Film theft in the UK - Future of Copyright

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Developing new business
models
Not all action, however, has to be defensive.
The Hollywood studios have been open to the
possibilities of developing new business models
and using the Internet for the digital delivery of
content to the PC and TV set – an example that
could be followed by other content rights
holders. Internet video-on-demand (VoD)
strategies, and the delivery of broadband
entertainment to the TV set, can be a positive
step in the face of the potentially damaging
long-term impact of the type of piracy that has
damaged the music industry. Such strategies,
subject to adequate digital rights management
(DRM) and other security measures, may allow
studios and distributors to establish valuable
‘direct’ relationships with their customers.
The concept of Internet VoD at present is
simple. In return for a one-off fee (typically
between $2-$5) or a monthly subscription
(usually around $9.95), the customer is allowed
to download a copy-protected digital movie file
onto their PC hard drive, where it is generally
‘active’ for a month. Typically, during that
period, the user can watch the full movie on
their PC at any time, but once viewing has
started, the user has a 24-hour ‘window’ to
watch it in. Once the 24 hours are over, the file
expires from the hard disk. An alternative
approach is to ‘buffer’ and stream the film
within a 24-hour window, providing more-orless
instant access, though this theoretically
provides less control for the customer. The film
can be viewed on the PC screen or can be
viewed on the TV via a simple cable link from
the PC.
In November 2002, all the Hollywood studios,
with the exception of Fox and Disney, launched
the Movielink Internet VoD platform. The
service started with a library of 175 titles,
including some titles released to video rental
only a few weeks earlier, but following a
number of licensing deals, this has risen to
more than 500 – offering titles from practically
every studio and significant mini-major except
Fox and its subsidiaries.
The only details Movielink has so far revealed
about its experience to date are some facts
about the demographics of its users – which
are predominantly male and between the ages
of 25 and 49 – contrary to early expectation
that the target market would be the 18-25 year
olds (this could be explained by the tendency of
the 18-25 year olds to favour illegal P2P file
sharing). The company has subsequently
planned for a multi-million dollar ad campaign
through traditional print and TV media to
extend its consumer base.
In early 2004, Movielink struck a deal with
computer chip manufacturer Intel to
collaborate on marketing and technology.
Importantly, the two companies have
announced the start of co-operation to develop
content-protection and home networking
solutions, enabling consumers to wirelessly
transfer Movielink content from their PC to the
TV and other portable storage devices.
Movielink has a number of competitors. There
are three other start-up initiatives of note in the
US and Europe – CinemaNow, Moviesystem
and NetFlix. US venture CinemaNow is
supported by Microsoft, amongst others, whilst
Moviesystem is a pioneering French VoD
content provider acquired recently by Canal
Plus. NetFlix, the US online DVD rentals firm,
has only recently unveiled its plans for an
Internet VoD platform, but has the implicit
support of PVR company TiVo. All the services
have shown intent to use the open Internet (or
IP solutions) to eventually deliver on-demand
movies to the TV set as well as the PC.
It is unlikely that the studios expect to generate
much profit from the ventures – at least in the
short term. Nevertheless, this is an acceptance
that demand for the delivery of online movies
does exist, and if legal providers don’t get there
first with a coherent business model, then the
pirates will. Moreover, an Internet VoD service
(or at least a platform based on open-standards