Conservatively, one may look at previous attempts to sell movies over the internet (or broadband, more specifically), and view this deal with a bit of skepticism. Earlier efforts, some with proprietary set-top boxes, either failed or generated lackluster sales. Many of the hindrances that existed then continue to exist now—dependency on broadband penetration; limited ways to watch content (e.g. PC or proprietary set-top); real-time options that involve less waiting (such as the local video store or cable VOD) and so on.
On the upside, however, are the prospects for success given the state of the market now and the broad acceptance of iTunes as a content delivery channel. Higher broadband penetration, as well as a significantly large installed base of video-enabled iPods (and an accessory market with video docks to accompany them) both strengthen the chances of iTunes-driven uptake of paid digital video downloads versus previous propositions. Pricing of $3-4 for 30-day rentals is also fairly palatable to the consumer.
As for whether this event serves as a bellwether for a long-term shift by consumers toward digital downloads and away from DVD and other forms of physical media, it may be an overblown assumption. Though certainly a boon for iPod Video and AppleTV owners, the mass market success potential of the model remains constrained by certain real-world factors that apply to most avenues of digital downloads. First, the transportability from room to room or house to house is not comparable to that of physical media. Second, it is difficult to overcome the ease and comfort of watching a film on traditional DVD in the typical bedroom or living room, versus additional hardware and/or effort being needed to watch the typical digital download in those environments.
