Here is a trend that I think is developing, and it is a classic case of competitive pressures forcing companies to make poor decisions.
In the brief history of recorded media and entertainment, we have associated new technological advancements in quality with a large increase in consumer satisfaction and an upswing in sales. From the LP to the Cassette to the CD. With video we went from VHS to the DVD, and now we are being pushed to Blu-Ray and HDDVD.
Moving from cassettes to CDs was an obvious choice for most consumers for one real reason: You could navigate by song. CDs also offered higher quality sound, which many saw as a bonus, but as we all bought CD players with the cheapest of headphones and speakers, it seemed apparent that sound quality was a secondary concern.
After the CD, the MP3 started to come in to prominence and music was broken out even further. Instead of dealing with a long continual tape or LP, we went to track-based CDs, and with MP3s we were moving on to understanding the song as an element of its own, independent from the concept of an album entirely. There had always been “singles”, but they were limited drastically in so many ways: They were selected by record companies, their distribution in physical form was a fraction of regular album distribution, and they were also generally overplayed on the radio and became repetitive.
In essence, the consumer made a decision about priorities. At the time, MP3s topped out reliably at 128kbps, which could be compared to radio quality but is easily distinguishable from even CD quality. What the consumer wanted was not higher quality, which Digital could make the promise of delivering, instead the idea of sharing their music, transferring it to different devices, and burning custom mixed-CDs of their favorite songs was just far too alluring.
The story of video is similar. While one of the driving factors in the move from VHS to DVD was quality, which is much more obvious in video than in audio it seems, DVD also offered a lot of the convenience of the CD, and most significantly did no wear down in the same way VHS tapes could. Never-mind rewinding!
Here is where the story of video is both similar to audio, but also very different.
In between VHS and the DVD there was also the Laser Disc. Laser Video Discs were very large and cumbersome, they were bigger than an LP and consequentially represented no additional convenience over VHS, even though they did offer a reasonably significant leap in video quality. The laser disc was Dead on Arrival, unlike digital video files.
Digital video has been around as long as the Mp3 or longer. Originally it had far more problems than the MP3. Where the MP3 format was licensed quite liberally to all sorts of players, video formats remained fractured with fights between Quicktime, WMV and a slew of others. Users had to download players, get codecs and then pray that their internet connection could get them the video in any reasonable amount of time, which was rarely the case.
This gave the DVD a huge head start, which would have contributed to its adoption.
As DVD was the dominant format, things started to change in the world of online video. Broadband connection rates have been growing steadily, but more significantly: Flash became a simple, lightweight and ideal video player. Flash was ideal for both the producer and the consumer. It required almost no work from the consumer. No messy codecs, no files to manage, nothing. And it was really easy to install to boot.
As next generation formats begin to shape up, HDDVD and Blu-Ray, people also started to find it much easier to create their own videos. Seeing the movie as a scene by scene sequence rather than as the epic we have come to know and love.
We now see video going in two directions, one is guided by the end users and the other by production companies and hardware makers. Producers are pushing the two next-generation formats on to store shelves in a protracted battle focused on delivering higher-quality video to consumers.
For a certain subet of customers however, Blu-Ray and HDDVD seem to be the last thing on their mind. Streaming video is taking over TV and DVD as the dominant video format for one single reason: convenience factor.
This impact is felt within the realm of digital video as well. In speaking to several university students and asking them about how they watch video, many eschewed delivery platforms such as iTunes and Bittorrent because of convenience factors. Even though a typical Bittorrent or iTunes video is of much superior quality, most students are turning to streaming, on-demand flash-based video from sites like ucTV and others. This is an example of convenience trumping quality even within the world of digital video.
Immediacy is more important than video quality
Producers need to realize that immediate distribution is more important that providing a high-quality version of the video. This also applies to the time companies take in distributing videos to the consumer. It takes month for a film to go from the theater to DVD now, but low-quality versions, often with foreign subtitles, are usually available within days online and consumers are more than willing to watch these videos and find them to be an acceptable alternative.
The content format is going to change eventually
This trend is going to stick around and its effect will be compounded beyond simple effects on distribution, content format will eventually change as well. As people become more and more accustomed with ripping and mixing video, they start to accept shorter and shorter videos as high-value entertainment. Youtube is the most obvious example of this.
The 5-minute epic
At some point this format shift will be compounded even more and watching entire 2-hour films will become less and less common. The art of the 5-minute (or 20 minute perhaps) epic will become a significant niche with widespread mainstream acceptance. The Academy Awards, which will be chopped up and delivered as a playlist of small videos, will dedicate a significant amount of their mainstream awards to these short films.
HDDVD and Blu-Ray are a poor market position
Content is king and it is going to be increasingly difficult to maintain market leadership based on high-quality video format. While large amounts of individuals in the middle-upper class will buy large flat screen TVs and high-definition video players, a coming generation of consumers will not be nearly as comfortable in front of the same 40-50″ screen. They are used to watching video on a laptop screen, usually while curled up in bed and they are more likely to watch on-demand 20-minute TV shows as they are to watch long-form movies.
At some point, high-definition will converge with immediacy. Large broadband connections and better streaming formats will mean that on-demand streaming video will be of a superior quality. 480p will be more than enough for a huge proportion of consumers.
Not just video
Trending in clothing in the last 15 years have showed similar tastes. Low-quality but fashion-current chains are gaining a larger foothold in the clothing industry. With stores like H&M, Zara, Guess and Forever XXI offering cheap versions of the same styles that you see at stores like D&G, Prada and other high-fashion designers.
Food has also seen this shift with the onslaught of Fast Food, which I think has been the most disturbing convience and immediacy based trending in consumer behavior, but it serves as a barometer for Video and a slew of other industries.
Video producers have to understand this trend and address it head on, most likely to the detriment of short term profits, in order to better iterate of potential business models in this space. Projects like Hulu from NBC show that not all players are completely clueless.