• by Rob Kendt , November 28, 2006

The era of online movie distribution has arrived. It began in earnest this fall when Apple launched a catalog of downloadable full-length movies on iTunes and Amazon unfurled its Unbox application, which facilitates viewing of downloaded films on PCs. In debuting their services, Apple and Amazon joined more established players like MovieLink and CinemaNow. But consumers haven't exactly flocked to these offerings, and among many reasons for the tepid response is one simple, over-arching bugaboo: convergence, or rather the lack thereof.

If any of these services employed a carnival barker or infomercial pitchman to tout their wares, he might start off strong: "And now, ladies and gentleman, thanks to the proliferation of broadband and the improvements in file compression technologies, our new movie-download service can deliver the best of Hollywood directly to your..." And here his voice would drop to an apologetic whisper: "Um...well, to your laptop."

There's the rub. While there's a "modest to moderate interest in watching TV episodes on an iPod or PC," says Joe Laszlo, a senior analyst with JupiterResearch, there remain "very few cases in which watching a movie on the pc is preferable. Maybe if I have a laptop and I'm going to be stuck on a plane."

Apple's iTunes has one edge in this market: the portable, ubiquitous iPod. And not surprisingly, given its leadership in hardware and software innovation, Apple is also the closest of any brand to cracking the convergence puzzle with its long-awaited iTV home-networking device, now scheduled to come to market in early 2007. However, Laszlo says, even if Apple can run the crucial PC-to-TV play, it may not be a slam-dunk because consumers have so many other alternatives.

"Movies are a hugely popular form of content, so it seems like a natural thing to offer downloads online," Laszlo says. "But it's not quite instant gratification. For any download services, the challenge is: Can consumers download a movie in less time than they can get in their car and go to Blockbuster?" Video-on-demand services from cable operators, though weak on catalog depth and user interface, at least deliver movies directly to the TV set. "There are more and more ways for people who want to watch movies to get them," Laszlo says, "and the Internet isn't necessarily either the cheapest or the fastest."

While Blockbuster still dominates the in-store rental market, the success of Netflix has been due not so much to consumers' hermit-like reticence to leave their homes as it is to the popular online "queue" interface, which allows for easy shopping and sorting of a deep catalog of films. That, Lazlo says, suggests another promising hybrid for a PC/TV convergence.

The first matchmaker that can make this wary couple talk to each other, and eventually even see them hitched, is likely to have an irresistible pitch for consumers.