In a recent article Neil Thompson stated the following.

“The horse that we’re fundamentally backing is the one that says the future of entertainment content is online digital distribution. I would argue that we backed the right horse.”

“If we’re sitting here in 12 or 18 months time, we’ll be saying ‘why were people even thinking about a disc format when it’s really about digital distribution?’ Our strategy’s been developed for the last six or seven years, and ever since we launched the platform it [online content] has been our big, big, big bet.”

I will agree that online distribution is the future, but it’s a future that’s ten years distant. Here’s 5 reasons why.

1. Broadband Speed

In the U.S. our broadband speeds are very slow and a full length feature movie plus additional content can take upwards of an hour on a day with heavy internet traffic. Throw in the fact that ISPs are now throttling internet traffic due to certain users using more bandwidth than others and this is only going to compound the problem. In the time it takes you to download a movie you can go buy it at the store, go to the gym and pick up food on your way home.

2. Tiered Download Capacity

U.S. ISPs are now playing with alternative pricing. Their hype says they are offering people that don’t use the internet that often a lower price. Really though, it’s not a deal by any stretch of the imagination. How can there be a better deal than unlimited? Answer? There isn’t. 30 gig a month is one of the limits being explored. Well that’s only 2 full length HD movies. The average person would use that downloading one of their favorite shows in a month.

3. Media Cost

For the most part buying media online is no cheaper than buying it at a store. With music it’s actually more expensive to buy the whole CD online, rather than picking it up at a physical location, despite the fact that there is zero overhead with online distribution. Some places offer you a slightly better price, but your almost guaranteed that these are teaser rates to push format adoption. As the adoption rate rises price creep will kick in. Let’s do some math. I have 600 DVDs not including box sets. If I were to buy them in HD and the price was $20 a movie, not the current $30, I’m spending $12,000 just to convert to digital distribution. Where as I can trade my DVDs in for Blu-rays and recoup some of the cost.

4. Storage Cost

As if the top three didn’t increase the cost of digital distribution enough, storage costs could add up to 20%. Let’s do some more math. Taking the above numbers my 600 DVDs would take up about 8.4 tera bytes. The largest HDD out today for the consumer is a 1 terabyte drive at the cost of $229. That means I’m spending $1,832 just on HDDs. That doesn’t include the cost of the monster media PC I would need. Nor does it include the $250 cost of Vista. Those prices are just for what I currently have, not what I’m going to buy in the future.

5. Consumer Adoption

If digital distribution isn’t reasonable for me, a technophile, for at least 3 years. It’s not going to be reasonable for the average consumer for at least 5 years past that. The cost is going to have to come waaaaay down in order to compete with a $50 Blu-ray player at that time. This also gives the consumer one more piece of technology to figure out. Many people in the U.S. don’t even have broadband yet.

Bonus: Recession

The Fed chairman announced yesterday that it looks like the U.S. is headed for a recession. People are not going to be looking for the next whiz bang product loaded with features and options. People are going to be looking for cheap. And a $1000 media PC will be passed over for the $400 PS3 or $100 Blu-ray player.

It could be argued that many people do not have the collection I do or would not buy a media pc and just use their current computer. You still run into space issues. Either your media is now competing with other things like music, games, software for HDD space or your constantly redownloading previously bought media.