Ben Fritz at Variety reports that the Xbox 360 video download service announced in November may be a surprise hit:
In a topsy-turvy year for the digital download biz, a videogame service in just a few million homes is ending 2006 with more momentum than the world’s biggest e-tailer.
The relative success of video downloads on Microsoft’s Xbox Live and disappointment of Amazon.com’s Unbox point to two factors that differentiate Xbox from Amazon and its many other competitors — consumers who download a movie want a simple way to watch it on their TV, and those with high-def TVs want high-def content.
Thanks to the Xbox 360′s direct connection to a TV and the console’s focus on HD content, Microsoft can deliver both. Though exact sales figures aren’t available from any Web site or studio, insiders agree that it’s the most, and maybe only, positive story in digital movie downloads this year.
Many in Hollywood had high expectations that Amazon’s strength in DVD sales would spur the nascent Web download biz. But the Netco faces the same problems as competitors such as Movielink, CinemaNow, Guba and AOL that launched before it: It’s difficult for consumers to burn downloads onto DVD (save for a few titles on CinemaNow), and it’s tricky for all but the most tech-savvy to watch downloads on a TV.
Part of it is the tech savvy Xbox 360 demographic and part is the ease of watching a movie on a box already connected to a TV (which says something about where Windows XP Media Center systems are installed). There aren’t really any hard numbers, but the buzz is that despite the limited audience, Xbox 360 download numbers are equal to any of the PC download sites. While that’s certainly good news for Microsoft, it also illustrates the current sad state of Internet video downloads.