First-run movies begin to roll into homes, perplexing Hollywood

08/17/99

By Doug Bedell / The Dallas Morning News

Like everything else touched by the Internet's digits, American film and its public are experiencing shivers of change.

The Blair Witch Project, a small-budget movie from obscure Artisan Entertainment, is today on track to gross more than $120 million at the domestic box office. Its chief marketing tool: an alluring, mystical Web site (www.blairwitch.com) that drew an astounding 35 million page views before the film's release.

"There were a couple days when it was hard to even get into the site," says Jessica Rovello, who handles Web sites for Artisan.

Internet buzz has helped propel this shockumentary to the No. 2 spot at the box office. But Blair Witch also rocked Hollywood as one of the first full-length titles to be illegally traded on the Net well before its domestic debut.

While Internet film piracy isn't as easy as copying audio CD tracks into MP3 form for trading, movie houses are feeling the same pressure as the record industry to protect their products against rampant copyright violations.

And, like top record companies confronted by MP3 distributors, Hollywood's major movie houses are being bombarded by a host of new Internet film companies, each claiming its ideas will deliver online box-office cash in this new computer age.

The obstacles for Internet film distribution, however, are formidable. Unlike MP3 music, film converted to the downloadable digital MPEG format can take hours - or even days - to pull from the Internet, depending on the home user's connection speed and other factors.

Using a T1 line - the widest Internet pipe available to well-heeled consumers - The New York Times reports that a pirated version of Austin Powers: The Spy Who Shagged Me required seven hours to download.

Even for industry experts such as Todd Sawicki, whose Encode.com is developing secure ways for entertainment companies to market their wares online, the future is hazy.

"Right now, it's megabytes and megabytes... . .. Downloads require a fairly large time investment. In the long run, you'd be better off buying the DVD and having it shipped to you overnight," says Mr. Sawicki, Encode.com's director of business development.

But Mr. Sawicki and other industry insiders see a future for pay-per-view on high-bandwidth Internet connections. Many also believe that Web surfers will soon routinely watch film outtakes, actor profiles and plot variations from Internet sources.

"It took Hollywood 75 years to figure out how to manage television distributions, theater distributions and all the rest of it... . . Internet content will look entirely unique in a much shorter time," Mr. Sawicki says from his Seattle office.

"It's happening already."

Pirates abound

MPEG, a digital file format for compressing and playing audio and video, is short for the Motion Picture Experts Group, which pioneered its development in Hollywood. It is no small irony that the format has become the tool of a growing cadre of dedicated, well-equipped movie pirates using the Internet as their private and public swap zone.

Like MP3 in music, the MPEG format can be used to digitize legally and illegally obtained film. Often the source is a pre-release copy of a film sent to movie reviewers. These "screener" copies are highly valued by those who gossip about new releases on public message boards such as ISO News (www.isonews.com).

Massive numbers of digital copies can be produced from legally purchased DVDs, too, much like albums on compact disc are pirated in the Internet audio world. These movies can then be played on a computer with MPEG players and with software such as QuickTime and the Windows Media Player. Files can also be recorded on a video compact disc, or VCD, for playback.

Although most digital film traders don't charge for their copies, the Motion Picture Association of America is not taking their activities lightly. When a bootleg of George Lucas' Phantom Menace started circulating online, lawyers for Lucasfilm tracked down several suspected pirate haunts and warned those involved.

The MPAA is also working with the FBI to curb the practice, a difficult assignment given its slippery nature. Traders hang out in streaming Internet Relay Chat, or IRC, available worldwide. After typing in a message such as "Got Blair Witch," they might be besieged with offers to trade a download of that film for other "warez" - gaming, entertainment or other pirated software. Exchanges can be made through e-mail or file transfer protocol, or FTP, sites set up with passwords on home Internet servers.

After a recent flurry of publicity, kafka - one of the anonymous leaders of ISO News - talked openly on the message board about the risks that traders face.

"Because of the medium of communication, which is primarily IRC and e-mail . . ..it's entirely likely that all of us communicate on a daily basis with informers, FBI agents, etc.," kafka wrote.

The seven major movie studios already estimate that they lose $250 million domestically to videotape copying and other forms of for-profit piracy. The industry expects losses to escalate when cable, digital subscriber line, or DSL, and other so-called broadband Internet connections become widespread.

Downloads of the Blair Witch Project were being swapped so far in advance of the film's actual release that some observers wondered whether the studio planted the copies to fuel the Internet buzz.

Such speculation is ludicrous, says Artisan spokesman Paul Campbell. "We absolutely would not do that on purpose. I would be surprised if any studio would be interested in doing something like that."

On the legal front

While Hollywood watches and researches ways to turn the Internet into another distribution medium, a host of Web film start-ups are jostling for attention.

Many of their business models fly in the face of a recent study by Media Metrix. The market research firm found that fewer than 25 percent of U.S. home PC users have the basic technology to watch even short bursts of video online.

Some companies, however, boast of revolutionary compression techniques, or "codecs," that they say will make watching movies on a PC commonplace within a year or two.

Among the early leaders is SightSound.com, started by a pair of Lebanon, Pa.-based entrepreneurs who have secured a patent for distributing downloadable music and film. With the Windows Media Player's newly developed 30 frames-per-second capability, the picture and sound quality of a film played from a computer approaches that of television.

SightSound lets customers either do pay-per-view or purchase films. A Web site visitor chooses a film, then downloads it to a hard drive. A single showing costs $2 to $3, using a secure credit card transaction. For about $20, it's yours for life.

The company offered its first pay-per- view selection, Darren Aronofksy's Pi, in April for $2.95. SightSound also took out a back-cover ad in Variety magazine advising Hollywood to begin hawking downloaded films over the Net before piracy runs rampant. The company says it is prepared to distribute as many as 375,000 movies a day across the Web.

Even more ambitious is the vision of Tranz-Send (www.tranz-send.com), which plans in October to open a venture called ClickMovie.com (www.clickmovie.com). Its plan is to make available "every film ever made in every language," says Per Caroe, Tranz-Send's public relations and marketing director.

"If you want to see Das Boot in letter box format in German, we'll have it," he says. "If you want it in standard screen in English, you'll get that, too. Any time you want."

Tranz-Send says its technology will reduce long download times with new compression techniques. Ultimately, it expects to deliver DVD-quality, full-length features over high-speed connections in less than 15 minutes.

Private demonstrations of Tranz-Send's technology seem to back up the company's claims. Already, Mr. Caroe says, Tranz-Send has access to 40,000 films. Its first offering of about five is expected in October.

Elsewhere, Movieflix.com, founded by a pair of Californians, is already providing free full-length movies through RealPlayer technology. Since opening its Web site in January, founders Robert Moskovits and Opher Mizrahi have amassed 150 titles that are shown on demand in exchange for demographic information from visitors. The company says it is near a deal to expand by 200 more titles.

Movieflix uses straight streaming, which can still produce some herky-jerky motion even on fast network connections. But the company plans to upgrade its technologies with additional funding to take advantage of the 30-frames-second Microsoft Media Player.

About 30,000 people have registered at the site, which receives about a million hits each month.

"It's pretty obvious we're attracting a lot of college students," Mr. Mizrahi says. "It's basically Gen X and Gen Y. In fact, we anticipate a huge increase this fall when all the kids come back to school where they're all on those T1s."

Coming attractions

At this early stage of interaction between Internet start-ups and old-line Hollywood studios, no one knows whether any of these legitimate efforts will fly.

From his seat at Encode.com, though, Mr. Sawicki says many of the ventures look like "shoveling" to him: companies simply redistributing old content on a new medium.

Television, in its infancy, did the same thing. The first shows were movies shown on new home screens. It was several years before series and other content took advantage of TV's best features.

"With the Internet and film," Mr. Sawicki says, "I don't think it replaces the cable or the television or the theater. The Internet will provide what was not available before, pay-per-view for those with high bandwidth.

"But the real innovators will develop a whole new method of delivering a type of content that is unique to the medium."

Send e-mail for staff writer Doug Bedell to dbedell@dallasnews.com.