Audio Video News

One abiding dream for film industry executives is to bypass all the middlemen involved in distribution and sell movies directly to consumers—repeatedly, by the millions.

Broadband access to the Internet may make that dream a reality. In mid-August, five major studios acknowledged the Net's growing potential as a distribution medium with the announcement that they will cooperate in delivering movies on demand. The five—Sony Pictures Entertainment, MGM Studios, Universal Studios, Paramount Pictures, and Warner Bros.—intend to deliver their products directly to viewers over what was described as an "open-access system based on Internet Protocol." Notably absent from the announcement were DreamWorks, 20th Century Fox, and Walt Disney Company, said to be at work on their own plans for Internet distribution.

Video-on-demand (VOD) has been discussed for years, but the until recently Internet connections were too slow to accommodate anything more demanding than short, low-resolution video clips. With 10 million homes now equipped for broadband, and as many as 35 million screens connected, the industry apparently feels the time is ripe to launch a VOD service.

The five studios have committed a total of $150 million to the project; each is a 20% participant. Larger conglomerates own all of them, a fact that may arouse antitrust suspicions in Washington. Paramount and Warner Bros. may be particularly troublesome because they are owned by Viacom, Inc. and AOL TimeWarner, respectively, which both operate cable systems. The five partners claim that they will make all their films available on a non-exclusive basis to other online distributors, and have addressed antitrust concerns in their plans from the beginning.

With DVD recorders beginning to make inroads in the hardware market, the timing of the announcement was seen by many industry observers as an attempt to prevent the emergence of a "video Napster" that might create a copy-control nightmare for the film industry similar to the one that blind-sided the music business two years ago. "The studios are making a preemptive strike here to avoid a video version of Napster," said Raymond James & Associates Inc. analyst Phil Leigh. Warner Home Video president Warren Lieberfarb described the joint venture as an attempt by the studios to get "ahead of the game rather than behind the game."

Initial plans include using established multimedia transmission technologies such as RealNetworks' RealPlayer and Microsoft's Windows Media Player to download and store the films on users' hard drives, where they will reside for a month before being deleted. Once viewing has begun, consumers will have 24 hours to finish watching a film. With typical broadband speeds, most movie downloads are expected to take 20 to 40 minutes. Pricing likely will be similar to cable or satellite pay-per-view fees.

Most initial viewing will take place on computers, with television screens to become more significant as the convergence of the two advances. The experience "will be better than watching a tape on television," enthused Jack Waterman, president of worldwide pay television for Paramount Television Group. His comments may be a tad overblown; anyone who has ever watched a RealPlayer video clip knows that the quality is worse than a VHS tape in SLP mode. In addition, VOD content will be "digitally altered" to prevent unauthorized copying, according to Kevin Tsujihara, Warner Home Video's executive vice-president of new media and strategic planning.

AOL TimeWarner has recently experimented with offering old episodes of Home Box Office hit shows Sex and the City and The Sopranos to customers in Columbia, SC for a $3.98 monthly fee. "This is not some dreamy test or experiment," said AOL chief Gerald Levin. "This is a rollout," he stated, perhaps prematurely in that no formal launch date has been announced for the new service. "We still have a little bit of work to do before announcing a launch date, but it's in the near future," explained David Bishop, president of MGM Home Entertainment Group.