Crave

At this year's E3 Expo in Los Angeles, both Sony and Microsoft pushed upcoming services and devices that allow users to download full games to their hardware. For Microsoft, it's a new arm of its online marketplace that will let gamers download full retail games to their system's hard drives. For Sony, it's the new PSP Go, a slimmed-down version of its flagship portable gaming hardware that does away with its game slot in place of pushing Wi-Fi game downloads to its 16GB of built-in memory.

Both companies are pushing direct downloads as the premiere way to buy new games, and many are expecting the direct-downloading technology to be one of the main selling points in the next generation of gaming hardware. As a side effect, the new revenue model largely cuts out used game retailers, since there's less physical media to resell or swap with friends.

But let's get real for a moment, this is nothing new. In fact, game companies have been trying to get direct-download games working on consoles since the early 1980s. Let's take a brief look at previous efforts to sell console games without any physical media:

Starting at $25, "bundles" of mainstream films can be added to a computer's hard drive during the ordering process on Dell.com. The bundles available currently include genre groupings like the comedy collection of Zoolander, Nacho Libre, and School of Rock, and trilogies like Spider-Man and The Fast and the Furious.

Dell teams up with CinemaNow on movie downloads.

(Credit: Dell.com)

Though the selection is limited and all of the movies come packaged in Windows Media DRM, the content offerings will be updated regularly in the future, according to Dell and CinemaNow, which is providing the movies.

Dell already works with CinemaNow on the Qflix DVD burner.

The movie download option is only available on the Inspiron 1525, Studio 15, and XPS 1535 laptops, and Inspiron 530, Inspiron 530s, Studio Desktop, and XPS 420 desktops. The XPS One desktop and Dell Mini 9 netbook are not part of this promotion.

LOS ANGELES--Rather than waging a war to make consumers choose sides between digital downloads and physical media, some content makers are calling a truce.

Instead of defending Blu-ray Disc's longevity as a physical format or predicting when downloads would finally reign supreme, they focused on how the two together can benefit consumers and content makers alike. It's as if two high school girls from opposing cliques just realized that if they team up, they're actually likely to attract even more attention and popularity than ever.

"It's a mistake to think it's either a physical (media) or an electronic (download) business," said Danny Kaye, vice president of research and technology strategy at 20th Century Fox. "That's arbitrary. They will coexist."

Blu-ray players will have their day in the sun before movie downloads become the norm.

(Credit: Samsung)

It's been widely assumed that digital downloads will wipe out physical disc media as soon as broadband Internet access becomes ubiquitous. But there are plenty of details to work out until that happens, such as consumers' continuing endorsement of DVD as an entertainment format.

NPD revealed at the DisplaySearch HDTV Conference here Tuesday that while DVD sales are flat, they still dwarf downloads. The old standard-definition disc format still stands tall over Blu-ray Disc, but that will change eventually. What's certain, is that most people who favor DVDs won't be skipping Blu-ray entirely to start downloading all their entertainment.

"Consumer habits change slowly," said Russ Crupnick, senior industry analyst for the NPD Group. "Discs are not likely to go away anytime soon."

The numbers support this. NPD asked 1,500 consumers that own high-definition TVs and subscribe to HD channel services how they spent their discretionary income on movies. Fifty-two percent said they buy movies or TV shows on DVD, 29 percent rent movies or TV shows on DVD, and 6 percent download entertainment, either to rent or own.

How much is this worth?

(Credit: Barnes & Noble)

Several HBO shows debuted today on the iTunes Store, but the big news was that two of them--Rome and The Sopranos--will retail for $2.99 an episode. To date, Apple had insisted on flat pricing of $1.99 per episode of any TV show added to its download roster. Indeed, the company's refusal to allow variable pricing was said to be the primary factor in NBC pulling its vast library of shows from the digital retailer in 2007.

Blogger Dave Zatz points out two big stumbling blocks to the larger issue of TV shows on iTunes:

... it's not like you get a ton of replay value--DRM-ed content isn't easily shared (like a DVD), and you're not going to stick a 55-minute show into a playlist for repeat enjoyment like a digital song.

In other words: every penny past the impulse purchase $1.99 price point magnifies the downsides of an iTunes TV download.

So, how does the $3 per episode price stack up? The DVD set of the 12-episode first season of Rome goes for a whopping $55 on Amazon, but you can find it (today, at least) for $41 at Barnes & Noble's site. I'd happily pay that $5 premium for the disc set.

Actually, I'm lying: I wouldn't buy the DVD either. I'd just add Rome: Season One to my Netflix queue, where I'd be getting it at no extra charge beyond my monthly subscription fee. (I rewatch movies frequently, but for TV shows, once is generally enough.)

I'd love to think that these high-priced shows will fail miserably, but these premium-priced seasons of Rome and The Sopranos have already cracked the iTunes top-10 list on day one. In other words, if the trend holds, it would seem that flat pricing is as dead as the dodo. The market has spoken, and consumers are willing--happy, even--to pay $3 an episode for their favorite TV shows. Expect lots of celebrating at NBC headquarters (and elsewhere in Hollywood). Just don't be surprised when an episode of The Office costs more than a gallon of gas.

What do you think: Would you pay $3 per episode for a TV show? Or are iTunes users ruining it for the rest of us?

The Zune hearts content, but how many people heart the Zune?

(Credit: Microsoft)

Microsoft may be putting together an "entertainment marketplace" tentatively named Zune VideoX, ZDNet's Mary Jo Foley reported Wednesday. In other words, it's yet another digital content store trying to take a bite out of Apple's iTunes.

Joe Belfiore, corporate vice president of Microsoft's Devices and Entertainment eHome division, is reportedly spearheading the project. But it goes without saying that as with any of these "iTunes killers" that seem to pop up like mushrooms after rain, well, it's going to be an uphill battle even for Redmond.

Creating a solid digital download store is something that Microsoft has tried repeatedly, and hasn't gotten right yet. Its Zune Marketplace hasn't exactly been a resounding success. There has also been chatter about something called "eLive," a marketplace of digital download content--music, video, games--for Zune digital media players, Windows-based PCs, Xbox gaming consoles, and Windows Mobile smartphones.

"eLive was renamed and recrafted to Zune VideoX," a source told Foley, "and the eLive vision scaled down to focus on Zune." Really? That's too bad. The Xbox has been a much more resounding success than the Zune, and it already has the successful Xbox Live Marketplace as a starting point.

That said, there's reportedly a third-generation Zune coming next year. And on another note, can somebody please outlaw the term "iTunes killer?"

Starting next week, a DVD you buy off the shelf could end up coming with a free or markedly discounted digital copy from the iTunes Media Store. The Unofficial Apple Weblog got the scoop from a reader who got an early delivery of the upcoming Family Guy DVD, which comes bundled with a digital download that can be transferred to your iTunes library. When a copy of the digital file to iTunes was attempted, the user got an error message noting that the process requires version 7.6 of iTunes, which is currently at 7.5.

Like movies purchased on the iTunes Media Store, digital copies found on optical media appear to be tied down via DRM. In this case, it's the use of a serial number that gets plugged in and authorized by iTunes. The DVD in question comes from Fox, which has had a similar process in place for other DVDs, although in the past it's used the now-defunct PlaysForSure DRM, which was created by Microsoft.

Besides movie files, piggybacking other content on DVDs could be Apple's next move towards establishing the longevity of iTunes. Studios could still retain their online distribution on iTunes, while offering the consumer a chance at extra pieces of content in the future or a quick link to the movie's soundtrack on iTunes. This is also the first hint of what Apple might be unveiling at next week's Macworld Expo. While the big draw of the show may be the expected hardware upgrades, long-rumored movie rental service, and a demonstration of the official iPhone SDK, this might have just blown the surprise of the "one more thing" we're all curious about.

AllFacebook blogger Nick O'Neill wrote on Friday that an "extremely reliable anonymous source" had told him that Facebook is working on an in-house rival to Apple's mighty iTunes Store. According to O'Neill, the company is in the process of looking for an executive to head this division--his source allegedly knew about the whole deal because of an acquaintance interviewing for the position--and is already meeting with record labels.

It's unclear whether this would be strictly a music store or whether it might extend to other forms of media, like TV shows and movies.

This is very much a rumor, but it would make sense from several different standpoints: first, the fact that Apple's iTunes Store is potentially at its weakest point in months due to controversy over digital rights management as well as disputes between Apple and the entertainment industry that have led to several big players like NBC Universal pulling out of the digital-media hub altogether.

Second, it's no secret that the future of Facebook's profitability is hazy, considering how much of the site's revenue relies on an advertising contract with Microsoft that expires in 2011. Plenty of analysts and critics have said that the Mark Zuckerberg-founded company is going to need to find an innovative way to make money.

But on the flip side, starting a digital download store would be a massive operation for a company that has heretofore been strictly a social-networking service--even one that's as hot as Facebook is now. Currently, the company's only e-commerce operation is the one-dollar "virtual gift" service that it's operated since February. Additionally, the digital download market is already getting saturated with new entrants eager to take on Apple's weaknesses. The new Amazon.com MP3 store, for example, has been described as a worthy competitor.

Not to mention the fact that, as O'Neill notes, the developers and companies responsible for Facebook's myriad third-party music applications won't be too happy if the site that provided their software platform created an in-house competitor. But something tells me that won't stop Zuckerberg & Co.

Remember when Amazon.com was just a bookstore? On Tuesday morning, the online retailer launched the public beta of its much-anticipated rival to Apple's iTunes Store: Amazon MP3, which features over 2 million songs free of digital rights management copy protection, which means they'll play on any computer, music player, or music-enabled cell phone.

Because of Amazon MP3's DRM-free focus, that means the selection isn't as wide as the iTunes Store's. Several major-label conglomerates, like Sony BMG and Warner Music Group, have not jumped onto the bandwagon and hence aren't offering their music for sale in Amazon's new store. Nevertheless, the retail giant has played up the fact that there are still 180,000 artists represented from 20,000 major and independent labels, including several prominent indie labels that are offering their music for the first time in "naked" format.

Each song is encoded at 256kbps, the file quality that Apple offers for its DRM-free iTunes Plus premium music selections, which it sells for $1.29 apiece rather than its usual 99 cents. Amazon's pricing for Amazon MP3 ranges from 89 cents (including the top 100 best-selling songs) to 99 cents; albums are priced from $5.99 to $9.99.

It goes without saying that Amazon is aiming squarely at Apple, and it's attempting to hit the digital music monopoly where it hurts--with regard to pricing, file quality, and versatility, all of which have come under scrutiny by critics. But this could also be a painful blow for eMusic, the online music store that has made a small name for itself by selling exclusively DRM-free music.

While the iTunes Store started its digital download empire with music sales, Amazon has already operated a movie download store, Amazon Unbox, for a year now. Unbox was off to a rough start at first, but tweaked features, partnerships with companies like TiVo, and a solid selection have improved the company's reputation for media downloads.