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.

Last year, in Nov 2007 headlines were made when a report came out saying by 2010 we’ll hit Internet gridlock, which means our Net access will slow down as there’s just too much data out there. Hey .. perhaps Telstra is preparing for this by still offering a 256kbps broadband plan (capped at 200MB with overruns charged no less) .. SMART because at least their customers won’t complain.

Unless significant spending is made to upgrade global networks (US $137bn), the report said we’ve got 2 years. Now AT&T have just come out saying the same thing. YouTube and the whole video-sharing craze it spawned is primarily the problem.

Hmmm .. that’s going to give VOD pundits pause for concern!

I don’t know how long they’ve been doing it, but in Singapore Video Ezy have a subscription/mail-order business that sits across their 29 local store operations. Blockbuster does the same in the States as they try and crack Netflix’s stranglehold on the mail-order market. Interesting! I’d love to know how it’s going, although I’d bet my left arm they’ve no intention to introduce it here in Australia. Quickflix and BigpondMovies are just too established, and in any case, I’m not entirely sure of their sustainability.

Quickflix shares are in steady decline (but hey, so is the market), and their ASX released “Progression to Sustainability Milestone” leads with Simon Hodge saying “The time has arrived for Quickflix to move it’s marketing focus and spend away from brand awareness towards low-cost subscriber acquisition by removing all non-essential expenditure”. Hmm .. if I put my Babel Fish in, that sounds like “We’re bleeding and we can’t keep up our marketing budget”. Quickflix need to hit break even soon to prove they’re tracking Netflix (whose success underpins both Telstra’s and Quickflix’s models). By my reckoning Netflix hit breakeven after 4 years, which is where Quickflix is now .. but I’d be surprised if Netflix throttled their spending to get there.

And no, I don’t really have an obsession with Video Ezy and Quickflix Just keeping an eye on the market leaders!

Paul Uniacke is tenacious to say the least! He’s had a set top box strategy in place since at least 2005. It faltered with a failed partnership with Mobilesoft last year (Mobilesoft went into receivership), but has since been resurrected with a new partner in the form of Digisoft. The idea is that true Video on Demand is still a decent way off, so why not bridge the gap with a local store download service that circumvents poor broadband performance. The process:

1. Local store places a download kiosk on their floor. The kiosk is filled with latest release movies in digital format (licenced and with DRM in place)
2. Customer buys a USB key or iPod, and download movies to device
3. Customer buys a set top box for home, and uploads movies to device
4. Customer watches movies at leisure, only gets billed for those watched, DRM deletes the movie once done.

Video Ezy’s GM, Andrew Gardiner, says “You could go to the shop once a month and download 20 movies and only pay when you watch them.”

I love the idea of downloading 20 movies, then pick and choose what I want to watch from home. Even if I have to wait 20 minutes for 20 movies (at a slowish 1min/gig, 20 mins for 20 gig), that doesn’t seem too bad. Even better if I only pick 1 or 2 movies. High Def, Blu-ray style will of course push those times out.

But I’ve also got problems with this:

1. If I’m going to fork out $600 for extra AV kit, it ain’t going to be Video Ezy’s stuff. To put that amount of money down and be locked into movies from my local Video Ezy? Think I’d rather get a Blu-ray player, or Apple TV, put my money toward a high def TV or a kick-ass DVR like Beyonwiz or TiVo (should TiVo ever come to Oz).
2. Kiosks just don’t scale! They beauty of Video Ezy’s current model is they can absorb 100 people all at once browsing shelves on a Saturday night. I’m not going to wait 15 mins for someone browsing a kiosk.
3. Content is King. Video Ezy better have a great catalogue in the kiosks. Good luck, because BigpondMovies download is hardly impressive, even with the might of Telstra behind it.
4. Why can’t I do it online? Then I don’t have to even go to the local store .. but wait .. that’s straight up VOD.

I sorta like the idea, I like it that Video Ezy are trying to inject new life into their operation. But I just can’t see it working. The $$ outlay for their gear is just too much (can I rent it?). Kiosks don’t scale well. By the time Jo Public gets the idea, Apple TV will eat the stb model’s lunch. Kiosks of course don’t have to sit in franchisee stores .. they can sit in an IGA or Coles just as easily. Perhaps this is a plan for Video Ezy to expand beyond their franchise boundaries?

With all it’s problems, I think there’s a better model out there

Inside Retailing reports that Australian retailers are losing out on e-tail sales. It’s mentioned this isn’t an issue of broadband adoption, rather the lack of vision traditional bricks and mortar retailers have in tackling the online space.

Yes! Couldn’t agree more. There’s very few bricks and mortar retailers that mix it in the online space, even though it’s an area of future growth. Think of good ‘ol Video Ezy, with it’s 500 odd stores in Australia .. with a buying group servicing a few million customers, why not go online and add retail to their operation? Why can’t I search the Borders catalogue over the web and work out which store has the book I want (I’m happy to pickup)? Why is it only Domino’s that lets me order a pizza online?

Granted, developing an online strategy isn’t cheap. And whilst I know people that love Coles online, their site is incredibly ugly. So if Coles with their budget can’t create something engaging, what hope do the rest of us have?

Well .. APPLEBOX shows what CAN be done with minimal resources and a compelling vision. So here’s to innovation. Look in the nooks and crannies and it’s to be found. Small is the new Big as Seth would say.

What a surprise! Turns out one of our members is Nigel Karikari. Funky looking dude with English accent who the other day drops a DVD in for Sarah to check out. I happen to be on and learn that Nigel is a writer/director and his 15 minute short ‘The Deal’ won him Best Director at the 2006 “In The Bin” Short film festival and premiered in the Opening Night slot at Melbourne’s St Kilda Film Festival in 2006.

Wow! Nigel has donated a copy of The Deal for us at APPLEBOX. You can see it in the system (just search for ‘The Deal’) and I highly recommend it. Starring some familiar faces: Glenn Robbins, Tim Draxl (Swimming Upstream) and Jane Allsop (Blue Heelers), it’s a nicely paced thriller that reminded me a bit of Noise in the way it built tension slowly without loosing the viewer.

Nigel is a founder of THIRDROW Films along with Olivia Peniston-Bird. Rebecca Peniston-Bird produced the film. THIRDROW have a few other award winning shorts that we’ll try and get hold of.

This is great because I’ve always seen APPLEBOX supporting independent and short film makers. We can offer a way of displaying their work beyond youtube clips and online streaming. We say full resolution and great sound is how all movies (shorts or otherwise) should be viewed (and David Lynch thinks so as well).

So welcome Nigel and THIRDROW Films! We are proud to begin our short film collection with The Deal.