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By Carl Howe

As noted in this article in the New York Times, Amazon's (AMZN) Unbox movie downloading service launched last week. Sadly, I think it is going to go nowhere. Why? Because it's not a service designed to meet the needs of real users; instead, it's all about protecting the studios and accepting Microsoft's very limited view of consumer rights in the digital world.

Why so negative? Because Amazon's Unbox service provides:

* No living room experience. These movies and TV shows can be burned to a DVD, but not to one that will actually play on a DVD player other than the computer that downloaded the video. The result? Unless your computer is a Media Center PC hooked up to your TV in your living room (a configuration I estimate to be in fewer than 3% of US homes), forget watching these movies on your couch.

* No guarantee of a good portable experience. Yes, these movies can be transferred to six non-iPod devices, including some (but not all) from Creative, Archos, iRiver, and Toshiba. We can assume they will also play on Microsoft's Zune, since that will be based on the Toshiba product. Of course, these devices constitute in aggregate far less than 5% of the portable media player market. But check out this disclaimer right out of the frequently asked questions: "If your device is Plays for Sure compliant it may work" (emphasis is mine). Wasn't the whole point of Plays For Sure to guarantee media would play for sure?

* No support for anything other than Amazon's Media Player on a hefty Windows XP computer. The only way to play one of these videos is by downloading a piece of software from Amazon; the files aren't standard MPEG2 or MPEG4 formats. And the software requires that you run it on Windows XP with at five gigabytes of free disk space and at least a half a gigabyte of main memory (which, by the way, is incorrectly cited as 256 MBytes of memory on this installation page. If you run Windows 2000, ME, 98, Linux, or a Mac, you are out of luck.

* No discount for all these restrictions. With all these restrictions and by reducing the need for the studios to provide you with a disk, a case, and supporting materials, you'd think that consumers would be seeing hefty discounts over buying a DVD of the same movie. Think again. When I shopped for a DVD of "The Matrix" it cost $9.88. When I shopped for the same movie on Unbox, it also cost $9.88 -- exactly the same. And the DVD I can play in my living room or on any computer in my house, rip to a file that will play on my Video iPod, and even sell to someone else when I'm done with it.

unbox
Amazon.com's new unbox service -- unworthy of your business?

I predict you are going to see a very different service from Steve Jobs this week, and consumers will get to vote with their wallets for which version they prefer. But Jobs at least understands that any movie download service has to create a rich, valuable experience for the consumer, and not just be a way for studios to pocket more money for less work. And until someone else in the digital media business starts to understand that balance, Apple (AAPL) will continue to rule paid digital downloads.

AAPL-AMZN 1-yr chart:

AAPL-AMZN 1-yr chart

Source: Amazon's New Movie Service No Threat to Apple