Ok .. that’s in the States and not here, but wow! That ain’t a vote of confidence for the good ‘ol large store format. The DVD rental industry has evolved into 3 models .. mail-order, local large format and vending machine. Vending machines in the states are going great guns. Redbox has 8000 (and is prepping for an IPO), DVDPlay has 1400 and The New Release has 2000.

Australia is of course a different story. Our in-store rental market is about $500 million/year, whereas the States is about $7.5 billion. That goes someway to explaining why Quickflix and Bigpondmovies are struggling by comparison to Netflix (which has gone gangbusters), and why Blockbuster can even contemplate rolling out 10,000 kiosks while Instant DVD here (and with some great media coverage from Today Tonight) has managed only 23.

But .. the trend is there, and we’re keeping an eye on it!

Launched today, iTunes now sells and rents movies online! Just 2 months ago I bought an ep of Lost on iTunes for the helluv it.

So ‘There Will Be Blood’ for $25. Is a $5 saving worth it over a $30 DVD? No slick, store it on your hard drive, less than DVD quality? The big news is rentals! You can’t rent TWBB but you can rent 27 Dresses for $5.99 for apparently 2 nights. We’re still doing it for $5.50 .. so that’s pretty competitive! Except you need to buy the apple TV for $329 to watch it from your lounge room, and lets not forget we do it for $2 on tuesday or $3.33 if you rent 3 of our latest releases in our 3 for $10 deal :-). But hey - it’s launched and it’s the first online rental service in Australia I’d give a shot. This is really going to test Ezy DVD’s download service, ezydownload.com.au.

As for the offline rental world .. yep it’s clearly another competitor and another downward pressure that all rental stores will feel. Your old school video store is starting to feel a bit creaky me thinks. Barn-like spaces, movies buried somewhere in 50 metres of shelving, no easy search .. there’s gotta be a better way.

Quickflix’s recent update to the ASX shows their first ever decline in membership. From their July 11 announcement:

2 months ago Quickflix announced they were going lean & mean. Yet without their marketing spend, you can see the impact. There has been 4 consecutive months of decline in their trialists. But more to the point, their paying membership base has seen their first-ever drop:

It’s pretty bold putting out monthly membership numbers .. great while the numbers are good, but not so good when they drop. Perhaps they’ve learnt their lesson as they’ve now reverted to quarterly reports. It’s tough being a public company .. there’s no hiding performance.

They’ve re-skinned their site, and with new marketing efforts no doubt things will pick up. Good luck guys!

Just a reminder that nominations are now open for the Leader Business Awards so….. nominate us now!

If you are wondering which category (we kinda don’t fit into any standard categories being a new model “bricks and clicks” kind of store) then we would love to win the following category:
18. New Business (under 18 months in operation)

Thanks for your support and don’t forget you go in the draw to win $2500 in travel by jumping on line and giving us a plug.

Got waaay too much business doco to churn out at the moment to be watching TV or flaffing about checking out download services. But just picked this up via Macrumours: TV shows are now available on ITunes AU. So I had to give it a go.

I went to download Lost, Season 4 Ep1. $2.99 for the single ep, or $41.86 for the season. This is interesting because:

1. Lost Season 4 isn’t yet available via retail DVD here yet
2. Prices seem reasonable. Lost Season 3 costs $68.77 on iTunes but $90 at ezydvd! The retail DVD comes packed with plenty of special features and extras, but that ain’t worth $20 in my books.

So ep1 (@43 minutes long) weighed in at 500 MB and took about 10 minutes to download. For the complete Season 4 of 14 episodes that’s a mighty 7 gig to download. Try Season 3 at 23 episodes and that’s 11.5 gig. On my home optus cable limit of 12 gig, season 3 of Lost would wipe me out. Downloading at off-peak rates (midnight - midday which gives me 24 gig allowance) is better, but the season download will still grab half.

At this download size the resolution is near-DVD quality. In a purely empirical test the ‘actual’ playback window on a DVD is bigger than the Lost window .. hence Lost runs at a lower resolution. Of course when you put it next to some hi-def content (eg http://www.apple.com/trailers/disney/walle/hd/) you immediately see how aged SD (Standard Definition) really is. HD resolution is stunning. When you upgrade to a flat panel you’d be crazy not to grab a Blu-ray player. HD will blow out that Lost Ep from 500 Mb to 3Gig (1min playback =11Mb to 1min=70Mb at 1080p) and the full season to 70 Gig. Yikes!!

I need Apple TV. My association with TV and movies is chill-time, and I’ve got thousands of dollars tied up in couches, coffee table, TV, DVD player and lighting to create a space that makes watching the box pleasurable. So like FTTN, until the last leg of delivery of video to my lounge room and TV is sorted, downloads just won’t grab for me. Apple TV could change this .. especially when rentals become available.

That last leg of delivery is crucial for the emergence of VOD and the downloads business .. let’s see where it goes ..

VOD (Video on Demand) is a marketer’s dream. Why? Because the sense of inevitability about it. It just makes sense doesn’t it? OF COURSE we’ll all be downloading and watching on our TVs. And we’ll be doing it tomorrow.

It’s a great lead in, for eg this article about EzyDownload, EzyDVD’s resurrection of Reeltime.TV begins “With the future of DVD clearly headed for the downloaded dustbin of history.. “. keh? based on what evidence? A flotilla of failed download services that litter almost every continent across the globe?

Unfortunately inevitability does not make a business case. Otherwise we’d all be driving electric cars by now. There are so many points of weakness in the whole VOD delivery path that in fact, big fat broadband pipes are the least of the VOD market’s problems.

The humble DVD will be with us for many, many, many years to come. That’s one thing you CAN bet on.

Ross Dawson has been busy compiling 100 web 2.0 applications around Oz for Business Review Weekly. It’s a pretty good question, ‘are there actually 100 web2 apps downunder?‘, well here they all are:

City Of Darebin is our local council and they’re running a ‘Love Living Local’ campaign to get residents enthusiastic about their local neighbourhood. Local business, local activities, walking, cycling, public transport .. it keeps us clean and green, fit and healthy. YEAH!

Local is big. We live in a global interconnected world where I can skype a mate in Ireland for nothing, scour the web for any and all detail I want on flatworm mating habits, satisfy my hankering for icelandic folk music and read The Age online when I’ve got a ‘mo. But, I still gotta get the milk, enjoy a weekend cooked breakfast, indulge the local barista. And lo and behold, stretching the legs, moving around and doing these things is good for me!

Local will never die and local activity will never die. Good local businesses will never die. Corollary: APPLEBOX will always have a place. Bring on downloads. Let Quickflix become a mega success. We’ll be part of the mix because local will always be strong.

And so it was über nice to get profiled in the Love Living Local mag that the council distributed to a couple thousand local residents. You can read the full mag here, and here’s our little bit:

In the States, Netflix has just launched a streaming set top box (it’s the black one on the left below). It’s got some limitations .. it so far only gives standard def output, stereo sound, and largely back catalogue with few new releases, but it’s killer feature is it’s price point: $100US (which is an unbelievable $104AU at the moment), and the movies streamed are FREE. That is, free if you’re already subscribing to the Netflix mail-order service. This must be costing Netflix a motza.

I like the form factor .. it’s fanless (quiet), small and is wireless. This is the sort of device that will get people giving it a shot. The Apple TV is the other contender, and whilst it’s form factor is typically a generation ahead, it costs twice as much and you still pay to rent movies (but you get a better selection of new releases). As for putting a PC under your TV .. only for the die-hards me thinks.

At this point I don’t think lack of new releases is a problem for Netflix, as close to half our earnings is from back catalogue .. there are so many good movies out there, the knack is to give people an easy way to find them.

So Video Ezy .. think hard and long about your own STB strategy, if you can’t hit the sub $200 price point don’t even bother, and you’ll have bigger fish in the market in the not-too-distant future.

Back in 2005 Video Ezy implemented a Microsoft solution for its in-store systems, across their 560 stores here in Oz. So impressed are Microsoft with their efforts (they in fact designed it), they featured it as a case study on their own site to promote MS Solutions over Open Source. You can read the case study here. Last week Linux evangelist David Williams (of ITWire) decided to pull apart this case study and debunk the anti-linux rhetoric the case study presented. You can read that here.

At APPLEBOX for our server we use an Open Source J2EE stack sitting on a Linux box, and love it. It powers along and hasn’t missed a beat, with the only downtime being a rather hasty server relocation. But at the end of the day, it’s the product that matters, not the technology used. This is what stunned me about the Video Ezy rollout. Only 4 years ago they had the opportunity to redesign their in-house systems, across the whole franchise group. With such enormous successes from SaaS (Software as a Service) initiatives, spearheaded by the phenomenal growth of Salesforce.com (servicing 41,000 customers without any remote-site deployments to be seen), Microsoft wanted Video Ezy to roll out a small business server to each of their stores. That’s 560 remote server deployments all needing maintenance and support. 560 servers to patch, backup and trouble shoot. Hmmm.

If I was the Video Ezy CIO, I’d want a new system to centralise inventory and membership systems, to allow members to rent from one store and return to another, and definitely not need remote server deployment. I’m not convinced this is what they ended up with. My tip: don’t let technology vendors build you a solution. Their consultants will follow their head office mandate .. and for Microsoft that’s deployments - both desktops and servers.

I’m absolutely sold on SaaS deployments. The web today (and 4 years ago) is the platform, it’s scaleability and reach puts that beyond doubt. And I’m happy to report APPLEBOX is SaaS personified.