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Last Updated: Friday, 26 May 2006, 15:40 GMT 16:40 UK
Hollywood copes with digital age
Richard Taylor
By Richard Taylor
Editor, BBC Click

Hollywood sign
The film industry has a choice: to ignore or take on the digital age
The Hollywood studios are the lifeblood of the American movie industry. For the best part of a century they have led Tinsel town down a path paved with gold, making it into a multibillion dollar colossus.

Those same studios face a huge challenge with the advent of the internet age.

They must adapt to meet the challenges of the newly democratised digital age, seek new opportunities and develop new business models.

Or else they will be reactive rather than proactive, trying to pretend nothing has happened and carry on with business as usual.

Until now the movie studios have viewed the digital landscapes of the 21st Century with great apprehension, wary of the tech-savvy generation which has been spearheading the revolution in file-sharing.

Today, the rebellion against the entertainment establishment which started with music has become far more all-encompassing.

Sophisticated file-swapping technologies and sites have sprung up faster than old ones have been shut down.

Together with faster internet connections, better file compression and cheaper storage, these are proving a lethal concoction.

Real-life drama

By some guesstimates, there are 17 million movies available for download out there in the so-called darknet, the internet underground.

The new film Poseidon is a new remake of the 1970s classic. While it is not even out in most territories, it is readily available for illegal download, if you have the inclination to look and a modicum of technical know-how.

It's uncontrollable. What can we do?
Wolfgang Petersen, Director
Interestingly, even among those involved in the movie industry there does not seem to be a consensus on the cost.

The actor Richard Dreyfuss says: "It's not a question of right or wrong any more.

"People will do what they want to do in order to get what they want. What's that line? 'Behind every great fortune lies a great crime'.

"So the guys who started this business all cheated somebody to get there, and now they're being cheated, perhaps, by all these crazy, geeky people all over the internet.

"I must say, my anguish level is not great."

Director Wolfgang Petersen says: "It's always the fear: oh my God, please let it be on the big screen and let it go a regular course. But it's uncontrollable. What can we do?"


Hollywood has reacted by adding educational trailers to the start of DVDs and cinema showings, targeted file-sharing sites, prosecuted individuals and developed new anti-copying technologies.

That campaign has had a limited impact, so the industry is finally thinking about alternatives.

That's what consumers want. Both of those are breakthroughs
Jim Ramo, Movielink
The American internet film service Movielink is backed by several big studios. It has been around for several years, offering downloads of rental of titles a full two months after the DVD has come out in stores.

But last month both it and its main rival, CinemaNow, took the decision to offer users an alternative: the option to download and keep big Hollywood blockbusters on the same day the DVD is released, albeit at a similar price.

Jim Ramo, the CEO of Movielink, says: "Download to own is a big deal. Two particular things are unique about it.

"First, it's the first time that Hollywood has allowed movies to be stored on a hard drive forever, basically.

"The second thing is that we're beginning to see movies delivered at the exact same time as they're delivered to retail stores, day and date with home video.

"Both of those are really exciting, and that's what consumers want. Both of those are breakthroughs."


There are some serious questions about the attractiveness of the new offerings.

Computer and DVD
The best way to address online piracy is still being worked out
Any film downloaded onto your PC will come packed to the gills with Digital Rights Management (DRM) which effectively controls where you can and cannot watch the movie.

For the most part, any film will be tethered to your PC. You will not be able to watch it on a TV unless you have the right connections.

Often the real thing is often cheaper and comes loaded with extra features, which does not make the downloaded version seem particularly enticing.

What is stopping a cheaper and less restrictive offering? Part of the answer is to be found in DVD stores.

DVDs make up almost half of a film's earnings. Making a film too attractively available online might upset well established, real-world relationships with big stores and cannibalise those golden DVD sales.

But there are other, perhaps even more significant, reasons why the industry is afraid to loosen its grip on its material.

Your typical Hollywood blockbuster tends to be very, very expensive. The latest incarnation of Mission Impossible is estimated to have cost upwards of $120m (64m).

You could say it's too little, too late, because the appetite for content is growing
Chris Barlas, Rightscom
Hollywood executives fear that without adequate digital rights management, online content will be ripped off even more widely and easily than it is at the moment.

Chris Barlas, from the consultancy Rightscom, co-authored a report on the future of the industry. He believes movie moguls may not appreciate the importance of attractive consumer offers linked to controls.

He told Click: "There is a very big push for protecting rather than trading, so what we see is little offers being made, like the Movielink offers, like the CinemaNow offers.

"You could say it's too little, too late, because the appetite for content is growing. It was, after all, seeded by the music industry, and it's there now for the movie industry."

New solutions?

There are some hopeful signs on the horizon.

The Cannes film festival may be the setting for industry back-slapping and deal-making but this year it has also seen some head-scratching, as delegates looked for ways to tackle piracy more positively with new business models.

There are already several rumours buzzing, and the most interesting involves Apple.

iTunes is already setting the pace in legal video downloads. Insiders says it would be well positioned to offer full-length features films too.

Warner Brothers, which has been aggressively fighting file-sharers, has now teamed up with BitTorrent.

Businesses that can offer a hybrid solution are the ones that are ultimately going to win in the marketplace
Simon Calver, Lovefilm
BitTorrent has long been the scourge of movie executives everywhere because around 65 million people use it to share files, often ripped movies.

Now Warners has decided it represents a cheap way to distribute their films. They will still be heavily copy-protected and the same kind of price as High Street DVDs.

But the Warner executive who brokered the deal, Darcy Antonellis, believes it will convert some of the file-sharing fraternity to legal means.

She told Click: "People do want a high quality of service. If they know that a service is easy to use, the content that gets delivered is of high quality, that they can count on reliability of delivery, that's worth something.

"We believe that, coupled with availability, and priced correctly, will give us an opportunity to compete with a free market, if you will, of often not as good product. "

Away from its own shores, Hollywood seems to be more experimental in its thinking.

The leading British film rental service Lovefilm has traditionally sent its titles through the post.

Now it too is offering downloads of films. For the equivalent of the non-discounted High Street price, you get the movie online which plays on portable devices as well as PCs, but it later send you the physical DVD too.

Lovefilm's Simon Calver says: "At the moment the early adopters are into download.

"The early adopters are a very small percentage of the population and they're creating a lot of noise out there.

"I think businesses that can offer a hybrid solution, both the DVD and the downloading together, to give people choice and reliability as well as the technical convenience that comes from download, they're the ones that are ultimately going to win in the marketplace."

Deal signed on downloading piracy
23 Nov 05 |  Technology
BitTorrent search site hits back
28 Mar 06 |  Technology
Digital film: Industry answers
09 Feb 06 |  Entertainment
Q&A: Movie downloading
05 Nov 04 |  Entertainment
Digital film 'must focus on user'
04 Apr 06 |  Entertainment
Sony wants an 'iTunes for movies'
31 Mar 05 |  Technology


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