Details of Amazon Video On Demand are sketchy at this point, but it appears to combine the ability to stream video in Flash format to any web browser with permanent downloads.  Users can rent movies for streaming or purchase them for both streaming and downloads.  The service works on both Macs and PCs, so we suspect that Amazon is also using Flash -- along with Adobe's recently announced Flash Media Rights Mangement -- as its download format.  

Amazon's current service, Unbox, uses Windows Media DRM. The service has not proved popular, and the new service will replace it.

Amazon is also offering streaming to Sony Bravia television sets equipped with Bravia Internet Link, a US $300 add-on component that is equivalent to the $100 Roku box that Netflix incorporates into its competing streaming service.  Future Sony Bravia models will have the Internet streaming capability built in.  Sony would not comment on whether the Internet Link uses the Marlin DRM on which Sony is purporting to standardize for its next-generation video products.

A tricky issue is in play here: how to offer content to consumers in a way that makes them understand that they can get different levels of access -- different rights -- at different price points, while not confusing them or interposing off-putting technical details (such as the custom player app that Amazon Unbox users have to download).  Clearly this will be a gradual, iterative process, one that involves increasing Hollywood licensors' comfort levels as well as those of consumers.  But Hollywood appears intent on moving in this direction. The alternative is an inevitable single paid access model -- DRM-free permanent downloads -- while every other access method is ad-supported or otherwise free to consumers; this is the slippery slope down which the music industry is sliding now.

With Amazon Video On Demand, Amazon is also taking an important step towards the so-called rights locker functionality that service providers would like to offer.  With rights lockers, users can have access to their content on a variety of devices, while service providers have the opportunity to lock them in and cross-sell them.  Standards initiatives such as Coral and the more recent Open Market have attempted to make rights locker portability a condition of service provider adoption, but this stipulation has found very few takers among service providers. 

Instead, it looks like the power of retailer reach and ubiquity -- which Amazon has in abundance -- will trump considerations of value chain control.  Millions of people use Amazon every day; this is an audience that Hollywood can ill afford to ignore.