The
Big Pipe Dream
Why are "intertainment" delivery companies such
as Movielink
betting business models on an increase in the number of
broadband-connected households? Because the old high-speed
dream had it backwards.
Last August, the annual Progress
and Freedom Foundation Summit--a gathering to boost
the relationship (or gauge its level of turbulence) between
technologists, policy makers, and media--echoed the sober
atmosphere of many Internet-related events in 2001. Yet
during one panel discussion, The Implications of Ubiquitous
Broadband, while repeating his usual mantra on the importance
of secure distribution, MPAA president Jack Valenti boldly
asserted that resolving piracy issues would thus resolve
the business issues of broadband.
"Once valuable works can be protected, broadband and
the Internet will take off," Valenti said. "Right
now, movies cannot flourish on the Internet because of thievery."
If Valenti's perspective is right, i.e. if that is indeed
the thinking by the content merchants, it would replace
the old broadband plan, which waged its appeal--and investment
dollars--merely on the higher speed. This "new"
approach is similar to the cable television model--consumers
will pay for the connection if the right kind of content
can be delivered through it. Not just build and they will
come, but build before they come.
Yet more than any other intertainment business, online VoD
companies like Movies.com and Movielink will depend on broadband
to deliver its large files, which begin in the 500 MB range
and will take - even with a high-speed connection - anywhere
from 30 minutes to an hour to download. Even though the
current number of consumers who have upgraded to high speed
Internet connections is considered disappointing, these
VoD ventures are founded on the belief that the current
number of 12 million broadband connected homes will be a
strong enough base to build on, and that the appeal of broadband
will succeed the availability of desirable content.
"There is a symbiotic relationship between broadband
adoption and high value content," says Movielink's
Jim Ramo,
who will be delivering his first keynote
since being named the CEO of the joint-studio VoD Internet
venture at this week's SCTVF
conference. "The broadband ISP's are reliant on high-value
content to entice narrowband users to upgrade, whereas Movielink
is reliant on the growth of the broadband footprint in order
to increase its potential customer base. We feel strongly
that the value of broadband will be significantly advanced
with our content."
Ramo is predictably an advocate for secure, legal distribution,
and adamantly opposes free Internet file-trading sites which
represent a virtual paradise for consumers looking to download
content without paying for it. Ramo says that these sites,
such as Kazaa, Aimster, iMesh and a myriad of others (that
have emerged since the fall of Napster), are "a moral
problem because you've potentially prevented more movies
from getting made." However, the economic threat that
this has posed to the recording industry is much higher
than the film industry; the selection of songs on swapping
sites is currently far more vast than video (and on subscription
sites), the files are much smaller and easier to download
and upload, and what has been attacked is essentially the
music industry's singular revenue stream--the packaged CD.
Also, the film industry has more control over its ability
to distribute unlike music, which is owned by a multitude
of parties from publishers, to labels, to artists, thus
making it more difficult to make a large selection of content
available for purchase online.
Movielink,
as well as online gaming companies, music subscription services
and other businesses that are affected by the rate of broadband
connections, are essentially resurrecting a new hope for
a the elusive high-speed dream of making the Internet a
major, if not the predominant, platform for consumers to
get entertainment. There is still a lot of skepticism around
the introduction of these new content services. Last February,
a GartnerG2
study, Internet Video-on-Demand: Ready for Primetime?,
reported that just 2% of the 156 million domestic Internet
users had purchased and downloaded a digital movie or video,
a number that is predictably small given that Movielink
and Movies.com have yet to launch and the selection of downloadable
content to purchase is scarce. However, the study also argued
that there were very few consumers "interested in watching
movies on a computer screen." Movielink says that the
process of bringing downloaded content to a screen will
be simple, if a television connected via an ordinary S-video
cable or radio frequency device connection, a standard on
many current computers. However, the GartnerG2 report stated
that the high-bandwidth conduit or home networking capability
necessary to make that happen was a technology that won't
be widely adopted in U.S. homes for three to five years.
"In the short term, Internet VOD will be neither convenient
nor revolutionary-nor will it deliver a quality entertainment
experience," the study concluded.
This report, however, does not take into account the extraordinary
attention being paid by platform companies like Microsoft
and Intel, the cable companies themselves and the studios
to the whole realm of home networking (and the movement
towards the seamless linking of "passive" and
"active" appliances in the home) and even if its
wide adoption is a few years away, the availability of the
solution is not an issue per se. One does not expect that
a whole new environment suddenly becomes a reality, and
over the next few years, a number of approaches will be
tried, tinkered with and perfected for specific business
models.
"What we haven't seen thus far is a sort of reasonably
priced alternative to give people that want to be legitimate,"
says Ramo. "I'm not saying that it will solve any problems.
I'm just saying that it's an alternative that will allow
the other things to kick in." Of course, even if Movielink's
business plan of a rise in consumer interest in getting
movies over the Internet does bear fruit, the pirating sites
will remain a strong threat. Bringing these plans to the
light of day will remain a complex challenge as business
models, pricing structures, and security issues are being
determined.
by Wendy
Hall
Larta Staff Writer
Rohit
Shukla
Larta CEO
Movielink
CEO to Deliver First Keynote At This Year's Venture Forum
No Silver Bullet: Asset Security Technology
Keynote speaker: Jim Ramo,
CEO, Movielink
The issues that face the entertainment industry, as
it grapples with how to deliver content securely over the
Internet, is applicable to many types of businesses trying
to secure assets and protect the exchange of information
and property while making it more accessible.
click
here to read about this keynote as well as the other SCTVF
2002 presentations
April
18th: Southern California Technology Venture Forum
Knowledge and Investment Conference
Come to SCTVF 2002 to learn about emerging markets--including
nanotechnology, security technologies, and bioscience. Renowned
keynote speakers will present industry analyses on these
emerging markets, followed by a select group of companies
representing the best technologies in Southern California.
SCTVF is the meeting point for anyone who needs to know
about the state of cutting-edge technology--venture capitalists,
corporate investors, private investors, analysts, corporate
executives, and entrepreneurs. 7:30 am-2:30 pm, Regent Beverly
Wilshire, Beverly Hills, California.
more information
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