Sony Vies for Video

Sony (NYSE: SNE) may have announced last week that it's disconnecting its Connect music service, but according to news reports today, that isn't stopping the electronics giant from mulling the idea of its own digital movie service. Maybe Sony can enter the download game a bit wiser this time.

Of course, there's no reason to believe this will be easy, even if the opportunities are ripe. After all, Apple's (Nasdaq: AAPL) got a good head start in offering digital video through iTunes for devices like iPods and iTV. That's not to say digital video is an easy product to offer at this point in the game; just for starters, the Hollywood studio set is just as worried about piracy as the music industry has been, and the fact that Sony's been a bit paranoid itself (the rootkit controversy springs to mind) might limit its abilities to think outside the box on this one.

Plus, this market's not just about Apple -- and it's not a simple market, either. Google (Nasdaq: GOOG) may be powerful in search, but it discontinued its online video store (although it still has YouTube, of course). As far as rivals go, there's also Joost (previously known as the Venice Project), which became more well-known when Viacom (NYSE: VIA) chose it as a video partner, even as that company took Google and YouTube to court over copyright issues. And there are sure to be many more competitors as the marketplace evolves.

Even beyond the competitive landscape, the video-downloading market is still nascent and faces a few obstacles before it can become mainstream. For example, video downloads can be time-consuming and require a heck of a lot of storage capacity on users' hard drives. I wouldn't be the first person to think that maybe Netflix (Nasdaq: NFLX) has the right idea by starting with streaming video for its customers.

This is not to say that Sony's completely out in left field on this one. I have often heard my Foolish colleagues discuss how one of the best things about high-end video game consoles like Sony's PlayStation 3 (and the PSP device) and Microsoft's (Nasdaq: MSFT) Xbox are their high-definition video capabilities, which include digital video content. In that way, these consoles may be underestimated as just toys for game geeks when they can also function as important hubs in the digital living room.

Sony shareholders can only hope that if the electronics giant does proceed with a digital movie store, it will illustrate that it has learned from initiatives that didn't work and find ways to make the offering irresistible to consumers (and even open up the possibility for a halo effect for its own products, although there are good reasons to theorize it might be unwise to put up proprietary walls like it did with Connect). There are plenty of rivals in this young space already, and missteps could leave it with a replay of Connect. 

Netflix is a Motley Fool Stock Advisor recommendation. Microsoft has been recommended by Motley Fool Inside Value. A free 30-day trial of either newsletter will turn your computer into an investing hub.

Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool has a disclosure policy that applies to its videos as well.