Disney Steamers Go Green

The Disneyland Railroad is going green by switching to bio-diesel. The engines are switching from a low sulfur diesel to a mixture of 98% soybean oil and 2% diesel aka B98. It will save up to 150k gallons of diesel fuel a year and the trains will reduce CO2 emission by 80%. And its 54 cents cheaper too!

Thanks LaughingPlace!

Mike breaks down P2P

In response to my last post on P2P, Mike answers:

"Yeah, BitTorrent is hosting the files. P2P works great when there are lots of downloaders, and becomes dependant on fast seeds as that number drops. You still end up with a CDN-ish architecture, but a much smaller, and much, much more efficient one, and one that can't be overwhelmed by a sudden surge of traffic (protection against which is where all the costs are in building a hosting solution or renting bandwidth. The benefits are even greater for large, internally-fast but bottlenecked networks (like college and corporate networks).

For delivering IPTV, I think the first workable solution is going to be a hybrid of streaming, P2P, and CDN infrastructure. It's the only way to get as good a user experience as people with cable and a TiVo currently have. Pure P2P with a CDN backup will work fine for a Netflix-to-TiVo type service (like Amazon Unbox, but with a non-retarded price point) where you want it in a reasonable time limit, but have a little leeway so you can get the benefits of smart queuing and swarm building."

Mike on P2P

Mike wants to defend P2P....

"For the record, the reason that BitTorrent downloads can take that long is because of shitty upload bandwidth on most peoples' asymmetric connections. If you have fat seeder pipes, it flies. Download something from bittorrent.com to see what I mean."

And who is hosting those downloads? Bittorent?

That it is sort of my point. P2P is great in theory, but in practice, a lot of the nodes a connected via slow or flaky connections and without trusted professional sources, the experience isn't great. So you wind up propping it up with CDN-esque architecture.

The Future in Beta

This weekend, I bought an Apple TV. I've also been playing around with Joost. Both are flaky yet promising.

To be honest, I probably would not have bought an Apple TV if I didn't have a $300 Apple gift card from my wife that had been burning a hole in my pocket for two years. (That's restraint, baby!) In all honesty, I don't need an Apple TV. I've got a dual-tuner HD Tivo and I'm not totally there yet on the idea of downloading movies when I can get a DVD at higher quality and with features (and without cluttering my hard drive). On the surface, the Apple TV is what you would expect, slick and easy. However, I have some real nags. First of all, the WiFi sucks. I didn't spring for the new pre-N Airport. so expected streaming to be slow, but that's not the problem. It totally drops the network all the time, and it is only 15 feet away from the hub!! I put my laptop in the same place and it gets 5 bars. This truly sucks. My second gripe is the remote. The best remote ever in the history of man is the Tivo remote. Its chief accomplishment is putting a lot of functionality on the remote in a logical, easy to use way, that allows you to use muscle memory to find the buttons you need. I never have to look at my Tivo remote while using it, despite all the functionality on it. Apple gives us its "easy to use" remote with a predictably spare number of buttons. And they made it all small because that's how they roll. But the Gen 1 iPod Shuffle-style construction is really shitting. The buttons are hard to press and nowhere near as conformable as the Tivo. And even though Apple TV multiple levels of fast forward, there's no indicator on screen for it, so you over shoot a lot. But it is very cool.

Joost has its own issues. Its biggest problem is that the steam frequently drops. Maybe Joost doesn't have critical mass yet. But it has me wondering whether P2P is really all its cracked up to be. P2P supporters like to deride CDN systems because it is supposedly scalable. But I am starting to think that P2P may be better in the theory than in the breach. A movie download on Bittorrent can take over a day. But a movie download on iTunes will take no more than a few hours and may be much faster. Skype is awesome in a million ways, but I frequently have issues with call quality or dropped calls. And then there's Joost. My sense is that P2P works best when you have a critical mass, but it works far less well on Long Tail content because there aren't enough nodes to pull from. Perversely, the CDN model may work better for the Long Tail which as we know constitutes most of the content out there. I was discussing this with one of my colleagues who is an expert on digital media networks and he agreed on this point. We both think that the networks of tomorrow will deploy both CDN and P2P type infrastructures with WAN acceleration technology a la Move Networks.

Which brings me to the last glimpse of our digital future, ABC.com. If you watch TV shows on ABC.com, you may have noticed that the quality at full screen looks a lot better lately. It does. ABC is now deploying Move Networks WAN acceleration technology which dynamically scales video bitrates to the size of the video window and the network speed to find the best quality possible. I have seen 720p demos using Move over the open internet and it is truly mindblowing.

These three technology deployments serve as proof points of what is coming, and its coming this year. We are actually seeing the fulfillment of the long promised tomorrow where TV comes to you over the internet. There are still lots of bugs to kick out, but it is more real than its ever been. The question is, what will happen to traditional TV.

The first thing my wife asked me when we got Apple TV was if we could drop out DirecTV subscription. We're not there yet. But at some point - and I think we are talking within 5 years - you will start to see broadcast, cable, and satellite lose ground to the web. TV is ripe for it in the same way that music was. Its a bad value.

Despite the massive upsurge in music downloads, CD sales are off 20% so far this year, and everyone is freaking out. Why is this happening? Because for the longest time, the labels have relied on a business model of selling 2-3 hit on an album with a bunch of other filler material that you often don't want, but have to buy anyway when all you can get are albums. With the advent of iTunes, you can now buy songs a la carte. So while downloads are up massively, people are downloading hit songs, not albums. The consumer ain't no fool. And that is killing record companies' margins. And there's nothing the record companies can do about it because the alternative is to offer their content album-only in which case piracy will go through the roof.

The same is going to happen with TV. I pay $130 for DirecTV a month for the premium package plus HBO and Showtime. That's $1560 a year. Now, I have 81 season passes on my Tivo but between me and my family we probably watch less than half of that a year. At Apple's average rate of $25 a season pass, all my shows would cost me $2025 to buy on iTunes. So on the surface, I get a good deal with DirecTV. Except with Apple, own the content so it won't expire in a week, and I can watch it on my iPod or my laptop, and best of all, its ad-free. But with ad-based content that I don't have to pay for, like the kind served on ABC.com, I could easily see myself dropping regular TV and going strictly on demand within a few years, and saving money to boot.

Once consumers start to figure this out, I think you will see an exodus. And it doesn't take huge drop to destroy an industry. If the business isn't growing, its not a good place to invest your kids' college money or your 401k, and if its not a good investment, the stock falls through the floor fast. But there is another factor which is advertisers. Already, big companies are holding their TV ad budgets flat or shrinking them to spend online. TV is notorious because you never know who's watching and who's not and Nielsen is not very accurate. With digital TV, you can know exactly who watched an ad and who clicked through. Now that Google has bought both YouTube and Doubleclick, the Google ad model will invade video ads. And so TV is being eroded from both angles.

The question is "what will happen to TV"? The cornicopia of distribution is happening because the main engine of broadcast and pay TV is going strong and it is still what's financing the content at the end of the day. Digital is still ancillary. But if digital erodes the traditional product enough, you may start to see content dry up, and then what? Will networks be able to afford to produce the content we are currently enjoying online? And if so, will the pricing model have to change? Will it even be economic anymore?

Well, we're about to get our questions answered.

The 30 Cent Solution

As you may know by now, Apple announced a deal with EMI to offer their catalog of music without DRM and in higher quality 256 kpbs encoding. Non-DRM'ed songs will cost $1.29 each. No word on album pricing. Users with existing EMI content will be able to upgrade for 30 cents a song to non-DRM'ed versions.

Lots of people will be talking about the wisdom of this and so I won't. I want to talk about what is probably not getting as much play, the price itself. Apple's pricing is always about philosophy, not a simple cost-up calculation. And the 30 cent premium is even more so. I don't know how Steve did it - although it sounds like EMI was already "there" on dropping DRM - but he is actually positioning the DRM-free music as an UPGRADE and a PREMIUM offering to the DRM'ed content. This is the Reality Distortion Field working overtime. But it is a stroke of genius.

Apple was never going to get sans DRM content at the same price as DRM'ed content. News reports have been that EMI was looking for a premium to compensate for potential lost sales because of the ease of piracy non-DRM'ed files. So that is what the 30 cent premium is all about. Because it doesn't cost a cent more to encode at a better bit rate. The 30 cents is a straight reflection of what EMI thinks it will lose in sales. What they are essentially saying in this number is that they expect music sales to fall the equivalent of 30 cents a song. How they came to this, I don't know, whether it was a complex model or a wet finger in the air. But 30 cents is the magic number. And magic not only for EMI, because it will be the gold standard that Apple will force every other label to.

But here's the genius part. He actually convinced EMI to give let him provide BETTER quality files sans DRM. So the consumer isn't just paying more for no DRM. They are paying more for BETTER QUALITY. I can't tell you how counter to Hollywood thinking this is. Most entertainment execs who are contemplating these types of moves are thinking of making the non DRM'ed content LOWER QUALITY because their biggest fear is that the highest margin product, the HD product, will run rampantly free. But now EMI and Apple have set the standard and everyone else will have to live up to it.

Its on like Donkey Kong now, my friends. No doubt, EMI's music will be on the darknet the second after its on iTunes. But if music sales continue to grow at their current rate or even GROW FASTER because of this, we could see DRM as we know it die within a year. It will just be a tide too powerful to stop and Wall Street will start to price down stocks of companies who resist it. You may even see management changes at the top and severe pressure on guys like Viacom's Sumner Redstone. If sales slide less than 30%, it will be viewed as a wash. Some companies will do it and others will not. But it won't settle anything. If sales decrease more than 30%, DRM will be more alive than ever because the experiment will have failed. And trust me folks, there are a lot of people who want to see it fail so they can say "I told you so!"

Strap your seatbelts!

DisneySea was an April Fool's Joke

John from The Disney Blog fessed up in my comments section that the DisneySea rumor was just an April Fool's joke. Too bad.

DisneySea?

The Disney Blog has multiple rumors about big changes at the Walt Disney World Resort. It says Disney-MGM Studios will become Disney-Pixar Studios, and Disney will also open a brand-new fifth gate for the resort, called DisneySea, which will allegedly will borrow heavily from Tokyo DisneySea (TDS) and be positioned to compete with SeaWorld, complete with marine animal shows.

When I read that, I could hear the collective "hurray" of a million Disney park fans. After all, TDS is popularly thought of as one of the Disney parks that was "done right", and yet I am skeptical that DisneySea will really resemble TDS that much. TDS is not at all a SeaWorld concept. If anything, its Disneyland The Sequel. In fact, that is why the Oriental Land Company wanted to build the park. Tokyo Disneyland is small and has attractions mostly aimed at younger kids. OLC wanted a second park where it could expand not only in land but in demographic, and so most of TDS is targeted to teens and adults. So just in making the whole SeaWorld component work, they will have to majorly re-work the concept. But beyond this, does DisneySea really want to replicate the Disneyland Part 2-ness of TDS? Does WDW really need a THIRD "futureland" in Port Discovery when it can barely keep Tomorrowland and Epcot's Future World up to date? What does the American Waterfront really bring to the party? Its only ride, Tower of Terror, is already located in Disney-MGM. Which brings me to another point, do the Imagineers really want to replicate these single or two ride lands like Mysterious Island and Lost River Delta? I don't know about you, but I'm old school about my lands. I like them with multiple rides.

Also, problematic is that TDS doesn't really have that many great rides. When people talk about how great TDS is, they are mostly talking about the theming. And yes, the theming is unquestionably the best of any Disney park in the world. But the rides are mostly medocre. Put Journey to the Center of the Earth, which has about 10 seconds of action, up against, say, Space Mountain, and you will see what I mean.

Then there's the issue of properties. Two of Disney's best water properties, Nemo and Pirates, are already pretty used up. Nemo has both the Living Seas and a musical at Animal Kingdom (although I guess the later could move). And Pirates has both the original POTC and now the Pirates themed Tom Sawyer Island. Having a sea concept without these properties would be weird, and yet how much more can realistically be done with them? I guess there's always Pirates 2 and 3 (and maybe if you believe the rumormills Pirates 4) which are barely addressed even with the POTC Johnny Depp overlay. I would be nice to see more of Davy Jones and Sao Feng.

Probably the biggest winner here is The Little Mermaid, which is tragically overlooked in current US Disney parks. Little Mermaid is one of Disney's most classic movies and remains a favorite of little girls everywhere, but plans for a Mermaid dark ride where scuttled. (For more on TDS and the "lost' Mermaid ride, check out the latest LaughingPlace Magazine, which is an excellent publication BTW.) And Little Mermaid has an awesome land in TDS.

Don't get me wrong, I love the idea of a Disney sea themed park. But I doubt it can or should look like TDS. I love TDS, but I think Disney can do even better.