Fencing In or Building Up: A Tale of Two Strategies

Just as excited techies spread rumors that Apple will offer movie rentals through iTunes for several studios, Wal-Mart announced an end to its movie-download service.

Apple Builds Up
Apple has been working its angle for awhile, but studios have resisted because they worried about their ability to control how their movies get distributed, and at what price.

Details are sketchy at this point since the notoriously secretive Apple has not authorized anyone to speak about it publicly, but there is no indication that these same studios will make the movies available to purchase, or to burn to a playable DVD.

Apparently they are still heavily influenced by their compulsion to control the minute details of consumption, placing barriers in the way for those who either don't have an iPod or who don't want to watch a movie on their computers. Of course, consumers could always buy an Apple TV for about $300, which I'm sure would make Apple very happy.

That's a big commitment to demand of consumers to use a service. Yet, with 30 million iPods sold to date (many of them having the ability to watch movies and, with the right cables, play them on a TV), the existing market, it seems, is large enough to justify the risk, irrespective of how slowly their policies will allow the market to grow.

Wal-Mart Fences In
Wal-Mart, on the other hand,  had to shut down its movie-download service when HP discontinued its video-download only merchant product. It's been a few months since I checked, but this service was never available for Macs, whose tech-friendly owners already familiar with downloading media, though largely loyal to Apple, may have been enticed to use the service, if it did more, better, than iTunes did. 

Wal-Mart's decision to fence in isn't necessarily wrong, because this type of service doesn't reflect their strength as it stands now.

If they truly want to go after this market, though, their best bet would probably be to start building some in-house intellectual property that they could use independently of third-party software vendors who hold animus towards a category of users who would be open to using the service.

Having defined itself as a software company, Apple has positioned itself to adapt to a changing environment. Whereas had they relied on someone else to provide the service for them, like Wal-Mart did, they would have been subject to their whims.

Neither dead nor thriving
Movie download services still have a long way to go before they can gain widespread traction, but in spite of the difficulty in getting the expertise and commitment to handle the creation and maintenance of such a service in-house, the main obstacle seems to be the studios themselves.

Fearing widespread copyright violations, studios demand they be allowed to exert excessive control over how and when people consume their media, which is the wrong approach.

The best way to deal with pirating threats is to make it easier to distribute and consume the media lawfully than to exert the effort it would take to use the media unlawfully. They are never going to  control all piracy. And their efforts to do so are just ticking off the people who have no desire to do so. - Cam Beck

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