Rupert Murdoch's lastest bid for world domination

[LiviaOlivia]

Rupert Murdoch Strikes Back
His bold plan to give away 20 million digital video recorders.
By Edward Jay Epstein
Posted Tuesday, June 14, 2005

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Girdling the earth with satellites was just the beginning. Even before Murdoch completed his acquisition of DirecTV, he told financiers at Morgan Stanley's Global Media Conference that he planned to marry the satellites above with TiVo-like home recorders below, explaining that "every subscriber will be getting either a free digital video recorder or one for nominal amounts of money." And, to this end, according to Business Week, he plans to order 20 million digital video recorders for his customers.*

Murdoch is attempting to revolutionize the world's video-rental market (both VHS and DVD). Since its inception in the late 1970s, video renting has been an inefficient business. Indeed, on first hearing the business model, Warner Bros. titan Steve Ross asked incredulously, "Can we really expect millions of busy people to get in their car, drive to a store, pick out a movie, stand in line, fill out a rental agreement, pay a deposit, drive home, play it on their VCR and then, the next day, repeat the procedure in reverse to return it?" Even with improvements in swiping credit cards and mail-in schemes such as Netflix, renting remains a cumbersome affair.

Murdoch plans to digitally deliver movies and other programming from his satellites to home digital video recorders that would be the same quality, or higher (HDTV), than a DVD. Since there are not enough transponders on satellites to stream movies to individual subscribers on demand, Murdoch needs DVRs in every home to make his digital-delivery system work. With DVRs, the satellites can upload movies in the middle of the night in encrypted form onto subscribers' hard discs without us having to do anything or even be aware of it. (One idea now under consideration at DirecTV is to provide these DVRs with an enormous 160-gigabyte recording capacity. The subscriber would only be told about 80 gigabytes, with the remaining 80 gigabytes reserved for encrypted movies.) Once the movies are placed on the DVRs, a customer "rents" them by clicking on his remote control.

Once it's possible to go no further than one's couch to rent a movie, why would any viewer choose to make two trips to the video store? Electronic delivery would also be much more profitable for the movie studios. Not only would it eliminate the manufacturing, warehousing, distribution, and return cost of DVDs, but it would cut out the video stores, which at present get about 40 percent of the rental money. There's just one catch. To make digital video on demand work, Murdoch would have to overcome a formidable barrier—the 45-day head start that video stores have been given. This so-called "video window" is the result of a long-standing unwritten agreement among studios to delay the electronic delivery of movies for at least six weeks after video stores have had the opportunity to rent them. Because most people rent movies the week of their release—indeed, more than 80 percent of rental earnings comes in the first two weeks—most would-be renters have already seen a new release by the time the 45 days have elapsed. To get these renters, Murdoch would have do away with the delay and deliver his movies to his subscribers on DVR the same day that they are available in stores.

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http://slate.msn.com/id/2120868/

[billbuckhead]

1. This is one of the rumoured reasons Apple switched to Intel

They have special security features for downloading media built into their hardware.

From Wired <http://www.wired.com/news/mac/0,2125,67749,00.html>

Hollywood Orders: Apple Wed Intel
by Leander Kahney
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"But why would Apple do this? Because Apple wants Intel's new Pentium D chips.

Released just few days ago, the dual-core chips include a hardware copy protection scheme that prevents "unauthorized copying and distribution of copyrighted materials from the motherboard," according to PC World.

Apple -- or rather, Hollywood -- wants the Pentium D to secure an online movie store (iFlicks if you will), that will allow consumers to buy or rent new movies on demand, over the internet."

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