MODEM, COMPUTER, ACTION!
More consumers entertain online movies
By Cecily Fraser
LOS ANGELES (CBS.MW) - The film industry always wants to take center
stage with U.S. consumers' entertainment spending, but making it
onto computer screens is requiring more than one take.
Major efforts from the likes of CinemaNow, Intertainer and studio-backed
MovieLink are gaining momentum to beam movies over the Web, experts
Content from so-called Internet video-on-demand can be delivered
to viewers' PCs, but with home-networking infrastructure increasing,
streamed movies will increasingly be seen on the living room TV
Still in its nascent stages, these services are making headway
with consumers - especially college students -- accustomed to downloading
audio, MTV video files or 30-minute television programs.
"People are getting used to the fact that they can receive
content on demand and that there's a variety of devices that can
deliver it," said Curt Marvis, chief executive officer of video-on-demand
distributor CinemaNow. "I view 2002 as year one of when the
real concept and opportunity for feature films delivered on demand
to be beginning."
Three-year-old CinemaNow, backed by Lions Gate Entertainment, has
about 50,000 movie buffs on its site daily, most of whom come to
view its free, ad-supported content such as the cult classic "Doom
Generation," Marvis said.
Intertainer, which has content through relationships with Universal
Pictures and Warner Bros., among others, has about 135,000 registered
Meanwhile, Movielink.com, a joint effort backed by Sony Pictures,
Viacom's Paramount, Metro-Goldwyn-Mayer, AOL Time Warner's Warner
Bros. and Vivendi Universal, is set to launch nationwide by the
end of the year, according to Movielink's director of marketing
"The time is right," Weiss said. "There's an installed
user base (of broadband households) out there that justifies a service
of this nature."
About 15.4 percent of U.S. households will have broadband Internet
access by the end of the year, up from 10.4 percent in December,
according to research firm GartnerG2 said.
"The fact that the major studios are indeed rolling out their
own sites is a pretty encouraging sign" for consumer adoption,
said Gerry Kaufhold, an analyst at research firm InStat/MDR in Scottsdale,
'Sit around the PC?'
The adult content industry already developed a set of services,
delivered via cable modem and digital subscriber lines, that provide
a viable market model to sell video over the Web, Kaufhold said.
"Now that technology is fairly well developed, it's ready
to go to a family-oriented market," he said.
He expects that by 2006, about 40 percent of worldwide consumers
who have high-speed Internet connections to their residences will
be participating in an "on-demand" service.
Other analysts aren't as optimistic, however, and are quick to
point out that the industry is still wrestling with issues related
to technology, pricing and how best to convert consumers who already
have a slew of choices on cable, for example.
"You don't hear people on a Friday night, saying, 'Kids, honey,
let's go sit around the PC and watch a movie," said P.J. McNealy,
an analyst with GartnerG2.
One of the main obstacles analysts point to is broadband service,
which often falls short of the required minimum sustained bandwidth
of 500 kilobits (kbps) per second or more needed to present a full-screen
movie on demand, Gartner G2 said.
Intertainer, for example, is available to broadband users in the
U.S. with connection speeds of 580kbps or higher.
The rollout of game consoles or digital set-top boxes that run
video on demand, among other tech advances, will provide more viable
streaming options to consumers going forward.
"You'll see more and more consumers go for the legitimate
resources when they're out there," said Rich Taylor, vice president
of public affairs for the Motion Picture Association of America
Beyond technology, legitimacy of films also is a big concern for
both independent operators and movie studios that have watched the
number of bootlegged copies swell online, Taylor said. As much as
600,000 films are being illegally downloaded in a given day.
"We see the Internet as an incredible opportunity to reach
more consumers ... and that's what we're all about, getting the
most eyeballs on a film, he said. "But no shopkeeper opens
up in a neighborhood where there's widespread looting."
The industry is working to design a level of protection that satisfies
all parties, including digital rights management proposals that
will help soothe studios' jitters about licensing their content.
"The key issue is security and adequate protection of our
copyright," said a spokesperson at Sony Pictures.
Meanwhile, pricing titles will be tricky, Kaufhold said. "Hollywood
is going to be careful about how they balance putting online services
up in such as way as they don't damage" agreements in the multi-billion
dollar rental service.
At the same time, video-on-demand providers are able to offer some
decent titles based on their existing partnerships. Consumers can
pay $3.99 for a 24-hour license from Intertainer.com to watch "A
Beautiful Mind." Or, its registered users can choose the TV
viewing package option for $7.99 a month.
Intertainer.com works with a lean marketing budget and relies heavily
on word of mouth to increase awareness. "The idea you can get
what you want when you want it is pretty powerful," said Jonathan
Taplin, Intertainer's chief executive officer.
CinemaNow, which features a lot of martial arts films, has both
a monthly $9.95 subscription service, as well as a pay-for-view
offering priced between $2.99 and $4.99 a title.
Even as traffic climbs, the company is realistic about its growth
going forward. "A small percentage convert into paying customers
and that's indicative of the fact that' it's going to be a slow
curve over time for people who are willing to pay for content over
the Internet," Marvis said.
Still, CinemaNow is finding the college market provides fertile
ground for video on demand. The company will conduct a trial with
Duke University students this fall, hosting a CinemaNow channel
that will be made available to the college's existing local area
As companies experiment with ways to make downloading or streaming
films better, their efforts aren't any different than those directed
at other earlier technologies such as DVDs, experts said.
Said Marvis: "Sometimes people forget (the movie) plays in
theaters, hotel channels, home video, pay-per-view, subscription
services, then syndication. There's a long lifespan for a feature
firm where it generates revenue. This sort of on-demand, Net-based
delivery is another iteration of a way movies can be delivered."