This year's CES saw some big announcements regarding on-demand online video, which everyone and their dog has been saying will be the next big thing since about 1996. Google Video, Vongo.com, Apple iTunes, and other services all allow you to download low-quality, DRM-ridden video on demand for modest sums of money. Unfortunately, the low resolution and restrictive DRM make these services pretty much useless for all but novelty purposes, with the possible exception of iTunes, which has the advantage of a growing population of video iPod owners who have nothing to watch on their new gadgets.
There are two types of people who want to download movies: geeks and non-geeks. Some geeks might not mind sitting in front of their computers watching a movie in a crappy little window, but most would balk at the crappy video quality, even if they didn't balk at the inconvenience. Your average non-geek most definitely does not want to sit in front of a computer to watch a movie. A small percentage of geeks and a much smaller percentage of non-geeks own HTPCs and could theoretically watch downloaded movies on their home entertainment systems, but often this is thwarted by restrictive DRM, and even if it isn't, you're still left watching low-res, blocky, over-compressed video.
That's not to say there isn't a huge market for digital video downloads. Peer to peer filesharing networks these days are swamped with almost nothing but digital videos. There's an enormous market. But why would anyone buy a low-res DRM-restricted video when they could download an HDTV-quality unrestricted version of the same thing for free?
I listen to tons of music and I watch tons of television, but I haven't bought a CD or watched broadcast TV at home in years. I buy most of my music from Allofmp3.com, not because it's super-cheap (although that doesn't hurt), but because I can get it in high-bitrate Ogg Vorbis format. I'd use iTunes, but 128Kbps MP3s sound crappy. Bittorrent has replaced cable as my source of television. With the click of a remote, I can be watching Battlestar Galactica, Lost, Scrubs, Veronica Mars, Arrested Development, and pretty much any other TV show I feel like watching, whenever I want to. At beautiful HDTV resolution. With no commercials. For free.
The downside is that it sometimes takes hours, days, or weeks to download that much video, but hey, what else am I gonna' do? Watching live TV is inconvenient. I could buy a DVR, but those are expensive, and I'd still have to pay for cable, then pay extra for HDTV equipment, etc. Bittorrent downloads can be pretty slow sometimes, and I'd much rather pay the studio a buck or two per episode to get fast downloads of HDTV-quality shows, but I can't. They only want to sell me shitty 320x240 videos that I can't even watch on my nice big widescreen HDTV set. Why would I pay for that? Why would anyone pay for that?
I really like that a lot of shows are now available on DVD. I own several DVD sets of pre-HDTV shows. But for shows that were originally shot in high definition, DVD is a step down. Why would I buy the DVDs when I could download higher quality versions online for free? Special features and deleted scenes? Sorry, no.
The studios don't want to compete with free, so they're fighting it with lawyers. Yes, downloading copyrighted content without authorization is illegal. And so is driving faster than the speed limit. And most people still speed unless there's a cop nearby. With enough cops on the street, you could probably eliminate speeding altogether, but then you'd have to pay millions of cops to drive around pissing off the citizenry and everyone would lose.
Do you see where I'm going with this?