Software
The first thing I’m taking a look into is what are the software packages each offers:
| Apple | AOL | Microsoft | Yahoo! | ||
|---|---|---|---|---|---|
| Browsers supported | None | Firefox, Internet Explorer, Netscape or Safari | Firefox or Internet Explorer | Internet Explorer | Internet Explorer or Netscape |
| Media Players Supported | iTunes, Quicktime | Windows Media Player | Google Video Player | Windows Media Player | iTunes, Windows Media Player |
| Platforms | Mac, Windows | Mac, Windows | Windows only | Windows only | Mac, Windows |
| DRM | Apple FairPlay | Microsoft Windows-Media DRM | Google DRM (based on OpenSSL) but providers can opt-out | Microsoft Windows-Media DRM | Microsoft Windows-Media DRM |
So it looks like we will be dealing with three different types of digital right management systems, making it difficult to actually have content play on every single device. If only Apple, Microsoft, and possibly Google, could sit down and agree on a standard way to handle this, it would make everyone’s life easier. However, because they all want to lock-in users, we will see an increasing amount of incompatibilities pop up. This becomes more visible in the portable space, which I’m highlighting below:
| Apple | AOL | Microsoft | Yahoo! | ||
|---|---|---|---|---|---|
| Allows use on iPod | Yes | No | Limited (Free content only) | No | No |
| Allows use on PSP | No | No | Limited (Free content Only) | Yes | Yes |
| Allow use on Windows-Media devices | No | No | No | Yes | No |
| Allows use on Nokia phones | No | No | No | No | Yes |
| Allows use on Treo | No | No | No | Limited (Treo 700w is a windows device) | No |
If my analysis is correct, Apple is using its dominance in the iPod space to try to gain power in the living room; Microsoft is using its dominance in the living room to try to get traction in the non-PC world (and gets an early edge as it will play on the Sony Playstation Portable and works on the Treo 700w); Yahoo! is hoping that an alliance with Nokia, which has a strong position in the mobile phone business, will help it in that space. This makes for a future battle in the portable video space with Microsoft getting an early hedge.
What content and how much?
But all the discussion so far has been one of technology. The real question is what content is available and how much it will cost. Let’s look at what they will offer:
| Apple | AOL | Microsoft | Yahoo! | ||
|---|---|---|---|---|---|
| Content | |||||
| Music Video | Yes | Yes | Yes | Yes | Yes |
| TV Shows | Yes | Yes | Yes | No | Yes |
| News | No | Yes | Yes | Yes | Yes |
| Weather | No | Yes | Yes | Yes | Yes |
| Sports | No | Yes | Yes | Yes | Yes |
| Movie Trailers | Yes | Yes | No | Yes | Yes |
| Movies | No | No | No | No | No |
| Short films | No | Yes | Yes | No | Yes |
| User created content | No | No | Yes | No | Yes |
Apple has done a good job in capitalizing off its early lead in the space to get music related content and some TV content. However, it is weak in the news, weather and sports arena, which could be an issue (I’ve actually heard from people at several large content providers of those types that they fear the power that Apple has in that space and, as a result, are wondering whether they should offer content to Apple at all because they are afraid to be led down a path where Apple would be in the lead, with them getting little input into price and strategy).
Also of note here is the fact that none of the portal is yet offering movie download. I expect Apple to be the first out the door with such an offering. Google and Yahoo! may also enter that space but Microsoft will not (as some of its partners like MovieLink, CinemaNow and Starz, are already offering such things) and AOL may only offer Time-Warner content (other studios will probably not want to offer their content through a competitor). Yahoo! will probably hedge out Google in that area too, largely due to the fact that its management has deep ties into Hollywood.
Last but not least is the amount of user-content. Google and Yahoo! are playing with the long tail, hoping that user-generated content will help them fill some of the pipeline. This will be an interesting test as to how compelling that content can be and there may be some tricky issues relating to copyright but it seems to be a risk those two players are willing to take.
The next question is how much this will cost:
| Apple | AOL | Microsoft | Yahoo! | ||
|---|---|---|---|---|---|
| Offers Free Content | No | Yes | Yes | Yes | Yes |
| Offers Premium content | $1.99 per show for video downloads | Yes, as part of AOL subscription | Yes, variable (based on what provider wants to charge) | Yes, $19.95/month all you can eat | Yes, $6.99/month for all you can eat music videos |
In this space, it is interesting to see two different business model collide: on one side, you have companies that are looking to offer advertising supported content to the masses and charge a premium for some of the content. The charging model on the premium content is also divergent from player to player: Apple is looking at a fixed per unit price, while AOL and Microsoft are looking at an all you can eat price for a larger fee. Although Yahoo! has not announced much in this space, they look primarily to the advertising supported model as the way to go. Google, on the other hand, is going to try to create a marketplace based on variable rates, and will probably use something similar to an AdWord for Video type of program to subsidize their own free content.
Update:
I’m making a few changes to the tables (primarily in the Google columns) based on the latest information I’ve received.