Too rainy to go to the video store? Want a movie to watch on your laptop on the airplane? Or how about an older title that isn't at the local Wal-Mart?
After years of avoiding it, Hollywood studios are preparing to let people download and buy electronic copies of movies over the Internet, much as record labels now sell songs for US$0.99, through Apple Computer's iTunes music store and other online services.
The movie industry has in years past made half-hearted attempts to let people rent a small number of movies online, but the rapidly growing use of Internet video, both legal and pirated, is prompting it to create more robust download options and to consider online business models it dismissed as recently as a year ago.
The studios have been working for months to confront the technological and business challenges of digital sales. Those initiatives gained new urgency on June 27 when the Supreme Court ruled that companies distributing software that allows users to trade pirated copies of audio and video files are liable for copyright infringement only if they induce users to break the law.
Sony, for example, is converting 500 movie titles to a digital format that can be downloaded and sold. Universal Pictures, a unit of NBC Universal, which is 80 percent owned by General Electric and 20 percent owned by Vivendi Universal, is preparing nearly 200 titles for digital online sale. And Warner Brothers, a division of Time Warner, says it has already digitized most of its library of 5,000 films and will start selling some of them online later this year.
The studios have strong incentive to make sure they offer consumers legal options: The rapid adoption of high-speed Internet connections is making the trading of pirated copies online easier and more widespread.
"It just will be easier and easier to be a legitimate consumer and harder and harder to be a pirate," said James Ramo, the chief executive of Movielink, a movie downloading service established by five major studios three years ago.
Of course, nobody argues that legal video downloads are going to take off quickly. It still takes half an hour or longer to download a movie, more than it takes some people to drive to a video store. The picture quality on a computer screen is not as good as a television with a good cable hookup. And there are not easy ways to move movies downloaded onto a PC to a television set.
Still, there is already a growing group of technology-savvy video buffs who are using free file-sharing software like BitTorrent to download pirated programs, especially movies that have not yet been released to DVD and new episodes of TV shows.
Not surprisingly, the videos that people most want to download are those that Hollywood is most shy about making available online.
Studios do not want to undercut box office receipts and DVD sales for hit movies, and TV networks do not want to put popular shows online, which might allow more viewers to skip the commercials. Nor do they want to rush into new technology that itself can be perverted.
"Broadcast, satellite and cable are all good models that provide us the ability to generate revenue for us and are relatively safe from piracy," said Robert Wright, the chief executive of NBC Universal, expressing the widely held view of studio executives. "The Internet may be more convenient, but it is Dodge City."
Hollywood is now betting that consumers will want to own digital copies of movies, much as they have embraced collecting DVDs. The final business deals are still being negotiated, and movies are not expected to be available for sale until this fall, but the outlines of how the business will work is clear.
The studios will most likely make downloads available to a wide range of online distributors. Those that are preparing to offer the movies include Movielink, MSN, Sony's Connect service, the Target Corp.'s Target.com and CinemaNow, an online movie rental store. Prices, to be set by the retailers, are expected to be similar to prices for DVDs, generally between US$10 and US$20.
The studios have decided that this model could well be at least as profitable as DVD sales.
Without the cost of distribution and the traditional retail markup, said Jeffrey Bewkes, the chairman of Time Warner's entertainment and networks group, a downloaded copy of the fourth Harry Potter movie, for example, could be sold "for the same price as wholesale." The wholesale price of a DVD is around US$12.
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