Sep. 08, 2002 IBM getting into movies
TECHNOLOGY WILL DELIVER FILMS ONLINE
By Dawn C. Chmielewski
Mercury News
IBM will announce today a deal with five of Hollywood's major studios to provide the underlying technology to deliver motion pictures via the Internet.
The deal is a key technological milestone in the impending launch of Movielink, an online movie service created by Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros.
Separately, Warner Bros. Pictures said it will put last year's blockbuster, ``Harry Potter and the Sorcerer's Stone,'' online through CinemaNow, an Internet video-on-demand service.
The moves are signs a legitimate marketplace for online movie rentals is beginning to take shape as an alternative to the rampant underground trade.
``This points to an energetic attempt by the film studios -- and movie community at large -- to try to move quickly to market with offerings that will be appealing to consumers,'' said Steve Canepa, IBM vice president of media and entertainment services.
Movielink is the most ambitious of the film industry's online ventures -- promising to put a digital film vault within a mouse click of computer users. Anyone with Internet access will be able to download a film and store it on their computer for up to 30 days. Once they begin to watch it, the rental clock starts ticking -- and the film disappears after 24 hours.
Movielink's chief executive, Jim Ramo, said the individual studios will set pricing and determine which films they'll release online. IBM will serve as the technological conduit -- distributing the movies and maintaining the network.
Big Blue is slowly gaining momentum in Tinsel Town. This spring, it struck a deal with Viacom to upgrade the media conglomerate's infrastructure and lay the foundation for digital media services that extend the reach of its entertainment divisions, which include MTV Networks, Paramount Studios, Showtime, and CBS.
Critics say services like CinemaNow and Movielink don't have a prayer of rivaling file-swapping services such as Kazaa or Morpheus; which the Motion Picture Industry Association of America estimates trade some 400,000 to 600,000 bootleg copies a day -- sometimes before the films reach movie theaters.
Not only is the content free -- but it can be converted to any one of four formats that allow the user to burn the bootleg to a CD or DVD and view it on the living room TV.
CinemaNow charges money for its mainstream films -- $3 for classics like Alfred Hitchcock's ``Dial M for Murder'' to $4 for major releases like ``Harry Potter.'' These films, once downloaded, can only be viewed on a personal computer -- and disappear 24 hours after viewing.
And the studios plan to time online releases with a cable pay-per-view availability so as not to cannibalize lucrative home video and DVD sales -- or the $10 billion global market for home video rentals.
``If the same movie is going to be available on the cable box through your home theater system, who's going to watch it on the PC?'' asked Michael Katz, senior vice president of the media and entertainment practice at the New York consulting firm Booz, Allen & Hamilton. ``You have to be a real geek or your TV has to be broken.''
But research firm In-Stat/MDR predicts that Internet video-on-demand services will provide movie studios with a larger potential audience than traditional cable -- at least, for the time being.
Some 10 million households have high-speed Internet access via cable or DSL -- compared with 2 million cable households with access to video-on-demand services, said Gerry Kaufhold, In-Stat's principal analyst for converging markets and technologies.
``Going through cable requires multiple versions of the content, stored on multiple servers around the country,'' said Kaufhold, whose Scottsdale, Ariz., company sells research reports to the industry. ``And at the end of the month you have to work with multiple logs of who used it where. If I'm a studio, I can get a bigger market, quicker, over the Internet -- at least, for the time being.''
Kaufhold said it's no coincidence that Warner Bros. chose to release a sought-after film like ``Harry Potter'' over the Internet. It's a test to see whether the market for online movie rentals exists -- and how it stacks up against traditional cable on-demand services.
``Frankly, I hope and expect this is the first of a number of announcements,'' said CinemaNow chief executive, Curt Marvis. ``This is more than just a test. We're beginning to roll out a larger number of films. This is something that more and more of the studios feel they're willing to do.''
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