Speed slowing 'Net movie biz, study sez

HOLLYWOOD — Internet analyst giant Jupiter Media Metrix has released a report that all but tells entertainment Netcasters to give it up — at least until 2005.

In a brief four page study on content and programming, analyst Robert Hertzberg wrote, “The Web-as-movie-screen has turned out to be an idea before its time. But the Internet is still valuable to Hollywood as a low-cost marketing tool, a test bed for creative ideas and a sandlot where scouts can discover fresh talent.

“Dot-com movie companies must suppress dreams of becoming consumer destination sites and reinvent themselves as business-to-business providers to have any chance of surviving. Few will.”

The study comes in reaction to the high-profile shutterings of DEN, and DreamWorks and Imagine’s Pop.com, the layoffs that are plaguing other entertainment Netcos including Z.com and Shockwave.com, as well as the low traffic numbers that stalwarts such as AtomFilms and iFilm have generated in recent months.

The problem, Hertzberg wrote, is that 90% of Internet users still connect to the Web using low-speed 56 kbps or slower modems. Only 36% of Netizens (29 million people in the U.S.), will use high-speed Web connections in 2005.

Better content on the sites won’t much help to generate more traffic, Hertzberg said in the study.

“The overarching problem with watching movies on the Internet is the user experience, which even for the 4.5 million U.S. households with broadband connections has consisted of watching images in a two-inch window of a PC screen,” he said.

Jupiter sees less potential for companies still trying to create businesses as consumer destination sites.

“With the movie-watching experience on the Internet still so dissatisfying, such companies will need to be creative about uncovering new revenue streams and wringing every penny out of existing ones.”

Instead, Netcasters should evolve into business-to-business ventures to serve as platforms to test creative concepts for traditional TV broadcast networks and film studios or allow consumers to vote for casting or potential film endings, for example.

Netcasters that generate revenues from a combination of advertising based on traffic, homevids and the sale of content to airlines or cable channels, and that supply undiscovered talent to Hollywood’s bigger players, will survive.

While many Netcasters have berated the report, those that have survived are doing what Hertzberg has suggested.

For example, AtomFilms and Icebox.com have sold their content offline; iFilm is helping agencies and production companies discover new talent through its online Screening Network; and via a deal with Universal, Hypnotic.com will supply the studio’s on the lot producers with fresh talent.

Hertzberg wrote, “The pool of dollars available pre-broadband saturation is so small that we expect only one or two of these companies to make it.”

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