Five major movie studios plan to begin offering films
via the Internet today through Movielink, Hollywood's most aggressive move
yet onto the Web.
The long-awaited service is designed to open a
new path for movies into the home, relying on the Internet and digital
bits instead of physical media such as videotapes or DVDs. Its initial
lineup of about 175 movies will be available only to U.S. consumers with
high-speed Internet connections, who will be forced to watch the films on
computers powered by Microsoft Windows unless they can connect their
television sets to their PCs.
Analysts say Santa Monica-based
Movielink faces several hurdles that could take years to overcome, most
notably the fact that the vast majority of consumers aren't equipped to
watch the service's films on their TVs.
"The average movie-lover is
not going to run out on Monday and try this," said P.J. McNealy of
GartnerG2, a technology research and consulting firm.
Spokesmen for
Movielink and several of its Hollywood sponsors said they view the first
few years as a time for experimentation and discovery, not
profit.
A main goal for the studios, they said, is to avoid the
fate of the record companies. Most major labels didn't make their songs
available through the Net until after online piracy became rampant,
leading some observers to wonder whether they'll ever regain control of
their businesses.
"We need to start the process and get this
service up and running, test it, get feedback, and spend the necessary
time to perfect it," said Rick Finkelstein, president and chief operating
officer of Universal Pictures, a subsidiary of Vivendi Universal. "You
want to be sure that you're there when the demand occurs. Otherwise,
there's a risk that the pirates come in and occupy this space."
The
five studios behind Movielink -- Universal, Sony Corp.'s Sony Pictures
Entertainment, AOL Time Warner Inc.'s Warner Bros., Viacom Inc.'s
Paramount Pictures and Metro-Goldwyn-Mayer Inc.'s MGM Studios -- have each
made a five-year commitment to the service, with an eventual investment of
more than $100 million, said Yair Landau, president of Sony Pictures
Digital Entertainment.
"This service is not so much about what it
is today but what it can become," said Landau, who started working on the
project in early 1999. "It's not about what the market for movies on PCs
is, it's about what Internet delivery of movies can evolve to."
A
handful of companies has already tried to deliver movies and other forms
of video through the Internet, with limited success. Downloadable digital
movie files are so large that it can take more than an hour to deliver
them even with a high-speed connection. And "streamed" movies, which play
on a user's computer as they're being transmitted, typically don't offer
as clear or steady a picture as a TV set.
A more serious problem
has been the studios' reluctance to let unaffiliated companies offer their
movies online. One video-on-demand company, Intertainer Inc. of Culver
City, recently filed an antitrust suit against several studios for
allegedly withholding titles and colluding to favor Movielink. The Justice
Department is examining whether the studios' online practices violate
antitrust laws.
Some of the survivors still welcome Movielink to
the marketplace.
"We're thrilled that Movielink is launching," said
Curt Marvis, chief executive of CinemaNow Inc., a video-on-demand service
in Marina del Rey. "You never want to be the only horse in a
race."
Movielink CEO Jim Ramo said the service will offer every
movie from the five participating studios that's available for
pay-per-view on cable or satellite TV, starting 45 days after the movies
appear in video stores. Initially, about two-thirds of the movies on the
service will be older titles, but about 15 new releases will be added per
month, he said.
For about the same price as a pay-per-view film --
$3 to $5 per title -- users can download movies to a computer and keep
them for up to 30 days. The downloading process, however, could take 45 to
90 minutes on a typical high-speed phone or cable connection. Users can
keep the movies for only 24 hours once they start to play
them.
Software from RealNetworks Inc. and Microsoft Corp. is
designed to prevent the movies from being copied or played on any device
other than the computer that downloaded them, Ramo said. When anti-piracy
technology gets more advanced, he said, Movielink intends to allow
customers to burn movies onto DVDs and play them on other
devices.
Movielink's backers say they're eager to see its movies
migrate from computers to TVs and hand-held devices. One of the first
extensions probably will be to game consoles, particularly Microsoft's
Xbox and Sony's PlayStation 2, which is incorporating RealNetworks'
software.
"Our expectation is, we're going to learn a heck of a lot
by launching this and getting something out in front of the consumer,"
said Kevin Tsujihara, executive vice president of corporate business
development and strategy for Warner Bros. "What's going to enable the
Internet to become a viable distribution channel is going to be heavily
dependent on what consumer electronics companies [build] and what
consumers buy."
Movielink serves at least two other purposes for
the studios. It gives them a new bargaining chip when negotiating deals
with cable TV and other distributors. It also could help the studios in
Washington as they urge Congress to mandate uniform anti-piracy
technologies in computers and consumer electronic
devices.
