Movies Get Tangled Up in the Web

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The New York Sun

As “Iron Man” steamrolled toward $200 million in ticket sales this past weekend, and as all eyes turn to this weekend’s family-oriented blockbuster, “The Chronicles of Narnia: Prince Caspian,” and then to next week’s “Indiana Jones and the Kingdom of the Crystal Skull,” it’s easy to forget that the industry’s focus has so thoroughly shifted away from the Friday theatrical opening and toward the Tuesday DVD release.

But even amid today’s DVD culture, indicators abound of just how quickly our collective viewing habits are changing, and how Hollywood players are positioning themselves for a DVD-less future. Call them the streamers — the one-appliance generation of consumers who are chucking their stereos, televisions, and DVD players in favor of watching their favorite films and TV shows online. Forget the movie theater — who needs a cable box or a DVD player? Before too long, three simple words will have usurped them all: digital distribution rights.

At film festivals, this notion of a theater-less future is a common point of discussion. A week ago, as the Tribeca Film Festival came to a close here in New York, a lot of conversation was generated by the festival’s two most unconventional acquisitions — “Finding Amanda” and “Fermat’s Room,” which were acquired by HDNet and IFC Entertainment, respectively, with both companies planning to put as much emphasis on video-on-demand tie-ins as on theatrical distribution. Now, as the Cannes Film Festival gets set to kick off Wednesday, pundits will no doubt be watching closely to see what titles seem capable of luring the dwindling American art-house crowd.

But HDNet and IFC are not the only companies trying to find new ways to reach an increasingly fragmented audience. At January’s Sundance Film Festival, a new Web site heralded the soaring value and importance of the next major benchmark in the industry.

“Newly Expanded FilmCatcher.com Launches at the 2008 Sundance Film Festival,” the widely circulated press release stated, “and announces new digital deals for downloadable films.”

The release came with the announcement that this specialized Web site had acquired the digital rights for 20 foreign films, thereby allowing it to stream the films onto any personal computer. If you can’t watch your favorite movies in stadium seating, why not just skip the DVD store and download it?

“We are living on the Web now, with things like YouTube and MySpace and Facebook, spending time meeting people, social networking, reading, writing, watching TV — it’s where we now consume our news, our information, and our entertainment,” the vice president of acquisitions and online media at FilmCatcher.com, Cristina Garza, said, adding that her company and others like it are banking on the continual online migration of the cinephile.

“Also, when you look at who’s going online for content like this, it’s not just people from urban areas,” a co-founder of FilmCatcher.com, Al Klingenstein, said. “The net is the great aggregator. Whether you’re in New York, or from somewhere like Peoria or Milwaukee, where you don’t have many art-house films, the five people in the community of 10,000 who really care can connect with other people and find out about these films online.”

Still, both Ms. Garza and Mr. Klingenstein are the first to concede that the shift from the movie theater to the computer screen will be a slow one. There are issues of bandwidth and image quality, not to mention issues of legality and marketing, as online distributors strive to build user-friendly digital pipelines. Just two weeks ago, Apple made the scope of its online ambitions clear, announcing a deal with several major movie studios that will allow iTunes to sell movies digitally the same day they are released on DVD.

As things go digital, however, a turf battle pitting online sites that offer downloadable movies against major broadcasters may be looming. Television networks view digital streaming as direct competition and, as a result, exclusive broadcast agreements have often pre-empted the selling of digital rights. Case in point: the lucrative deal (reported to be in the neighborhood of $40 million) struck in February by USA Network to secure the broadcast rights for the first three “Indiana Jones” films, as well as the forthcoming “Indiana Jones and the Kingdom of the Crystal Skull.” With plans to screen the original trilogy this month in advance of the new film, USA will retain exclusive broadcast rights for “Crystal Skull” for years, during which time the digital rights are likely to be kept off the table.

It’s a complicated business arrangement, but the impact on home viewers is simple to understand. Just as online movie services such as Netflix race to offer their users digital streaming capabilities — Netflix currently allows PC subscribers to stream some 9,000 titles directly off its Web site — they are finding it exceedingly difficult to secure the digital rights for many new releases (as well as classics like “The Godfather” and the James Bond franchise) that are already subject to exclusive broadcast deals.

The ups and downs of these negotiations may only be affecting a fraction of online movie buffs today, but going forward, as the first wave of tech-savvy viewers abandons cable subscriptions and DVD libraries — just as music fans have turned to iTunes and iPods in lieu of CDs and home stereos — this issue is poised to pick up steam.

ssnyder@nysun.com


The New York Sun

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