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Lovefilm and Livescribe: Hybrid hopefuls

Rory Cellan-Jones | 08:35 UK time, Thursday, 9 September 2010

Go digital or die - that's been the accepted wisdom for a while for every firm hoping to keep up in a fast-changing world. But this week I've talked to two firms which seem to have found a middle way between the analogue and digital worlds.

One is still doing something as old-fashioned as putting products in the post, the other is trying to revive handwriting by reinventing it for the digital age.

Post box

Lovefilm is a movie rental service that puts thousands of DVDs into the post each day to more than a million customers across the UK and parts of Europe.

A business which depends on shifting physical products in an industry which is rapidly going digital sounds doomed - and just look at what has happened to Blockbuster in the United States for an example of the threat posed to old-fashioned movie rentals.

Now it has to be said that Lovefilm is moving down the road towards digital delivery at a fair pace - subscribers can already watch some of its titles online without waiting for the postman, and it's eager to get onto new platforms such as games consoles and the Apple TV set-top box.

But when I spoke to one of the company's backers, he was certain that a rapid transfer to a purely digital approach would not work in the short term.

"The graveyard of digital-only services is pretty full," he told me, mentioning a UK video-on-demand service called Home Choice which never really caught on and a number of false starts by BT.

"What everybody has missed," he said, "is the power of a hybrid model". The core business at Lovefilm is apparently still very profitable, and the belief is that this provides a good platform to start marketing digital services, which could then deliver better margins to the business as a whole.

This seems to make sense to me - plenty of people have lost money by failing to keep up with new technology, more have wasted it by over-estimating the pace of change.

Our broadband infrastructure will be one limiting factor for any business hoping to deliver media online - as my Lovefilm friend put it, "the letter-box has unlimited bandwidth - whereas if we chose to stream all of our movie catalogue on the same day we would bring the internet down."

With talk of a stock market debut later this year, investors seem to have bought into Lovefilm's twin-track strategy. And the venture capital community is also expressing enthusiasm for another technology firm today, with Silicon Valley's Livescribe announcing that it has received new funding.

Livescribe is another kind of hybrid, with a mission to reinvent writing. Its product is a digital pen which matches the notes you write on special Livescribe paper to an audio recording of whoever is speaking. so you can tap on each word with the pen and hear back exactly what was said.

The company's founder is Jim Marggraff, an engineer who is also a brilliant presenter of his own product - quite an unusual combination in my experience. He showed me some new features Livescribe is bringing out, including a function which allows you to take the handwritten notes from your livescribe book and e-mail them to someone, along with the audio recording.

This struck me as a delightful if rather retro idea. Perhaps it could revive the art of letter-writing, even bring a new twist to the love letter? Mr Margraff agreed, and said he had been Livescribe electronic handwritten notes to his wife.

My concern is whether there is really a big enough market for this proposition. It obviously appeals to journalists with poor shorthand, or to wealthy students taking lecture notes, but surely this is one area where most of us have already gone digital, tapping notes direct into a keyboard rather than committing them to paper first.

I also think there's just a little too much friction in the process if you could wirelessly beam the notes and audio from the pen direct to the cloud, rather than having to plug it into a computer, then it might be a compelling product.

Still, just as Lovefilm is betting that consumers will stick with an old-fashioned way of getting hold of movies for quite a while, Livescribe believes the habit of writing with a pen will stay in fashion - as long as it's given a digital twist.

Jim Marggraff tells a compelling story about his product and he confirmed to me that he had given the same demo he gave me to his new investors before they signed up. It obviously did the trick.

Time will tell, though, whether his pen computer will give handwriting a new lease of life or just prove an interesting diversion on the road to a fully digital future.


  • Comment number 1.

    With the US firm NetFlix rumoured to be launching in the UK later this year, LoveFILM are probably expecting some stiff competition. As NetFlix are only planning a streaming service (and not the postal option they also offer in the US) it probably explains why LoveFILM is so keen to ramp up its streaming operations.

    That said, one of the reasons NetFlix's streaming service was so popular is because they worked with Microsoft to develop a well thought out and tightly integrated interface to their systems via Windows Media Centre (and other platforms). Unless LoveFILM can do this to leverage where people have devices already hooked up to their TVs - i.e. media centres - and not force them to watch blockbuster movies on their small screen home PCs, I doubt the streaming service will take off.

  • Comment number 2.

    The big problem for Lovefilm shifting towards digital delivery (and for anyone new entering the UK market) is the lack of SVOD rights.

    BSkyB has rights to all the juicy content that most consumers would want from such a service, but doesn't exploit them fully in the UK market, something that Ofcom looked into as part of its Pay TV consultation.

    You only have to look at the content offering on Netflix in the US and compare that to Lovefilm to see that unfortunately, in the UK, we're not quite as well served.

    The other problem for Lovefilm is pricing. Their cheapest subscription package including streaming is £9.99. Netflix in the US starts at $8.99. I'm sure Lovefilm are being as competitive as they can, but when you can really only watch the latest releases on discs through the post it doesn't seem worth paying the premium.

  • Comment number 3.

    I got a Livescribe pen for Christmas and it is fantastic in meetings, means you can focus on what's being said and you saying intelligent things rather than trying to both participate and take notes. All you need to do is jot down the key words and then you can click on the word at a later time to see exactly what was said. You don't need to write down lists etc any more. Just waiting for my new one to be shipped from the States by US snail post (21 days!), the last one stopped charging which is apparently a common fault, but support was brilliant and just said they could send me a brand new one.

  • Comment number 4.

    As an ex-subscriber to LoveFilm one of the problems I experienced was the availability of new releases. You had to wait for ages (in my experience) to get the decent latest releases sent out. Great content, poor service. However on reading this blog I was interested to hear that they run a streaming service now. "Ideal!" I thought, "streaming the latest movies online will really get the content to the consumer quickly" so I took a look at the site. Wow. How poor does that look? All I can see are old films or new ones that you really bother about. The service may be great but the content is now poor. Shame.

    When someone comes up with a streaming solution for the latest top DVD/Blu-Ray releases (on the same release day as the physical versions in the shops) then I will be interested. Otherwise i'm sticking with Sky Box Office or the Zune Movie player on XBOX (which delivers 1080p).

  • Comment number 5.

    It would take over 4 hours on a 20Mb connection going at full speed to transmit 40GB’s of data, the size of a blu-ray disk. That’s doesn’t make 1 hour 40 minutes, the standard length of a film. Until we’re all wired with fibre I suspect Lovefilm will have business for some time to come.

    Especially so if those with the big TV’s want to watch a high quality films. My Dad just got himself a huge Sony TV as a retirement present to himself and it came with internet connection and is able to play film’s from LoveFilm, however the quality was awful, big mpeg artefact squares all over the place, ok for Planet Terror a film designed to look bad, but Blade Runner...he bought Blu-ray.

  • Comment number 6.

    I agree with Tim about the livescribe pen, I have only had mine one week, but it has been invaluable in meetings, as I can just write down the heading of what we are discussing at various points in the meeting and tap the heading I've written at that point and know exactly what was said and who said it on that area. Which means I can play a much more active part in the debate.

    Apart from that it really is a computer in a pen and for fun you can get aps which enable you to draw a piano or a the strings of a guitar and you can hear the notes as you touch the keys or strings with the pen.

    It's not's perfect though as you can detect the scratching sound of your pen when you write and I am sure you could improve upon the way you file the information. However, on the whole I'm very impressed and all my colleagues want one.

  • Comment number 7.

    I've been a user of the LoveFilm service for several years now and it's fantastic. It's much more than just a mail-order service: the website is a wealth of information on film and really uses the ability of the internet to develop a community around the content.

    I look forward to having digital downloads, but there's something nice about having a disc drop through the door!


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