A new mode of movie ownership is briskly emerging — one which someday may challenge the hegemony of the digital videodisc (DVD). During the last few weeks, Hollywood debuted two films, “King Kong,” and “Harry Potter and the Goblet of Fire,” via a new media, broadband, Internet-based “download-to-own” service, as well as on DVD.
The market could be worth Pounds 735 million — or US$1.3 billion — in the next four years in the United Kingdom alone, according to research from the London office of Strategy Analytics, the market research firm covering the IT industry.
UK Debuts Technology
The Internet trend is starting in Europe, because the broadband connectivity is available in smallish countries, like the UK and The Netherlands. Eventually, it will come to the U.S., which is rapidly expanding its broadband infrastructure.
A report, a copy of which was provided to the E-Commerce Times, demonstrates that a “significant” part of the UK broadband audience is ready to try video download services, which could complement — or even replace — popular video rentals, as well as DVD and videocassette purchases, the firm said.
“With more than 10 million UK households now using broadband Internet access, these findings suggest great potential for the online distribution of video content,” said Martin Olausson, an analyst with Strategy Analytics. “As the base of users grows, access speeds increase, and the range of video available online expands to include more premium content, such as recent movies.”
The report, entitled, “Universal Brings Kong to Broadband: Ape Smashes UK Release Window-But Slips on Pricing,” also indicates that a study of 250 broadband homes in the UK showed that nearly a quarter of respondents expressed interest in this new type of video download service.
‘Kong’ First Out of the Gate
The release of director Peter Jackson’s “King Kong” for Internet downloading was a major event in the UK. Universal Pictures, partnering with a DVD rental site, called LoveFil, and America’s AOL, is offering the film over the Internet for Pounds 19.99 ($35.58). For that price, consumers receive a copy of the show for their PC, and another that they can transfer to a PDA, like the Zen device from Creative Labs, or something comparable.
What is more, consumers will also be sent a copy of the film on DVD through the mail. “The entertainment industry is changing rapidly, with an emphasis on instant access,” said Peter Smith, president of Universal Pictures International, in remarks to the media.
The movie “King Kong” is but the first of 30 new films that will be initially made available for the home market via the Internet. The other forthcoming films include “Pride & Prejudice,” “Serenity” and “Nanny McFee.” Some older films are already available for downloading on the Internet — but Universal was the first to release one for the home market in that way, Olausson said.
The industry is desperately searching for a way to combat digital movie piracy — and retain its revenue stream from home viewing of films. “These solutions help us to combat piracy by providing quality, affordable and legal downloads,” said Kevin Tsujihara, president of Warner Bros. Home Entertainment Group.
Continental European Debut
At the same time the service was debuting in the UK, it was also coming to market across the North Sea in The Netherlands. Warner Bros. Home Entertainment made “Harry Potter and the Goblet of Fire” available over the Internet in The Netherlands and in the Dutch-speaking part of Belgium on April 4.
The producer is partnering with an online service called FreeRecordShop.nl to distribute the film, and other, older Warner Pictures titles, like “Lethal Weapon,” “Dr. Zhivago” and “Gone with the Wind.” The company claims to be the first movie studio to have offered the service on continental Europe.
There are more offerings to come, the studio said. “By continuing to partner with local services, around the world, Warner Bros. is finding innovative ways to engage with the local culture,” said Tsujihara.
Not one to be outdone, Sony Pictures Home Entertainment also launched its digital sell-through business this month, partnering with Movielink and CinemaNow.
In the short term, some in the industry estimate that online distribution is a niche business that will only appeal to about 5-10 percent of the market, according to research analyst Jonathan Arber at London-based Ovum Research. However, in the long term, it is estimated that the online hard-copy segment will represent a major channel for revenues.
“However, we expect to see more deals of this type over the next few months, as studios further explore their options in this space and search for the best model,” Arber commented, adding that Germany, Austria and Switzerland were also likely to see this service offering soon.