Hollywood and the internet
Feb 21st 2008
The internet could be a boon (благом) for Hollywood—but only if it can conquer (победить) its fears (страхи)
TO SEE what the future of film distribution might look like, go to a website called ZML.com. It offers 1,700 films for download to personal computers, iPods or other hand-held devices (портативные приборы), or to burn to DVD (для записи на DVD). It is inviting (привлекательный) and easy to use (легкий в использовании), with detailed descriptions (детальными описаниями) of each movie, customer reviews (рецензиями) and screen stills. And the prices are reasonable (приемлемые): “Atonement” (Искупление), for instance, costs $2.99.
There is one small catch (загвоздка): ZML.com is a pirate site. Hollywood's movie studios, which are used to dealing with scruffier crews (привыкшие иметь дело с более неприглядными командами) like Pirate Bay, a Swedish outfit (группой/компанией), are aghast (ошеломлены) at how professional the newcomer («новичок») is. “It looks like a fabulous (потрясающий) legal website,” says one studio executive.
The existence of ZML.com illustrates why Hollywood is in two minds (в нерешительности) about the web. On the one hand, the internet has brought a potent threat (мощную угрозу): pirates are plundering (завладевают путем обмана) films and carrying off booty (прибыль) that rightfully (по праву) belongs to the studios. Online piracy costs Hollywood less than the physical variety (всё разнообразие физического пиратства), but the gap is closing (разрыв сокращается). “We are more concerned (обеспокоены) about internet piracy than physical piracy, because controlling it is harder,” says Ron Wheeler, head of anti-piracy efforts at Fox Entertainment Group. Some in Hollywood believe that internet theft (хищение с использованием Интернета) could even be the death of America's film industry.
On the other hand, the internet offers Hollywood a great opportunity (возможность) —which it has so far been slow to exploit (использует неактивно). There is every reason to think (есть все основания полагать) that people will want online access to films, just as they do for music, newspapers, television and radio. ZML.com is proving (доказывает) that people will pay to download films (платить за скачивание) to see at home when it suits (удобно) them. And once (как только) people can buy or rent films on demand (по требованию), the chances are that they will watch more of them.
The web is already making its presence felt in the heart of Tinseltown: this year's Oscars extravaganza (фееричное представление) nearly fell victim to a strike (чуть не пало жертвой забастовки) by writers over pay for the distribution of their work on the internet. But for the time being (пока еще) Hollywood is mostly stuck in the physical world. Every year it sends thousands of heavy, expensive reels of film (киноленты) to cinemas by road.
Some studios are enthusiastic about the internet. “In 2008 we will move full speed ahead online,” says Thomas Lesinski, president of digital entertainment at Paramount Pictures in Los Angeles. “It's the great hope for new revenue (прибыли) for the movie business.” But the industry has by and large (в целом) been slow: studios have only tentatively (в порядке эксперимента) backed (поддерживали) legal online film-download services. Television, by contrast, (наоборот) has been much faster to embrace (в принятии) the internet.
On the buses
The choice of what is legally available online today is patchy (неполно/обрывочно/мозаично). For instance, London buses are carrying ads for (рекламируют) FilmOn.com, a new download service. It promises “tons and tons of great movies”, but you will not find “Mulva 2—Kill Teen Ape!” near the top of many people's lists. The internet has lots of legal sites like this, which promise thousands of top-class titles but in truth (на самом деле) resemble (напоминают) the worst shelves of a bad video-rental store. ZML.com has a far better collection than most legitimate (законные) services do.
Another legal site, MovieFlix, based in Los Angeles, makes its money from independent films, student movies and other eclectic fare. Its founders (основатели), Opher Mizrahi and Robert Moskovits, stay away from (держатся подальше от) Hollywood studios because of their high fees (высокие комиссионные). MovieFlix, which had revenues of $1.2m last year, is rare (редкость) among download sites: it turns a profit (приносит прибыль). “We are the cockroaches (тараканы) of this space,” says Mr Mizrahi, “and we are survivors (выживающие).”
Many better-funded services have fared far worse (живут гораздо хуже). Movielink, which the studios themselves set up (основали) in 2001, with about $150m of start-up capital, was sold last August to Blockbuster, a video-rental chain, reportedly (якобы) for less than $20m. CinemaNow, which counts Microsoft and Cisco Systems among its investors, started offering movies online in 1999 and is not yet making a profit, to the surprise (к удивлению) of its chief executive, Curt Marvis. Back then, he says, everyone thought that selling films online would be a huge business by now.
The colour of money
There are two broad reasons for Hollywood's tardiness (медлительность). The main one is the industry's aversion to (отвращение к) making big changes to its business model. In part (частично) this is because it takes so much risk in its day-to-day operations (повседневной деятельности). “Every weekend, we sit on pins and needles («сидим как на иголках») watching to see if our films will flop (провалятся/потерпят неудачу),” explains a studio executive, “and that doesn't encourage (поощряет) risk-taking (принятие на себя рисков) in the business as a whole.” There is a less defensible (менее выгодное для обороны) explanation too: “Hollywood's value system (система ценностей) is not necessarily about growth (связана с ростом [прибыли]),” says Dan Jansen, who runs the Boston Consulting Group's media practice. “It's about recognition (признанием) for films.”
For the moment (в настоящее время), most people are still happy with DVDs, so the studios have had little incentive (стимул) to switch to (для перехода на) an unproven (непроверенный) new format. The DVD business is huge, bringing in $23.4 billion in America last year, against $9.6 billion from the box office (кассовых сборов). The studios are terrified of damaging (бояться навредить) that source of revenue. In 2006, when Disney made a deal with Apple to sell movies via iTunes, Wal-Mart, America's biggest retailer, reportedly (якобы) threatened to retaliate (пригрозил нанести ответный удар). Wal-Mart accounts for (на WM приходится) about 40% of DVD sales in the United States and if it sharply cut shelf-space (место для выкладки товара) for DVDs, the lost sales would far outweigh (намного превысят) new digital sales in the near term (в ближайшей перспективе). At the end of last year Wal-Mart shut its ten-month-old movie-download site. Now that (теперь когда) it no longer has a foot in the internet camp, studios expect it to take a harder line against (возьмет более жесткий курс против) any further efforts they may make to favour online distribution.
Not everyone agrees, however. Wal-Mart and other big retailers rely heavily (слишком зависят) on DVDs to bring higher-income people into their stores, says a studio executive. For this reason, he believes that Hollywood should be able to cultivate online revenues without greatly disrupting (не слишком подрывая) its existing businesses.
In any case, there are now signs that the DVD boom has come to an end—which should also encourage the studios to worry less about Wal-Mart and to move faster online. After its growth slowed in 2005 and 2006, spending on DVDs fell by 3% in 2007. Some in the industry are pinning their hopes on (связывают свои мечты с) fancier, “high-definition” (с высоким разрешением) discs—another physical format—rather than on the web. But so far, sales of such discs have been minuscule (мизерны)—largely because of a war between two formats, HD DVD and Blu-ray. Although the war ended this week, when Toshiba said it would abandon (откажется от) HD DVD, high-definition discs are unlikely to bring growth back to the home-entertainment business.
Indeed, Hollywood's desire to preserve (сохранить) its existing business rather than (а не) embrace (охватить) a new one echoes (повторяет) its misgivings (дурные предчувствия) a few years ago about the DVD itself. In 1997, when the new format was about to be born (еще только предстояло родиться), three studios, Paramount, Disney and Twentieth Century Fox, came out against it (выступили против), remembers Warren Lieberfarb, who is widely credited with having fathered (которому вменяют в заслугу создание) the product as it is today. They were worried that selling DVDs for $18 apiece (за штуку) would cannibalise (обескровит) their sales of video cassettes to rental stores for $65 each. None of the three studios is proud of that episode now.
Moreover, as well as boosting sales overall, the internet will make it easier for the studios to make money from their libraries. Virtual distribution does away (покончит с) with manufacturing, packaging, transport and inventory costs (стоимостью хранения товара). At the moment, the studios get $18 per film from a Wal-Mart or a Best Buy and about $16 for a digital sale, but because of the lower costs they make about $3 more on each film when sold electronically.
A bigger risk than angering Wal-Mart is that Hollywood will be undone (уничтожен) by internet pirates. In November France's president, Nicolas Sarkozy, backed a proposal to require ISPs (поставщиков услуг в сети) to detect and cut off conspicuous (очевидных) pirates. Britain's government is said to be considering a similar law.
The second reason for Hollywood's sluggishness (нерасторопность) is that the studios and the consumer-electronics industry have not overcome (преодолели) three technological hurdles (препятствия). Downloading a film still takes a long time—in America, about 30-40 minutes on average (в среднем). Movies in high-definition format would take about four times that (в 4 раза больше). But broadband speeds (скорости широкополосной передачи) are increasing all the time. In Japan and South Korea it now takes between five and ten minutes to download a film in standard definition.
Another obstacle (препятствие) is that most people want to watch films on television, not on personal computers—especially if they have wide, “home-theatre” TV screens. Products connecting PCs and televisions have been available for years but have not caught on (стали модными), because they are hard to install and operate. That is changing. Apple has just overhauled (модернизировал) its linking gadget (соединяющее устройство), Apple TV, to make it easier to use. At the CES (выставка электронных товаров) in Las Vegas, says Alan Bell, Paramount's chief technology officer, new televisions and set-top boxes (декодеры каналов) that connect directly to the internet were on show, “so the PC is not the bottleneck (помеха) in getting digital content from internet services to the TV screen that people saw a year ago.”
The last hurdle, and perhaps the highest, is the lack of common standards among websites and devices. “Imagine if you went to Wal-Mart to buy a new DVD player and then found that your DVDs from Best Buy didn't work on it,” says Mitch Singer, chief technology officer of Sony Pictures Entertainment. Movies on the internet, he says, is “a format war on steroids”. Each download store sells different usage rights. Hollywood is trying to do something about this. Late last year (в конце прошлого года) a group of studios, retailers and consumer-electronics firms met to discuss an idea of Mr Singer's for a standardised electronic movie product called Open Market. But the talks are at an early stage, and it will be tricky (трудно/мудрено) to get (побудить) companies such as Apple and Microsoft to agree to common standards.
Hollywood's dealings (торговые отношения) with the consumer-gadget companies also betray (выдают) its habitual caution (привычную осторожность). The studios fear that Apple could become the Wal-Mart of the internet—a giant with power to push them around, continually pressing prices down. “People think that if it's online it should be free,” says one studio head.
How the web was won
Hollywood is harnessing (использует; дословно: запрягает) the internet. Studios are using it to find global pockets of interest (очаги интереса). “If there's 1m people around the world who are interested in ice-fishing,” says Jeremy Zimmer, co-founder of United Talent Agency, “we can make a movie for them.” Studios are using their customers' opinions to shape their films. Thus, Blowtorch, a young media company making video content for 18- to 24-year-olds, will allow audiences to influence (влиять на) its movies via (через/посредством) the web. They will be invited to vote on (голосовать по) elements of a film's soundtrack, an actor's wardrobe (гардероб), or even character development.
In the long term (в долгосрочном плане), many people expect that the internet could undermine (подточить/расшатать) Hollywood's system of exclusive “windows”. Cinemas get a film to themselves for a period of weeks, then it goes to DVD, then to video-on-demand and online services, then pay-cable television, and so on. And many films are still released in different countries at different times, usually starting in America. The system is a gift to pirates. But the studios are wedded to (дословно: повенчаны с) it, especially the cinema window.
The internet creates immediate (мгновенную) global awareness (осведомленность), so the studios are increasingly choosing (все чаще предпочитают) to release films at the same time everywhere. They have already shortened their windows, he says, and that could be a step towards getting rid of them (к тому, чтобы от них избавиться). As people buy home-theatre systems and the convenience (удобство) of the internet makes it even harder to get people out of their homes, the cinema window will come under ever greater pressure (натиск/напор/трудности).
It will doubtless (без сомнения) take Hollywood a few more years to work out (решить) how to deliver films over the internet. Meanwhile (тем временем), studios and retailers are poised (готовы) to introduce movie-download kiosks, using flash memory. Several companies, such as MOD Systems, of Los Angeles, have cut download times (время загрузки) to a few minutes; Ireland's Porto Media claims a time of 17 seconds. The idea is to put kiosks in such places as shops, airports and petrol stations. Using Porto Media's system, films are downloaded onto a tiny device (pictured) which plugs into dock attached to a television. Kiosks could hold more titles than physical video shops and would never be out of stock (без запаса). Twentieth Century Fox is looking at several competing kiosks. It will test them this year.
“The flash-memory-enabled kiosk is an interim solution (временное решение) which overcomes many of the weaknesses (слабые места) of the present model and the current deficiencies of the internet,” says Mr Lieberfarb, who is on the board of MOD Systems. Customers will get used to (привыкнут к) downloading films and transferring them between devices, which will prepare them for proper online distribution. Kiosks will make money for retailers too, so that they could help the studios keep Wal-Mart and others sweet (мягкими и милыми). That is the kind of careful (осторожный) step forward that even Hollywood can dare (отважиться) to take.
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