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Will a PS3 Download Service Starve Blu-ray?


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348w ago - Sony is working to roll out a video-on-demand service for the PlayStation 3, and one report says it could happen as early as this summer. However, most Blu-ray DVD players in consumers' homes are actually PS3s. Will offering an online service cannibalize Sony's high-def format?

PlayStation 3 owners may soon be able to watch movies without ever leaving their living rooms.

In an official PlayStation blog entry dated April 15, the game maker hinted at plans for the PlayStation Network in 2008 and a recent revamp of the PlayStation Store. A senior marketing executive also mentioned that a video service was in the works for the PS3. Then, a report in Monday's Los Angeles Times cited unnamed sources familiar with the matter who asserted a video service is indeed headed for the PS3 as early as this summer.

"Many of you have been hearing rumblings about a video service that will allow you to download full-length TV shows and movies via PlayStation Network for North America," wrote Peter Dille, senior vice president of marketing and PlayStation Network, on the PlayStation blog. "While I don't have any new announcements here for the PlayStation Nation, it's already been confirmed that we'll be offering a video service for the PS3 in a way that separates the service form others you've seen or used.

"Ultimately, the goal of the PlayStation Network service will be to break through the overwhelming clutter of digital media to give you the TV, movies and gaming content you want. More on this very soon," he continued.

A Sony (NYSE: SNE) spokesperson declined to provide any additional details such as pricing or lineup on the as-of-yet unofficial service.

"We don't have anything further to announce about this service," Patrick Seybold, Sony PlayStation spokesperson, told TechNewsWorld.

Two Strikes ...
A PS3 movie download system would mark Sony's third attempt to create a video service. The first two include Movielink, purchased by Blockbuster in 2007, and Sony Connect, which came to an end in March.

In moving the PS3 into the download market, Sony enters a realm currently ruled by rival Microsoft's (Nasdaq: MSFT) Xbox Live service. With some 10 million subscribers and enough video content to keep gamers otherwise entertained when not playing an actual video game, Microsoft has set the bar high.

Xbox Live users can view more than 350 movies and 5,000 TV show episodes, of which 25 percent are available in high-definition.

Eating Up Blu-ray?
The bigger question, however, could be the impact of such a service on sales of Blu-ray high-definition DVDs. Sony championed the Blu-ray format, which fought a long battle for market dominance with rival HD DVD. With PS3 owners currently comprising the largest segment of Blu-ray's installed base, does the electronics company risk cannibalizing one technology for the benefit of another?

Maybe, but not yet, according to Michael Inouye, an InStat analyst.

"Online video, both via the Internet at large and downloadable content, is still largely a complementary good, so to speak. While at some point downloadable content could trump the physical products, it will likely come well beyond this current generation of consoles," he explained.

In a recent survey, Inouye found that a large proportion of respondents still prefer "physical copies with packaging."

Inouye sees Sony's move as more of a preemptive strike.

'Baby Steps'
"As online video becomes more central to how we consume content, there could very well be a natural paradigm shift to downloadable content, and the offerings from Sony and Microsoft are baby steps to this end. I say 'baby steps' since it will be a gradual process," he told TechNewsWorld.

"Over time, the industry is very cognizant of the increasing demand for content to flow to numerous screens, and both managed copies and downloadable content are two such venues to satisfy this need. I could be wrong, but I don't see the quick transition to downloadable as, say, the change form VHS to DVD, but rather I think we are privy to the first steps towards a different way of looking at content," Inouye continued.

"We hear it less often now, but the phrase 'democratization of media' is still, if not more so, applicable today then even a few years prior, and Sony is adapting just like the rest of the industry," he concluded.



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