"They just don't get it"

The release of the Xbox 360 and PlayStation 3 has brought about the rumblings of another format war: Blu-ray vs. HD-DVD. One of these two formats is supposed to triumph as the storage medium for next generation, high-definition content that can’t be accommodated on CDs or DVDs. Just like the much discussed VHS vs. Betamax battle, two industry giants are pitted against each other in a battle to convince consumers to buy their disc formats, media players and content.

However, this time the battle is very different. With dual-format players already available it is more likely that multi-format platform will emerge akin to current DVD devices that can accommodate multiple formats. More interestingly though, the idea of buying and renting content on physical media is becoming incredibly passé. In the not to distant future, buying a game or movie on DVD will be akin to buying software on floppies or listening to music on tape.

iTunes is the prime example of where things are heading – ubiquitously available online content integrated with appliances and a killer user interface. The release of Apple TV didn’t really make huge headlines but essentially Apple is validating their past business success and hoping the stalwart media providers are caught sleeping when all of a sudden millions of consumers start purchasing movies and custom digital content online. The current digital and PPV offerings from traditional cable providers are amateurish at best – and in reality indicated that they don’t get what is required for this new way of content distribution to succeed. Companies like Blockbuster and NetFlix, in their current iterations, are walking anachronisms.

This is also why the Xbox 360 is most likely going to win the next generation console wars as well – the online aspect of each game is not a bolted-add on but an essential part of the experience. By distributing their appliance to millions of households and providing a superior online experience, Microsoft is laying the infrastructure for a battle with iTunes and Apple TV. However, it’s not clear that Microsoft has learned the lesson from their disastrous attempt at creating a media player for neither Windows nor the mobile market. Sony on the other hand is still focused on proprietary hardware technologies like memory sticks and Blu-ray – a sign that they are still living in a past mindset.

The company or consortium that can deliver a vertically integrated solution including appliances at the home level, wide range of affordable content and a user interface that is useable by the digital proletariat will destroy they way we currently consume entertainment.