Hollywood studios, seeking a way to foil piracy and looking toward life beyond the DVD, and turning Europe into a proving ground for new methods of digital movie distribution
Universal Pictures, the movie studio behind “King Kong,” said it will offer the ape saga and other films on a “download-to-own” basis for the first time next month as Internet movie delivery switches to ownership from renting.
The new service in Britain that will sell digital downloads of movies such as King Kong along with a DVD copy, tapping into the online video market now dominated by Apple’s iTunes.
The service being started in Britain, in partnership with LoveFilm, an online video rental company, which allows consumers to download a Universal movie on the same day as the DVD release, so movie fans can own the download permanently and watch it on a home computer or portable device.
"It gives instant access, it gives portability and it gives much greater flexibility for the consumer to consume his product any way they want," said Universal Pictures UK Chairman Eddie Cunningham. Universal Pictures is part of General Electric’s NBC Universal unit.
Hollywood studios have been reluctant to sell digital versions of their blockbusters for fear they would be copied and pirated online.
In Germany, Austria and Switzerland, meanwhile, Warner Brothers plans a download service in partnership with a subsidiary of the German media company Bertelsmann.
The rollouts show how the industry, stung by illegal copying of DVDs and trading of movies on the Internet, is embracing digital distribution in an effort to avoid the problems of the music industry, which is still struggling to convert illegal copying of digital files into revenue-generating sales.
While consumers have been able to download films to a personal computer for a couple of years, these files are somewhat crippled, typically self-destructing after, say, a 24-hour period. The video-on-demand services also generally trail the retail arrival of DVD versions by about three months.
“The days’ of just a DVD that plays on a television screen is moving on,” Peter Smith, president of Universal Pictures International, told a news conference in London, because consumers now want to watch movies on the go. Universal Pictures is a unit of General Electric Co.’s NBC Universal.
The new services from Warner and Universal, in contrast, will allow consumers to "own" the movie files for unlimited viewing, potentially creating a replacement for DVDs, and at the same time as the DVD retail-store release.
The service will begin April 10 with the DVD release of “King Kong,” the 2005 movie starring Naomi Watts and directed by Peter Jackson, and 34 other Universal films. For 19.95 pounds ($34.77), consumers can download a digital copy of “King Kong” for a home computer and a second copy for a portable device, and also receive a physical version of the DVD in the mail the next day.
Download-to-own has the potential to completely revolutionize the way people watch movies, said Smith. "The entertainment industry is changing rapidly, with the introduction of new delivery channels to consumers and an emphasis on instant access."
Several U.S. media companies, including Walt Disney, NBC Universal and CBS, make television shows available for downloading from Internet sites like iTunes and Google Video. But they have been reluctant to do so with movies, in part because of concerns about angering large retail chains, which have come to rely on DVD sales for significant revenue. Cinema owners are also watching digital distribution warily, worried that release dates will eventually creep closer to premieres.
Industry executives say privately that, in part, they chose Europe to introduce the first film download services because cinema owners and retailers are less concentrated and powerful than in the United States, where Wal-Mart Stores, for instance, is a huge seller of DVDs.
In addition, the number of people subscribing to fast, broadband Internet service – which is necessary to download sizable movie files – is relatively high in many European markets and still growing rapidly. Smith of Universal Pictures International said he expected that 60 percent of British households, or nearly 17 million homes, will have broadband by the end of 2008.
Universal expects the service to quickly move beyond Britain, due to the rapid global spread of broadband Internet connections, and it is already in talks with potential partners in other countries, Smith said.
The downside of high broadband penetration is piracy, which is more of a problem in Asia and Europe than in the United States. Warner Brothers estimates that in Germany alone, 1.7 million people downloaded nearly 12 million copies of films illegally in the first half of last year.
Lovefilm Chief Executive Mark Livingstone said he expected Warner Brothers and other Hollywood studios to follow Universal’s lead in the download-to-own market.
Market research showed that while consumers wanted the ease and immediacy of digital downloading, they still wanted to be able to watch films on television. "Consumers are keen to have versatility, so we are offering them both digital and physical," Livingstone said.
Other Films:
In addition to “King Kong,” other Universal movies to be offered in the early days of the new service include “Pride and Prejudice,” “Serenity,” “Doom” and “Nanny McPhee.” They will be priced from 9.99 pounds to 19.99 pounds, said Livingstone. (LOVEFiLM is a unit of venture-capital firm Arts Alliance.) The service can be accessed through LOVEFiLM’s Web site or that of AOL, he said.
The new service will use Microsoft’s digital rights management technology, which is designed to prevent consumers from duplicating the movies, burning them to disc or uploading them to the internet.
Users will also be able to share lists of films they have purchased; if they make their computers available to the peer-to-peer network, they will earn credit toward future downloads.