It seems Hollywood might have found a way to harness the power of the Internet: Encode back catalogs and video content for multi-platform delivery online, and make a profit … Someday.
For companies such as Trimark and Bravo/IFC, who are leading the pack in terms of Internet content streaming, this is the next step. They are leveraging video assets through a distribution base and method that was unthinkable a few years earlier.
While this is a revolutionary concept relative to theatrical distribution technology, it is a step backward economically for companies who are accustomed to generating huge revenue streams from theatrical releases and homevideo markets. The question du jour is how they stand to generate any revenue by providing online video content on demand.
Curt Marvis, CEO of Trimark’s CinemaNow.com, explains why they are pioneering the online distribution of theatrical films via CinemaNow:
“We view this as an emerging distribution vehicle. Television began as a version of vaudeville, video started as a way to distribute porn, and cable TV was a vehicle for stations like HBO to show second-tier product.
“Right now we are in the early stages of this new industry. From my vantagepoint, it’s a mechanism that’s not going to wipe out movies or television. It’s another medium that will generate new kinds of content that was inconceivable before.
Richard Darling, VP of Operations at Digital Outpost, which encodes content for the Web, concurs with this analysis, saying, “We are seeing a lot of studios delivering content to video-on-demand sites and that makes good sense. For example, DreamWorks is taking an angle that I think is going to be the model for other studios.
“They encode their digital files for the Web through companies such as ours. This allows them to control the quality of the files. Right now they’re being taxed by all of these different little Web sites who want to lease movies. The studios had no control over the quality of content that ended up on the site.”
Darling says it has been a slow building process. “We’ve done a lot of work with independents in the past and now the studios are finally jumping on board. We are fully prepared to handle this new load and don’t need to ramp up like the companies who are now jumping in.”
Joseph Cantwell, executive VP of new media for Bravo and the Independent Film Channel, says the cablers are selectively choosing current and library content and placing it on the Web.
“We are reaching out to an audience we think will most likely watch the network through a media that is a closely aligned our viewership,” he says. “What’s become apparent to us is the number of people who love IFC, are already online, and want to grab our content. It makes sense to reach those viewers – before they get digital cable or satellite.
“The question is how to grow the revenue,” continues Cantwell. “There is not a lot of money in it today. Anyone who says otherwise, is pre-IPO or has a post-IPO company that’s underwater.
“What we see is the opportunity for brand extension and sampling. There will be a diverse mix of small, incremental revenue streams that will make sense down the road – including advertising in all of its forms.”
But Bravo and IFC won’t discard their cable-bred subscription model entirely.
“We also think that consumers will be willing to pay a small premium to have complete control and access to the kind of content they care about,” says Cantwell. “We want to give the user the ability to choose their content.”