevitable comparisons to Apple’s iTunes Music Store, especially in light of Apple’s upcoming press event (assuming, that is, that Apple has anything involving movie downloads up its sleeve). To put those comparisons in context, then, here’s what you’ll find at the Unbox Video Store—as well as what’s missing.

What Unbox offers

Amazon opened Unbox with seven movie studios—20th Century Fox, Fox Searchlight, Lionsgate, Paramount, Sony, Universal and Warner Bros. Unbox is charging between $7.99 and $14.99 for most movies. Rentals of the latest movies cost $3.99, giving the studios the flexibility that they were looking for.

Users who rent movies will have 30 days to watch the video file. What’s more, after they begin playing the file, they have 24 hours to finish watching it; after those 24 hours, the video is automatically deleted from their computer.

Videos purchased from Unbox can be stored on up to two PCs and two portable video players at once, Amazon.com says. When a user downloads a movie or show, Unbox automatically sends a second download file optimized for Windows Media-compatible portable devices. As an example of file size, a two-and-a-half-hour film like The Matrix comes as a 2.2GB file; the mobile file size is 520MB.

Unbox keeps track of media purchases on a personal page at Amazon’s Your Media Library, and acts as a backup, allowing users to download video purchases onto an additional PC. Amazon.com says users can store download files on a DVD; however, DVDs with Unbox files won’t be readable by a DVD player. Users will only be able to watch the files burned on that DVD on the computer that originally received the download.

Users with older PCs may find it difficult to meet Unbox’s hardware requirements. At minimum, users will need a PC with a 1.5GHz processor and 512MB of memory, in addition to a DirectX-compliant video (64MB) and sound card. Users must also have an Internet connection capable of sustained 800kbps data transfer rates, Amazon says.

What’s missing

You’ll notice there’s been no mention of the iPod so far. That’s because Amazon.com has launched Unbox without any support for the handheld music and video player that dominates the market for such devices.

Not only does Unbox spurn the iPod—it offers no Mac support whatsoever. The service requires Microsoft’s Windows XP. Amazon suggests that Unbox may work on Intel-based Macs with the help of software such as Boot Camp or Parallels Desktop that lets Mac users run Windows XP, but the retailer says it cannot guarantee performance on those machines.

Noticeably absent from Unbox’s list of participating movie studios is Disney. Apple CEO Steve Jobs sits on Disney’s board of directors and is the company’s largest individual shareholder—a role he assumed earlier this year when Disney bought Pixar. It’s widely assumed that, should Apple announce a movie download service of its own, Disney with its close ties to Jobs would be one of the first participating movie studios.

What it means to Apple

The participation of so many studios in Amazon.com’s venture raises questions about whether those same companies will be willing to also join forces with Apple, if a download service is on tap for next week. Negotiations between Apple and the major film studios have been strained, as the sides wrangle over pricing. Apple reportedly wants all movies sold for one price, similar to the pricing structure throughout the rest of the iTunes store; movie studios are rumored to want varied pricing, as is available through Unbox. Apple reportedly also wants digital downloads to be available the same day as DVDs are released while the studios want varied release dates.

So what if Apple were to throw a movie service launch party this Tuesday, and only Disney shows up? Analysts say they’re not concerned if Apple debuts a new service with just one studio partner—that’s what happened when the company added TV programs to the iTunes Music Store a year ago, after all. But this time around, Apple faces competition from an established service—even if that service has been around for less than a week.

Should Apple unveil a movie download service, the company is almost certain to use iTunes as the media management tool. That’s not an insignificant point—adding such capabilities to iTunes gives both Mac and Windows users of the service the ability to manage all of their digital media: music, television, and (theoretically) movies. It also provides a way for Mac and Windows users to sync media with their iPod—something Unbox lacks.

Amazon has given us something to think about with its video store and pricing model, but by not having support for the iPod, Amazon has given users a reason to wait. If Apple successfully negotiates pricing with film studios, next week’s special event could have Mac and Windows iTunes users downloading and syncing movies with their iPods very quickly.

[ Jim Dalrymple is Macworld.com’s News Director. ]

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