Yahoo! (Nasdaq: YHOO) took a break from search this week. Rumor has it Yahoo! plans to team with DSL partner SBC Communications (NYSE: SBC) and the online movie download concern CinemaNow to provide a limited-time video-on-demand service. Listen up, iTunes hipsters, because this sure sounds familiar: The movies will be available for download for $0.98 a pop. The time is ripe, but are we ready?
Viewing movies via PCs has been something that's been talked about for years, but it's been slow on the uptake. After all, it was the norm to surf the Internet on machines with little or no giddy-up and plodding dial-up access. The number of people equipped to download movies was woefully few.
Recently, though, companies like SBC, Verizon (NYSE: VZ), and Comcast (Nasdaq: CMCSA) have brought affordable broadband to the average home. Consumers now have computers with more memory and speed than they will probably need. The time is ripe for VOD.
The SBC Yahoo! deal is not a precedent. Time Warner's (NYSE: TWX) AOL unit recently offered a similar deal for its users through MovieLink. And Netflix (Nasdaq: NFLX), which has reigned supreme in providing subscription DVD rentals, certainly sees the way the future could turn, judging by plans to get into the VOD space.
Digital media for chump change has revealed itself as workable, Apple's (Nasdaq: AAPL) iTunes being a case in point. (Speaking of, some surmise that Apple will develop an iPod-like device for on-the-move movie watching, though the company's tight-lipped about any such plans.)
Some of the old barriers remain. Even with broadband, downloading a flick still can take a couple hours. And will the average 9-to-5 office worker relish the idea of two-plus extra hours on the computer? Tech watchers also complain that both the MovieLink and CinemaNow sites offer too sparse a selection and too high a price, when not connected with super cheap deals like those Yahoo! and AOL are offering.
Regardless, a few short years ago, movie rentals meant a trip to your local video store. Times sure have changed -- movie-watching options now include Netflix, Motley Fool Stock Advisor pick TiVo (Nasdaq: TIVO), and cable companies' video-on-demand services. With the availability of sub-dollar downloads to at least coax users to try the PC/movie combo, the stage is set for that pre-bust new economy buzzword, convergence.
Will the final steps of convergence cement Yahoo!'s dominion, or, perhaps, put AOL back into the mainstream? For now, there are still wrinkles that need to be ironed out. But investors watching the space should eagerly await the next installments.
Are you a movie addict, no matter how they're delivered? Talk to other cinema fanatics on the Great Movies discussion board.
Alyce Lomax does not own shares of any of the companies mentioned. Having just bought a shiny, new TiVo, she's thinking she'll have plenty of entertainment, at least for a while.
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