Analysis: Ten reasons why discs won't die

Scott Fulton, BetaNews: Well, all the cards are pretty much on the table now at CES 2008, and it's time to start looking at what it all means. For that we've brought along our former Gartner analyst and BetaNews' own Senior CES Analyst, Sharon Fisher.

And Sharon, I'm thinking the place to start this week is with the notion that the high-def format war may be drawing down, if not to a complete close, and the real excitement has shifted over to streaming video.

Sharon Fisher, Senior CES Analyst, BetaNews: Yea, sure, Scott. And there's been some discussion that, now that the high-definition wars are largely over and it looks like Blu-ray will be the winner, it will all become immaterial because by 2010 we're all going to be moving to streaming video anyway and the disc is dead.

Balderdash. Here's why.

Ten Reasons Why Discs Will Never Die

1. Consumers aren't ready for it. Look at it this way: next year is the conversion to digital television, and the industry and the government are printing out 35 million coupons for the people who still use rabbit ears or a rooftop antenna to get their TV signals. How many consumers, other than the leading edge, are going to have the type of hardware and software that will allow them to rely solely on streaming video?

2. Sites aren't ready for it. Even now, when there's big events like Cyber Monday, Web sites can't handle it, and that's just for shopping. How much of a load is streaming video going to be? A good test will be to see what happens with the Summer Olympics this year. NBC and Microsoft announced plans to stream 3000 hours of coverage for every sport. www.nbcolympics.com has streaming video with good performance now, but let's see what happens during the gymnastics finals.

3. Infrastructure isn't ready for it. How many consumers have enough bandwidth to support it? How many consumers even have access to that much bandwidth? According to the National Association of State CIOs, you need 12 Mbps to even start getting IPTV, and what you really need is 24 Mbps to 100 Mbps. I have the fastest consumer Internet service possible in my area, and it clocks at 214 Kb. I downloaded the Microsoft Silverlight software that will be used for the Olympics, and tried to check out the CES coverage on Microsoft's site, and it paused every few seconds.

4. Providers aren't ready for it. Comcast has already taken heat for what's called bandwidth throttling, or cutting consumers off when they download "too much" data (and the "too much" isn't defined), but surely many other providers are doing it as well. How quickly are they going to be able to handle it when everyone is doing it?

5. With all the talk of on-demand video, do we really believe that we will be able to see any video at any time? I happen to be fond of the Icelandic film director Hrafn Gunnlaugsson; am I going to be able to find his more recent movies?

6. How's the pricing going to work? Wal-Mart (which, incidentally, discontinued its movie download service) charged $12.88 to $19.88 for a movie and $1.96 for a TV episode. If my daughter wants to watch Rudolph, the Red-Nosed Reindeer five times in a row (in July - and am I going to be able to download it in July?), how much is that going to cost me? Am I really going to pay $10 for every night when I flop in front of the tube after dinner and manage to stay up for Jay Leno?

7. There are some movies, that, ahem, we'd just as soon people not know that we like to watch and that we might like to have on disc so we can hide them. Yes, it's true that such content is available and popular on the Internet now but if all the video coverage is coming from the same provider, how does one maintain one's discretion?

8. Owning a disc is just simpler. There's plenty of Disney channels, but every parent I know has a rack full of Disney videos anyway, which they pass around among themselves, send with their kids to overnights, etc.

9. Let's say that there's a way for consumers to keep the content they get through streaming media. How are they going to manage it? Everyone I know with a TiVo has it full of stuff they never get around to watching and then it fills up and they can't record any more. What happens if a power failure or disk problem zaps the library?

10. Megatrends author John Naisbitt postulated the concept of "high tech, high touch," which stated that with increasing technology, people feel the need to increase the human response. They want something tangible they can hold and touch. People still buy vinyl records, for heaven's sake. Heck, they still buy books.

I admit it: You can have my discs when you can pry my cold, dead fingers from them.

Scott Fulton: Sharon, you mentioned the need for something tactile. I've always used that defense in arguing why electronic books would never replace books.

Sharon Fisher: Exactly.

Scott: There is a certain friendliness, a familiarity with the bound volume that cannot be simulated even by Amazon's best engineers. My wife and I still treasure our 33 rpm collections. (I'm dating ourselves now.)

Sharon: Plus, the distinction between them. My daughter learned to read through the logos on Disney movies. She wouldn't be able to do that through a list on a screen.

Scott: By that same token, you'd think that the record album in its current incarnation would be something of transcendently tactile value.

Sharon: It does. Vinyl record sales are going up.

Scott: And yet CD sales are evaporating. Every analyst from every part of the spectrum is saying that today's buyers prefer the portability of the disattached file.

Sharon: So what are you and I? Chopped liver?

Scott: Once the ratio of available space to media file size becomes the same proportion for video later as it is for audio today, who's to say that trend won't repeat itself, and you and I would become chopped liver?

Sharon: Maybe we will. Someday. But not by 2010.

People are willing to dump old technology when something demonstrably better comes along. How many eight-tracks do you see today?

Scott: Well, 8-track failed because of its relatively low fidelity. MP3s are not necessarily any higher fidelity than what is printed on a CD.

Sharon: Sometimes worse.

Scott: In fact, many are lower fidelity. And you'd think they have the disadvantage of not being bound to something you can touch. For a growing number of people, that's not a disadvantage.

Sharon: True. For them, they like the portability.

Scott: So why wouldn't a similar trend emerge in video, if not by 2010, then certainly by 2015?

Sharon: You know, some archivists are talking about how we're likely to lose our history of this period, because so much of it is stored in computer media that is no longer readable or will no longer be readable in the future. By 2015, there'll be some other big thing, some new format, that everyone will want and that will be incompatible with previous methods.

Scott: That theory only makes sense if you subscribe to the notion that data is "printed" on media. In a storage area network, where a lot of history these days is being kept, that's not the case. It moves around.

Sharon: Is the average consumer going to have a SAN at home?

Scott: Quite possibly, at least in the architectural sense. You're seeing more and more enthusiasts' desktop computers with two or three RAID drives standard. So what if, by 2015, I can hold my whole SAN in my hand? That becomes my entire library. It's kinda tactile, in a strange way.

Sharon: Enthusiasts, yes. Certainly enthusiasts will be doing streaming video. But what about many other consumers? I can't even send my dad digital pictures of his granddaughter because he doesn't have e-mail or a computer. But that's also vulnerable. Part of the reason I don't get an iPod is that I'm afraid I'll run the thing through the wash.

Scott: Well, you see how trends are sold to us at CES every year. It's not something that corporations beg us, please, please do this, it'll make our gross margins so much nicer. They say, this is something that's going to happen and going to sweep the country, and if you're not doing it too, you're chopped liver.

Sharon: People hate throwing things away, especially when they work. Shall we take bets on how many people freak out on February 19 next year when their tvs suddenly don't work?

Scott: There will be millions of people...who suddenly see static where Channel 7 used to be......and they'll issue a Mandate for Change in America!

Sharon: It's going to be very interesting, actually. Bigger than Y2K.

Scott: The reason I ask all that is this: There's a theory buzzing around this week that the high-def format war is almost over at last. And that it's only a matter of time before HD DVD concedes defeat and Blu-ray takes over the last two big studios in a great game of Risk. And that when that happens, everybody who's been waiting around can at last invest in a Blu-ray player.

I think the manufacturers know that this theory isn't set in stone. I think they're looking at the facts and saying, do consumers really think they even need a high-def video disc?

Sharon: Exactly. I'm actually hearing from a lot of people that they aren't seeing enough of a difference in HD to make it worth bothering. These are people people, not enthusiasts, not industry people.

Scott: As long as conventional DVD hangs on, high-def blue-laser disc will always be in the upper crust of consumers. And that's the same profile of consumers who can reject CDs because they no longer need the bulk.

Sharon: Right. So video streaming will actually end up cannibalizing the Blu-ray market, because they fill the same ecological niche.

Scott: You've followed me to the conclusion I had in mind...So Discs Will Never Die?

Sharon: I won't say never. Never is a long time.

Scott: So shall we call your list, "10 reasons why most discs will likely not die for a long time?"

Sharon: True, I did say "never" in the title, didn't I?...It is remotely possible that they won't sell discs by 2015.

Scott: And with that bit of cannibalization, we'll say thank you to Sharon Fisher.