Movie Titans Struggle Against Tides of Fate - Page 3

The Killer App Is Piracy
But despite Hollywood's effort to re-ignite the market for online movie distribution, the bootlegging of industry assets has become a way of life that has already cast its dye on an entire generation of Internet users. Online consumers who don't already have a cable modem or other means of attaining on-demand movie content may not be willing to pay for subscription services that charge anywhere from $3.99 to $9.95 per month.

"The problem is that you can't compete with ubiquitous, free, and convenient," said Bruce Forest, an independent media technology consultant. "It's like closing the barn door after the horse has been out, had kids, and grandkids!"

"It's all about users getting habituated," said Phil Leigh. "New and emerging trends on the Internet are about control and empowerment. People feel a sense that they can have what they want, when they want it, and unless the marketplace is there, they'll find other ways.

"The popularity of the CD burner is demonstrating that the consumer wants to listen to or watch what he/she wants to at any given moment," Leigh continued. "Until the CD burner, the consumer really didn't have control and had to comply with market availability. Younger generations have demonstrated that they want that control and they are going to exercise that control, regardless of what the labels and studios do about it."

Gerry Kaufhold thinks differently. "There's no hurry for the film studios to get it right, it's just important that they be there as the market develops. It will still take another three years before the numbers start to look great."

The Real 'Clone Wars'
Depending on the speed of the broadband connection, it can take as little as 40 minutes to download a 5-gigabyte feature film, burn it onto a DVD, and voila, it's yours for the taking.

Not a bad option when just about every new release and seasonal blockbuster is available over the Internet long before the general public can see them in movie theaters.

Viant, a Boston-based consulting firm, estimates that 350,000 movies are being downloaded illegally from the Internet every day, and that's a modest estimate.

Copies of "Star Wars: Attack of the Clones" have already been circulating through sites like Usenet a full week before the official theatrical release date.

"Those guys you see lined up around the block for days dressed like Chewbacca for the opening day of Star Wars have probably already watched pirated downloads of the movie," said Forest.

Last weekend alone, during the premier weekend of the pre-summer blockbuster "Spider Man," an estimated 2.5 million users flocked to peer-to-peer site IRC (short for Internet Relay Chat) where any number of summer blockbuster movies and music releases like Eminem's newest CD could be downloaded, ripped onto disk, and either sold offline or distributed through other sites and chat rooms.

"It was the biggest moment in piracy history," said Forest. "I've never seen anything like it. This is going to be a blockbuster summer for movies and a blockbuster for piracy. The entire numerical quality of piracy is going to get blown out of the water because there is a demand there and it is being filled. Why should I buy a movie if I can download it?"

There is no question that the movie industry has been slow to provide authorized copies of appealing digital content to the Internet community. The move into the VoD space has been an obstacle course of legal hurdles, licensing woes, industry infighting, and of course the monster threat of digital piracy which has had the movie and music industries in a chokehold for the past two years.

Movie studios have done little else but step up efforts to pass legislation like the newly scribed Hollings Bill, named after South Carolina Democrat Sen. Ernest Hollings, which, if passed, would require computer and device manufacturers to install anti-copying technology that prevents the illicit use of digital content.

In addition, many studios have led the charge in litigating against the makers of hardware and software that enable the unauthorized use and distribution of digital content.

Give the people what they want, or else they'll take it anyway, appears to be a self-fulfilling prophecy as the film industry clashes with the Internet, and movie titans scramble to find a way to keep their bottom line from falling out, capitalize on business opportunities the digital age has to offer, and maximize competitive advantage over the cable industry's rollout of similar movie-on-demand products.

Even renegade Taiwanese site Movies88.com, which sold pirated movies over the Internet for a mere $1.00 each, proved that the market for IP-based movies-on-demand is ripe for the taking. The site has since been shut down, but the demand is still out there in cyber space.

The In-Stat/MDR report titled "Consumer Oriented Video-on-Demand Via IP Networks" will be available the week of May 20, 2002.

Internetnews.com Associate Editor Michael Singer contributed to this report