AMPAS grapples with blurry boundaries

Great piece posted to Variety's Web site today, by David S. Cohen, about the dilemmas that new technologies are creating for the Academy of Motion Picture Arts & Sciences, the industry group that doles out Oscars once a year.

"...[T]he arrival of digital cinema is forcing almost every branch of the Academy to take a hard look at its rules. One insider calls it the widest-ranging review of Academy policies since talkies came in nearly 80 years ago," Cohen writes.

Among the questions:

- "Sin City's" sets were created digitally. Is that production design, cinematography, or visual effects?

- Andy Serkis, who played Gollum in the Lord of the Rings trilogy, will play King Kong in the forthcoming Peter Jackson remake of the 1933 classic. Well, to be exact, his motions were captured in order to make a digitally-animated King Kong seem more realistic. Is he eligible for a Best Actor nomination?

- "If a project is shot and edited digitally and shown on a digital projector, is it still a `motion picture?' With some directors, such as James Cameron, talking about making movies that can only be shown with digital projection, that's a question the Acad must answer in the next few years," writes Cohen.

Going down?

Market research firm iSuppli says that 40 to 42-inch LCD television sets are plummeting in price, and that you'll be able to get one for roughly $2500 by the end of the year. Eighteen million LCD TVs will be shipped this year worldwide, according to iSuppli - that's up 87 percent from last year. ("While generally more expensive, LCD technology is thought to produce a higher-quality picture than plasma," Alorie Gilbert of CNET's News.com writes.)

The D Cinema roll-out: Shading, nuances, details

Been having lots of interesting conversations today, in the wake of yesterday's DCI announcement. (I liked this headline and assessment from Bruce Newman of the San Jose Mercury News.)

First, a spokeswoman for Mark Cuban and Landmark Theatres informed me that Landmark has only committed to buying six high-quality "4K" digital projectors from Sony; this press release from March 2005 made it sound like the deal was for at least 59 - one for each Landmark outpost around the US.

Then, I learned that this quote from Warner Brothers, which seemed to imply that starting this year, they'll be releasing all of their films in both 35 millimeter and digital form, actually means something else: all WB movies will be released in one or both of those formats. (Some films will still be released only in 35 mm.) So it turns out that like everyone else in the DCI Consortium, they're simply endorsing the concept of the new digital format, not committing to a particular timetable.

Finally, it was pointed out to me that some theater-owners may wind up financing their projectors by charging the distributor "virtual print fees" of $1000-$1200 for each movie that's shown on that projector; another option, though, is that the projectors' cost could be defrayed by running more pre-show advertising. (Yikes!) Or some combination of the two: fees and ads.

Variety weighs in on DCI announcement

The subhed of Variety's DCI story yesterday evening said it all: "Techies pass d-cinema torch to money men."

Reporter Ben Fritz says the next big job is creating a $3 billion fund to pay for the roll-out of digital cinema. His piece predicts that even if that happens fast, digital projectors wouldn't make a nationwide debut until 2007.

Some other good insight from the piece:

Insiders noted that most of DCI's work was completed by late 2003. The past year and a half has been spent primarily in intense negotiations to complete the antipiracy elements of the technology so that studios can be assured that as files move throughout post-production and to theaters, they can't be decoded and put on the Internet.

"Security issues have taken up most of our time for the past year," observed Walt Ordway, chief technology officer of DCI. "Nothing has really changed in terms of the image or audio."

Fritz also reports that each of the DCI member studios has ponied up $1.2 million to support DCI's work; with the standards project completed, DCI will likely dissolve in September.

The Spec is Out

Digital Cinema Initiatives just released Version 1.0 of its specification for the creation, distribution, and exhibition of digital movies. (DCI is a consortium of the seven major studios.)

Here's the celebratory press release, a meandering parade of 'important' quotes that no one actually uttered.

Interestingly, of all the studios who say they're committed to releasing all future digital films in compliance with the new DCI spec, only one - Warner Brothers - actually mentions a timetable for beginning to offer digital versions of its new releases alongside celluloid. (That's because most cities in America don't yet have a venue to show digital movies.)

Saith Dan Fellman, president of domestic distributions for Warners: "With this essential specification now in place, Warner Bros. now plans that by the end of 2005 we will be releasing our movies in two formats: 35mm film and DCI digital cinema."

Others, like Jeff Blake of Sony, say only "We look forward to releasing our feature films digitally to cinemas deploying digital cinema systems compliant with the DCI specifications worldwide."

My favorite quote from the release is from producer/director Bob Zemeckis: "Hallelujah - It's about time!"

A standards agreement on the horizon?

Laura Holson of the New York Times writes today that we're on the verge of an announcement about digital cinema standards from Digital Cinema Initiatives, a consortium of the major studios.

I'm keeping an eye out for the actual announcement, because the Times story is a bit confusing:

"...Studio executives agreed that the projectors should not only have digital capabilities now, but be compatible with higher resolution, next-generation projectors." Somehow, I doubt that the first-generation of digital 2K projectors (2k refers to an image that is 2048 pixels across by 1080 high; 4k offers double the visual clarity, with 4096 pixels horizontally and 2160 vertically) will be capable of being upgraded to 4k once they're deployed; that'd be like upgrading your Chevy to a BMW without taking it out of your garage. The servers, on the other hand, which store digital cinema files and feed them to the projector, will likely be capable of handling both 2k and 4k files.

Holson continues: "Financing, a major sticking point between movie theater owners and the movie studios, is still being worked out."

True. That's at least as important to the digital cinema roll-out as technical standards.

Nightline: What's happening in Hollywood?

This was the promo for a segment on Hollywood's box office woes from Nightline Monday night:

You'd think with summer blockbusters raking in millions, the executives in Tinseltown would be feeling good. Trouble is, fewer people are beating a path to the theater. There's high anxiety on the soundstages, as the filmmakers tally up receipts and realize that for a recent 19 weeks in a row, their movies were under-performing compared with last year's numbers. The trend is not good. And one of the concerns is that the gap between a theatrical and DVD release is getting so short that many people are waiting to watch the film at home. In fact, the Motion Picture Association says Americans spent an average of 78 hours watching DVDs last year, that's up 53 percent from 2002. And with the advent of home theatres and specially designed recliners with popcorn and soda holders, Hollywood's anxiety will only grow.

The segment offered two interesting soundbites from a pair of well-known husband-and-wife producers who've been involved with films like "The Ring," "The Island," "Catch Me If You Can," and "Gladiator".

Walter Parkes: "I think the question in everybody’s mind is, is this a temporary state of affairs that came about as the result of a number of pictures that didn’t work, or are we looking at some kind of fundamental shift in the viewing patterns of the audience?"

Laurie McDonald: "We may have to adjust the way we make movies, our budgets, the amount we spend on marketing, how we get them out to that public -- but ultimately people want to get together and sit in that dark room and laugh and cry and have that experience."

Their two perspectives hope for a temporary (not fundamental) shift - one that doesn't hurt producers or studios too much, or force much of a change in strategies. But another summer like this one, and you can forget about gradual...Movie-goers are smart about investing their dollars, and I suspect that they're looking at most of this summer's releases and thinking "rental." Could going out to the movies be on its way to becoming a "special occasion" activity, like going to a live sporting event, a play, or the ballet is today? A four-times a year thing?

Peter Bart, editor of Variety, chimes in: "Long run - sure - fewer people are going to go to see movies at theaters. More people are going to have home theaters and buy DVDs."

Bart observes that studios seem good at ignoring the lessons of unique, charming pictures made on small budgets that break out and do well, like "My Big Fat Greek Wedding" and this summer's "March of the Penguins."

"Penguins" is "a wonderful example of how something can come out of nowhere and do business," Bart says.

Current TV prepares for lift-off

Current TV is the new cable network from Al Gore and company that will solicit much of its content from viewers. How good can that be? We'll find out starting August 1st.

Today's NY Times offers an overview of the business, and its plans to turn traditional television on its head. Most interesting is that visitors to the channel's Web site will help filter through all of the stuff that's submitted (3000 videos so far), voting on the pieces they like best.

The Supreme Court will get involved only in the event of a tie.

Gilder Takes on Hollywood

At the AlwaysOn conference in Palo Alto, I had the chance to sit down with the writer, futurist, and supply-side economist George Gilder, who talked a bit onstage about what he sees as the impending dissolution of the television and motion picture industries as we know them.

His central thesis is that Internet-connected screens in the home – whether it’s the PC in your den or the plasma screen on your living room wall – are going to change the way we consume video by offering us infinite choice. “The cineplex becomes the home domestiplex,” he says.

“The film business will increasingly resemble the book business,” he says, with a few best-sellers that achieve widespread popularity, and lots of publishers making a profit selling titles that no one’s ever heard of. People will watch what they’re most interested in, rather than what happens to be playing in the local theatre, or airing on a station they get. “A first choice culture will displace the lowest common denominator culture,” Gilder says.

“The bias toward completely satisfying a small group is going to yield a better product than orientation toward gratifying and shocking and titillating billions of people.”

We can always hope.

I discovered, in the course of this twenty-minute conversation, that George may be the only person in North America who hasn’t seen “The Wizard of Oz.”

Here’s the MP3.

A Q&A with Mark Cuban

I had the chance to sit down on Wednesday (July 20) with Mark Cuban after he gave a talk at the AlwaysOn conference at Stanford.

We met up in the "speaker ready" room. Mark had spent the past two hours either onstage, or talking to various attendees and members of the media, and he'd just done a ten-minute podcast interview with John Furrier. Still, his energy didn't seem to be ebbing.

Our conversation focused almost entirely on Mark's film-related ventures (with a brief foray into TV talk). Along with his old buddy from the Broadcast.com days, Todd Wagner, he owns Landmark Theatres, a chain of 57 "art house" cinemas in the US; 2929 Entertainment, a movie production company; and HDNet, the first nationwide high-definition cable network. Not to mention the Dallas Mavericks, an NBA team.

Mark and Todd are in the midst of conducting an experiment that could rearrange the tectonic plates of the movie business. They're producing a series of movies that'll be shot digitally (with directors like Steven Soderbergh), and shown digitally in Landmark Theatres. But that's not all - the day the movies open in his theatres, they'll also be available on DVD and on HDNet's sister cable channel, HDNet Movies. (He calls this the "day and date" model.)

What follows is a lightly-edited transcript.

Scott Kirsner: I’m looking at how technology is changing Hollywood.

Mark Cuban: Not enough.

SK: Yes. Well, I’m looking at the love-hate relationship that Hollywood has with new technology. They adopted digital effects and non-linear editing – that changed everything.

MC: They adopted that.

SK: But digital distribution, and exhibition, for some reason – maybe a lot of reasons - they seem to resist that.

MC: Production is obviously internally and completely controlled. It’s just a cost savings. Why wouldn’t you? The element that people seem to forget is that, [the studios are] all public companies. Period. End of story. They’re obligated to support their shareholders and make them money. So it’s cost first. There’s not a reward for taking risk. Or rarely is there a reward. New Line, I guess you could say, is an alternative, with what they did with Peter Jackson, but they’re always going to be risk-averse. There are obscene rewards for public company CEOs. Just obscene rewards.

SK: It almost seems like they’ve painted themselves into the “Innovator’s Dilemma” corner. They can’t make a movie for less than $50 million, and they can’t market anything for less than --

MC: They can’t take chances. They can’t say, let’s change the way we do business. Which is truly the innovator’s dilemma. Somebody else comes in and pre-empts them.

SK: With the films that 2929 Entertainment is making, is the production going to be all digital?

MC: 2929 not so much, because that’s more Todd [Wagner]’s baby. But HDNet Films, that’s 100 percent HD.

SK: So with 2929, if a director wants to shoot on film, you say, go ahead.

MC: Yeah, because that’s Todd’s baby, and that’s the way he runs that side of it. He just wants to make great movies, and he’ll follow the director. Whereas with HDNet Films, it’s the exact opposite. Here’s the rules of the game: it’s going to have a day-and-date release, [on] any platform and every platform that makes sense for us, and it’s going to be shot in high-definition 1080.

SK: So I’m not sure if HDNet includes the Steven Soderbergh films?

MC: Yes. HDNet films are the six Soderbergh films, starting with “Bubble.” There’s “One Last Thing,” with Cynthia Nixon, “The War Within,” which is our movie about a sleeper terrorist cell, the Herbie Hancock movie. There’s ten in production or in post-production now. So they’re going to be coming in a steady stream.

SK: If I’m a regular patron of the Landmark Kendall Square cinema in Cambridge, how is digital going to change the way I experience going to the movies on Friday night?

MC: There will be more alternatives, more often. We’ll be able to have a steady stream of new, hopefully great movies, because we’ve got that production process in place, and we’re gearing toward the Kendall Theatre audience, as opposed to saying, here comes the next “Fantastic Four” and that’s what we’re trying to do. Being able to control the whole chain, to be able to say, look, we know it’s going to Kendall, through Landmark, we know it’s going to be day-and-date on HDNet, we know we’re gearing to an art house, independent film consumer, and so we’re going to make their lives as simple as possible.

From a resolution and technical perspective, once we’ve digitally enabled all the cinemas, you will notice a difference. You’re not going to see the cracks and the pops, because it doesn’t deteriorate over time.

SK: Is the programming going to change, in terms of maybe reacting better to what people like and don’t like? Today, a new slate of movies opens on Friday, and they play for at least that coming week.

MC: Only from the perspective that we can create more movies and better movies for a given amount of money. We’re not limiting ourselves just to our movies. We’re working with Graydon Carter, we’re doing a documentary on Hunter S. Thompson, we’re working with others to do great stuff.

SK: I guess I’m asking, is the model of having eight movies showing on eight screens for a week going to break down?

MC: We’re open to anything and everything. We’ll try to learn and get smart about it. The fact that we’ll have digital cinema in there means we can do live events. Monday nights are typically terrible movie nights, so you might throw concerts on Monday nights. You might have Monday Night Football, if you do a deal with ESPN.

SK: Why hasn’t that worked in the past? People have tried it.

MC: You needed digital cinema. No one wanted to put up the money. In terms of live broadcasts, we’ve had great success doing college football games live. We haven’t done any concerts, but Regal has, and they’ve had sell-out audiences for concerts. I think that’ll change the movie theater business.

SK: What’s the pacing for the [digital cinema] roll-out, within Landmark? People were surprised when you picked the Sony 4K projectors. When are those going to be ready?

MC: That has been the problem, obviously. There is an issue there, but we’re willing to play that out, simply because, 4K is coming. It’s not a question of if, just when. And somebody had to be first. Sony made it attractive for us to be the first ones, and we took advantage of it.

SK: So are you waiting on them?

MC: For the first units, yes. We’ll probably roll out three, and then we’ll beta test them and debug them all, and go through that whole process.

SK: Will those three happen sometime this year?

MC: Hopefully by the end of the summer.

SK: Have you picked the markets?

MC: It’ll probably be New York, LA, and San Francisco.

SK: Is there going to be a convergence coming? Right now, we think of movies and TV as being two different forms of entertainment. “Desperate Housewives” and “Lost” are on TV, and “War of the Worlds” and “Star Wars” are movies.

MC: We’ve tried to license TV shows to show in theaters.

SK: I was just going to ask. You can imagine the season premiere of “Lost” next season – a group of “Lost” fans –

MC: -- Would love to go see it in a theatre. The problem is contractual issues on residuals. Their contracts right now don’t incorporate the ability to show theatrically. That’s been the inhibitor.

SK: So they don’t really even look at that as a revenue possibility?

MC: They didn’t up until we started banging on them about it. But it makes perfect sense. Don’t even charge people for it. Just have a “Lost” festival, to get people excited, get all the PR about it. Have people come to a theater, have someone speak who’s involved with the show, and get people fired up about it. It makes perfect sense. One of the things we’re working on with HDNet Films is to create a movie, and then extend it with a serialized TV show. So “The War Within,” this movie about a terrorist cell, there’s no reason it has to end there. It can continue –

SK: If it’s successful.

MC: Even if it’s not. When you’re shooting, shoot for 90 minutes of movie, and three hours of sequels.

SK: I do see the economic benefits. You’re at the location, you’ve built the sets, you’ve got the actors in costume. So just shoot more. But your production company would have to decide to invest in X number of hours of this content.

MC: When we’re programming HDNet, what shows are we going to run? If we’re going to have to buy shows, let’s buy shows that are extensions of the properties we already own.

SK: Have you started doing that with anything yet?

MC: We’ve started to work on it. We haven’t premiered anything.

SK: Will “The War Within” be the first experiment?

MC: That should be. I don’t know if we’ll be able to extend it as a series, because we don’t know if we can get all the actors back for some of the re-shoots we have to do. But the movie itself turned out great. Hopefully, it’ll be a great follow-up to “Enron.”

SK: So you do buy this idea that TV and movies may be converging.

MC: Bits are bits.

SK: This is all visual content. Sometimes, people might want to go to a Landmark Theatre to see it.

MC: And sometimes they might want it on a video portable device. Maybe they want it on their Sony PSP because they’re traveling. The idea is to give consumers the content where they want it, how they want it, when they want it, at a price they like. Simple concept, it’s just that nobody wants to do it.

SK: The exhibitors right now hate this notion of day-and-date release. The financial guys in the studios look at today’s revenue streams. They don’t like day-and-date releases, because everything becomes uncertain. “Are we going to get the same amount of revenue from a day-and-date release as we get today from a windowed release?” Is anything going to change that? Or do you guys need to be the experiment?

MC: We’ll be their experiment, and either it works or it doesn’t work. Part of what we’ll do is, we’ll share the back end with the theatres that enable us to do day-and-date.

SK: Some of the exhibitors, I think Regal and maybe some others, said “we hate this idea, and we’ll never show your movies.”

MC: But there’s a lot of smaller systems that showed “Enron,” even though we day-and-dated it on HDNet Movies, and those guys, when we sell the DVD, we’re going to take one percent of that, and split it all up. That’s a new revenue stream that they never got before. That’s found money. In essence, theatrical has become as much promotion for DVD and other exploitations, and the theatres aren’t rewarded for that.

SK: Do you buy the idea that 3-D is going to save movie theaters?

MC: 3-D would be a nice change, just like Imax was. It’s a nice alternative. Not all movies are going to be done that way. We’ll support 3-D, when the projectors are there. That’s fine. It’s a great evolutionary process. But it’s not the salvation. I think the salvation is knowing who your audience is. There are very few mediums of entertainment where a 16-year old hanging out with his buddies is going to be the same place where mom and dad are going to want to go for dinner and a movie.

SK: But if we talk about the 16-year olds for a second… I’m intrigued by the idea that the quality of video games has gotten so good, maybe the theatre needs to change to be more like a theme park theatre, where you’ve got smoke and lasers and seats that shake.

MC: No. Because you know what? Even if you had the ejector seat and all that stuff, mom’s still downstairs. Or your friend’s mom is still downstairs.

SK: I’ve been really interested, with NetFlix, in that they know more about me as a NetFlix member –

MC: - than you do.

SK: Well, certainly more than Sony does or NBC Universal.

MC: No question. I agree 100 percent. As they build their audience, the knowledge they have is the ultimate in permission marketing. Blockbuster has the same information. They just don’t use it as well.

SK: Is there anything you guys think about doing there?

MC: We’re trying to partner with all of them. Particularly in a day-and-date environment, it creates a whole different type of marketing approach. “Go to the theatre, but if you can’t make it to a theatre, pick your outlet, but we’ll charge you a premium.” It makes the value proposition for going to a theatre even stronger. If the movie is $8 or $10, but the DVD is $34.95, or the pay-per-view is $29.95 for the first month of release. But if you want it, and you’ve got kids and can’t make it out, but you still want to talk about it around the watercooler at work – we enable you to do it.

SK: What are some of the things that haven’t been paid enough attention to, in terms of the way that movies, or entertainment video, is going to play out over the next couple years?

MC: I think the windows have been a problem. The consumer hasn’t been paid enough attention to. We’ve created so many new ways to watch movies, personally – forget the theatres.

But if you want to watch a movie on this laptop, and we went to the store to buy a DVD, and you wanted to watch it on a flight to New York, you’d have to have that DVD and any of the others you wanted to watch. You’re juggling five DVDs, and it’s a pain in the ass. It should be easy as the day is long to copy your DVD onto a hard drive. Simplification. Keychain drives, so that if you’re in an airport, and there’s a kiosk, it should be easy to pay $4.99 and pop it into your USB port and watch the movie. When there are video iPods, there’s no reason that you shouldn’t be able to carry your iPod around and plug it in [to a kiosk.]

SK: It does seem like that mobile device presents this massive opportunity. When you ride the train, or you’re at the gym, that’s a time when you can’t consume your own movies or video today.

MC: It’s crazy you can’t. People will pay the price associated with simplicity.

SK: In terms of the HDNet/2929 experiment, being a producer and owning theatres. Are we getting back to the days of Paramount owning theatres and producing movies for them?

MC: I hope so. We’re vertical. We’re very, very vertical.

SK: You seem to have a pretty high degree of confidence that that’s the way to go.

MC: I get to control the whole experience. I get to make movies that fit my theatres, fit my television networks, fit my production methodologies, and control the whole sequence. The hard part is making great movies, obviously.

SK: One very last thing. What about movies like “Tarnation,” the movie that was made last year for less than $500 on an iMac. It got into Sundance, and was named one of the ten best films of last year by a New York Times critic. Those types of people – is a Landmark heatre going to be an interesting distribution channel for them?

MC: We want it. If it’s a good movie that we think we can sell, we want to show it.

SK: How would they get your attention?

MC: Send me an e-mail (mark @ hd.net). You couldn’t name a person whose e-mail is more available than mine right now. I get a thousand e-mails a day.

SK: So you’re going to watch a thousand movies a day, from a thousand directors?

MC: Or I’ll get somebody to help me watch them. It’s a lot cheaper to buy a [finished] movie than it is to create a new movie. I’d love to have people send me movies. The only qualification I’d put on them is that it’s shot in high-definition. And now you’ve got the HDV cameras, and that’s, you know, not great, but it beats the hell out of digital video. “Pieces of April” and other good movies were shot in it.

SK: Are you interested in what Current TV is doing? Have you followed that?

MC: The Al Gore thing? I hope it goes well for them, but they’re short-sighted, because they’re not working from high-definition. That’s my prerequisite. Either you buy that it’s all going HD at some point, or you don’t. And I don’t think there’s any question that it’s all going HD. Shooting in digital video right now is like shooting in black-and-white. It’s a throwaway.

Mark Cuban, Mike Homer at "AlwaysOn 2005"

On Wednesday and Thursday, I was at the AlwaysOn conference at Stanford University. From my perspective, two of the best sessions were a "fireside chat" with Mark Cuban, the owner of HDNet, Landmark Theatres, and 2929 Entertainment; and a panel on "The Dislocation of Media and Entertainment," which featured Cuban, Mike Homer of Open Media Network, and execs from Streamcast, DivX, and Yahoo.

Some quick notes from those two sessions:

Mark Cuban: "Hollywood reminds me of NBA general managers. The Number One job is not to win championships. It’s to keep his job."

"[Release] windows have been defined by Hollywood, not by the consumer."

"Why not just release the movies everywhere at the same time, and let the consumers decide how they want to consume them?"

"The Mavs have sold out every game since 2002, yet every game is also on TV. When you create a great experience, people want to get out of the house. They get cabin fever."

"They [the major studios] think they’ve defined the only ways to deliver movies to consumers, and they’re wrong."

"People may pay a premium price for a DVD [on the day of a movie’s release]." Cuban said he was also interested in offering just-released films as an Internet download, or in other clever formats. "I don’t care if you buy a movie and it’s on a keychain, on a flash drive."

On piracy: "You can’t stop it. You’re wasting your time. Put the money into the movie, rather than spending it to stop piracy."

Asking people not to pirate content, Cuban said, is like trying to tell "a 12-year old boy he’s gonna go blind."

Moderator Roger McNamee asked the panelists at one point what business they'd go into if they couldn't do what they're doing. Mike Homer said he'd go into producing content. “You get frustrated with the innovation and the creativity of any traditional media producer, their unwillingness to play."

Some notes to come from my interview with Mark Cuban (I may also post the recording as a podcast), and also a conversation I had with George Gilder about Hollywood.

Forbes on Technicolor

Forbes notes that Technicolor (a division of France's Thomson) wants to play a part in the digital cinema conversion that may now be shifting from park into first gear.

Hoping to cash in on the move to digital is France's $9.6 billion (2004 sales) Thomson.

...At the center of the company's turnaround is Technicolor, which Thomson bought in 2001 for $2.1 billion. For the past 90 years Technicolor has been the main film processor and duplicator in Hollywood, handling 5 billion feet of prints every year. The company began adding digital services in 1999. Filmmakers can go to Technicolor to have their uncut movies digitized for editing and then transferred back to film for distribution.

That presumes, of course, that everyone is still shooting on film and distributing reels of celluloid - not exactly an "all digital" strategy.
The Forbes piece is sort of a "Digital Cinema 101" article, though it does observe -- accurately -- that few specifics have been revealed thus far about the Christie/Access IT and Kodak/Barco financing plans for making the digital cinema roll-out more affordable for theater-owners.

Movie marketing via Bluetooth

From today's NY Times, a dispatch on an interesting marketing experiment that involves 20th Century Fox and Loews:

This summer, moviegoers walking through theater lobbies in three cities might have felt a sudden vibration in their cellphones, the work of a nearby Bluetooth promotional kiosk.

Last month, 20th Century Fox signed a deal with Loews Cineplex Entertainment to distribute movie trailers, ring tones and pictures through kiosks in three Loews theaters, in New York, Los Angeles and San Francisco.

The promotional material can be picked up by anyone with a cellphone equipped to handle Bluetooth, a form of short-range wireless transmission.

It takes about 30 seconds to download a full-length trailer to your phone. The downloads, ringtones, and wallpaper are free. (Wallpaper of Brad Pitt from 'Mr. and Mrs. Smith" has been more popular than Angelina Jolie wallpaper, the Times reports.)

Only about 10 to 15 percent of cell phones are equipped to handle Bluetooth. But perhaps these people are what Seth Godin calls "sneezers", who like nothing more than recommending cool stuff to their friends.

Do you believe in werewolves?

I had coffee with SF independent filmmaker Misha Anissimov last week, and we were talking about novel ways of developing and financing films.

He mentioned a project called "Freeborn", where the filmmakers, simply by putting up an online bulletin board, have somehow managed to bring together a community of horror and werewolf movie fans. The filmmakers have asked this community to help them create the ultimate werewolf movie. Fans have helped describe what a werewolf looks like (do they have tails, for instance?) and they've debated the werewolf code of conduct (do werewolves eat people?)

The bulletin board is here. Despite all of the fervent message-posting, it sounds like the filmmakers haven't yet found a financial backer yet. (Could it be because their teaser trailer is a string of dialogue that sounds like it was culled from 1000 other trailers of the past decade? "You can't take her with you." "I will not leave her behind." Is there a finite pool of cliches that can be used in trailers?)

Still, there's huge potential in cultivating an audience before a movie is released, even if it's not part of a franchise like Superman Returns. Moviegoers will feel more invested in films they've helped shape. One message on the "Freeborn" site reads, "I can't wait for the movie to come out. I have almost every werewolf movie I can get my hands on." Sounds like an eager customer to me.

Dolby: 3-D, digital cinema, and "Chicken Little"

I spent a couple hours yesterday morning at Dolby Laboratories in San Francisco, talking digital cinema with senior vice president Tim Partridge, who has been with the company for more than 20 years. We met in Dolby's elegant screening room - and the projection booth that serves it.

A few notes:

- Dolby doesn't want to be in the projector business; instead it wants to sell the servers that store digital cinema files securely and the software that enables cinema managers and projectionists to create line-ups of what their theaters are going to show. Partridge told me that the cost to "digitize" one screen has now dropped below $100,000. Eighty percent of that is the cost of the projector (Dolby's screening room uses one from Barco), and 20 percent is the cost of the servers.

- While Dolby has previously only been in the business of delivering high-quality sound, it must get into the image business as digital cinema emerges. Why? Because digital cinema files will carry uncompressed, original audio. The studios don't want to be beholden to any proprietary, Dolby-esque standards. "For a company that built its business in compressing audio - yeah, it's scary," Partridge says. "It's both a challenge and an opportunity to go beyond audio."

- Dolby's "Show Manager" software, which runs on a PC and communicates with Dolby's digital cinema servers, makes it insanely easy to string together a series of trailers, promos, ads, and a feature, by dragging and dropping icons. Tom Bruchs, who was running the projection booth, said that it'll save at least an hour of the projectionist's time - no more splicing together different pieces of film and then checking to make sure everything was OK.

- Emphasizing the security of its servers, Dolby doesn't aim to be the low-price leader in the market. Partridge says that they've shied away from off-the-shelf hardware in favor of stuff that's slightly more expensive, but will meet or exceed the security specs set by the studios' Digital Cinema Initiative.

- Partridge seems to deeply believe that 3-D is one thing that will keep audiences coming out to theaters, rather than watching movies at home: "It might be a stretch to say that every movie needs 3-D. But aren't we trying to make movies as life-like as possible? People said that Dolby stereo would just be used for the Supermans and the Batmans, and not the Woody Allen movies. But now everything uses it."

- Dolby and Disney are already working frantically to get 100 theaters around the country ready to show "Chicken Little" digitally - and in 3-D - this November. The original announcement didn't include many financial details, but Partridge shared a few. The 100 theaters chosen in 25 markets are intended to keep their digital cinema set-ups. "These will be permanent installations," Partridge says. "The exhibitors and the studios will share the costs."

The theaters will use a variety of projectors, but only Dolby servers. Theater-owners won't buy the rig outright, but it sounds like the cost will be defrayed over time, in part by a financing mechanism, and in part by the studios paying "virtual print fees" to the exhibitors - in essence, sending the exhibitors the money they've saved by shipping a hard drive rather than striking a print. (Dolby's system relies on 120-gigabyte Seagate hard drives). No decision yet on which sort of 3-D glasses will be used: red-and-blue, passive polarized, or active polarized.

This looks like it will be a huge milestone for digital cinema. But as always...a lot will rest on the quality of the movie.

Variety: 'Slump' doesn't affect everyone equally

Gabriel Snyder's Variety piece is headlined, "Despite the 'slump' studios get a bump."

"...[W]hy is total box office down for the year? Look at the indies. Last year, because of the runaway success of `The Passion of the Christ' and `Fahrenheit 9/11,' independent distribs took in $633 million through the second weekend of July. This year, without a blockbuster to match those titles, the sector has grossed $189 million, a difference of more than $440 million." (An LA Times story today offers some supporting data, reporting that "Murderball," an indie documentary that got great reviews, has only done half the business that its distributor expected.)

Major studios, and "mini-major" studios, have actually seem their revenues climb this year, Snyder reports. Their take in 2005 so far: $4.333 billion at the U.S. box office. Last year to this point: $4.301 billion. Winter and spring were actually quite good for the big players - with flicks like "Hitch" and "Robots." Summer...not so good, so far.

Total box office, because of that indie deficit Snyder cites, is off 8.4 percent this year.

2005: The beginning of an inexorable slide?

Great piece by Anne Thompson in The Hollywood Reporter.

...[T]his year's pictures aren't any worse than usual. They meet the studio standard -- such as it is.

But they're not good enough to fight the multimedia competition: Streaming Live 8 on AOL, ESPN baseball, iTunes, In the Groove, Comcast on Demand, EverQuest, Netflix, Arianna Online, HBO, CinemaNow, LiveJournal, Drudge, PokerRoom, MySpace, Yahoo!

As ever, just when Hollywood thinks it has figured out the winning formula -- build tentpoles, sell the bejeezus out of them, and everyone will come -- it's way past time to come up with a totally new approach. The studios are running on fumes, and they are nervous. They don't have a simple solution for what's happening.

Thomspon packs a lot of great ideas into this piece:

"...[W]hat if the studios gave up the quest for record-breaking openings, No. 1 standings, biggest grosses ever? Maybe Hollywood should rethink its bigger-is-better model. Back in the old days, each studio placed its chips on a few tentpoles a year. When did it become essential to stage an `event' every weekend? Make something that is so expensive, and it must appeal to a wide audience. There's no room for risk. Studio fare has become bland, washed out, vanilla."

Whatever happened to making movies for niche audiences? Hollywood doesn't do it, in part, because it doesn't understand how to use new technologies to communicate with those smaller audiences; what it excels at is making massive TV, print, and radio buys - using old media to reach old-style mass audiences.

Thompson writes: "The new media is prepared to exploit the interests of niche audiences even as Hollywood ignores them in its attempts to please the widest common denominator."

That is what you call a problem. When you can only make giant, expensive products for giant customer bases, you are becoming a victim of what the brilliant Clay Christensen has termed "The Innovator's Dilemma."

Is Hollywood Becoming 'Detroit West'?

Daniel Gross made a fascinating comparison, in yesterday's NY Times: how Hollywood's problems are similar to those of the auto industry. Here's the gist:

Consumers today face an unprecedented array of choices for how to spend their transportation and entertainment dollars. And with each passing year, they seem less likely to choose to spend them on the stuff cranked out of Detroit and Hollywood assembly lines. In the postwar decade, the height of the American century, both rode high. The Big Three - General Motors, Ford and Chrysler - held down an astonishing 95 percent of the United States car market in 1955. In 1948, writes Edward Jay Epstein, author of "The Big Picture: The New Logic of Money and Power in Hollywood," some 90 million Americans, or 65 percent of the nation's population, went to a movie each week. That year, with TV in its infancy and the only real competition radio, Americans bought a whopping 4.6 billion tickets.

But decades of competition from upstarts - Japanese and Korean automakers for Detroit, television, video games and the Internet for Hollywood - have killed these two incumbents by a thousand cuts. In June, the no-longer-so-Big Three controlled just 58.3 percent of the United States market. Last year, according to the Motion Picture Association of America, only about 10 percent of the population managed to make it to the multiplex each week, and the number of tickets sold slumped 2.4 percent to a little more than 1.5 billion. So far this year, according to Exhibitor Relations, attendance is down another 7.8 percent.

Gross goes on to observe that one big problem for both industries is unappealing products. (Copycat SUVs for Detroit, and for Hollywood, retreads and TV transplants like "Herbie: Fully Loaded," "Dukes of Hazzard," and "Bewitched.") Another problem is continually rising production costs. After all, no consumer is willing to pay $25 for a movie ticket just because the budget ballooned beyond initial projections.

Those are great points, but Gross' piece ends in a weird place, suggesting that growth in the international market will save the movie industry. ("Last year, while United States box office revenues stagnated, box office revenues outside the United States surged 47 percent in dollar terms.")

That doesn't sound like a solution to me. Yes, there is a growing middle class audience outside of North America. (But many of those countries are making mighty efforts to develop more sophisticated movie businesses of their own, like Great Britain's Digital Screen Network.) What about a renewed focus on original products and quality - developing new writers, directors, stars, and stories? What about new approaches and technologies to allow studios to make more films for less money? What about marketing strategies that didn't treat every film like a new product launch, and instead thought about cultivating loyalty over time (for instance, there's no easy way for Warner Brothers to communicate with fans of prior Batman movies every time it releases a new one)?

Netflix picks up Hal Hartley's latest

Netflix will be distributing the latest Hal Hartley film, "The Girl from Monday," on DVD later in July, according to IndieWire. The sci-fi farce has played in several cities and at festivals - but it didn't attract a traditional distributor.

Key quote from the story:

"Even though we felt 'The Girl From Monday' had great commercial appeal, most mainstream distributors thought it was too much of an art film to warrant the high cost of theatrical release," said Steve Hamilton [Hartley's long-time editor], in a statement. "As an alternative means of promoting our film, we joined forces with Netflix, a company whose model and philosophy provided a much more direct link between the filmmaker and the viewer."

I had a chance to chat with Hartley in January at Sundance, after he spoke on a panel about alternative distribution models for movies. (Coindidentally, Ted Sarandos of Netflix was on the panel with Hartley.) Everyone else on the panel - mostly distributors, former execs at theater chains, and producers - was jazzed about the new possibilities for financing indie pictures and getting them seen outside of normal channels. But Hartley didn't seem that enthused; he seemed to think it indicated that his success, niche-y as it has always been, was getting even niche-ier. And there's a quote in the IndieWire story that seems to underscore that Hal isn't so happy.

Explaining why he's moving to Europe, Hartley told IndieWire, "I need to work and I can't work here. It's impossible to make art film in America, particularly in New York. It's just too expensive to make work here, if you want to pursue work that is based on your interest you can't necessarily be tied to being a commercial success and that's all that happens here."

More on the Intel/Morgan Freeman deal

In today's NY Times piece, Morgan Freeman says:

"I live in Mississippi in a very small town. In order for me to see a first-run movie, I have to drive a couple of hours at a high rate of speed. For me, and many consumers like me, this will be a godsend. I will be able to get premium content safely and cheaply."

(And no one wants to force Morgan `Driving Miss Daisy' Freeman to exceed the speed limit.)

What this article doesn't talk about is how the new venture, ClickStar, will deal with the resistance of theater-owners to having movies they're showing also available for download on the Internet. So far, it seems like they will simply refuse to show such movies. Which makes you wonder: do ClickStar's founders have some secret strategy to avoid that problem? Or are they going to be producing original, download-only films?

Web site is at ClickStarInc.com. But not much detail there.

I'm staying tuned...

A new joint venture from Intel and Morgan Freeman

Intel and Revelations Entertainment, Morgan Freeman's production company, announced a new joint venture today called ClickStar.

"Our view is that making content available on the Internet is not an option--it is an imperative for the industry, given piracy and consumer demands for flexibility," said ClickStar's new chief executive officer, Nizar Allibhoy, a former Sony Pictures executive. "Our motto is, 'Anytime, anyplace, on any device.'"

That includes offering first-run films still in theaters. Don't they know that that'll spur most big theater-owners to boycott them?

Later, writer John Borland observes:

A handful of technological and cultural factors are coming together to make the movie business--and the role of movies online--look very much like the music business in the years just before the release of iTunes in 2003.

Dead on.

Earlier today, another CNET article by the same writer asked, "Where's the iTunes for movies?"

Hollywood is too in love with its own soaring DVD revenues to risk supporting an attractive Internet alternative, and it needs to be shown that video-on-demand services can make money...

Two pieces from today's NY Times

Tom Zeller makes a similar observation in his "Link by Link" column today as I made in the Merc yesterday:

In the digital age, the music industry faces two basic choices - either make it too risky to upload and download copyrighted files (or to even create software that allows people to do so), or completely rethink the business.

So far, the industry has relied on the former strategy. But each new court victory arrives years behind the next digital innovation, born in some college dorm where an abiding geekiness is the motivator and earning profits means little. However valid the industry's desire to protect its products, trying to stop file sharing has become a Sisyphean exercise. (Emphasis mine.)

That goes for movies and TV shows, too. Zeller also quotes Eric Garland of the research firm Big Champagne:

"`It is the consumers' increasingly powerful position,' [Garland] said, that will define the new marketplace."

The article brings up the idea of some sort of monthly media subscription fee, which would be divvied up among studios, labels, and artists based on what a consumer watched or listened to. Garland says content may be viewed as a utility, like water from a tap. Interesting idea - but right now it's hard for me to imagine consumers accepting it.

The headline on Zeller's piece is, "The Imps of File Sharing May Lose in Court, But They Are Winning in the Marketplace."

The second piece in today's Times makes a similar assumption, but even questions whether last week's Supreme Court ruling was really even a defeat for file-sharing. It's titled, "Forget the Bootleg, Just Download the Movie Legally."

The studios have been working for months to confront the technological and business challenges of digital sales. Those initiatives gained new urgency on June 27 when the Supreme Court ruled that companies distributing software that allows users to trade pirated copies of audio and video files are liable for copyright infringement only if they induce users to break the law. (My emphasis.)

Studios are digitizing more of their film libraries, and Disney president Bob Iger is talking about making "Desperate Housewives" available for download the day after it airs, with DVD-like "special features."

OK - but enough talk - let's see some action.

Josh Goldman, CEO of Akimbo Systems, hits the nail on the head when he says that some experimentation is happening, but that "everyone is holding back the best of their programming until they figure out the right model."

'Digital Media at a Crossroad'

Here's my piece from Sunday's San Jose Mercury News.

My thesis: "Piracy, and the impulse to defend existing businesses, is distracting the entertainment establishment from chasing exciting opportunities." Like delivering music, movies, TV, and other stuff the way people want it, when they want it. And using technology to support more creative artists in innovative ways.

A lot of examples and quotes got trimmed from this piece for reasons of space. When I have a sec, I may post them here.

More depth on downloadable movies (or, Netflix vs Starz)

Eric Becker, the executive director of corporate communications at the Starz Entertainment Group, just e-mailed me about that last blog entry. His goal was to educate me a bit - and I'm grateful.

Everyone has been curious about Netflix's plans to offer downloadable movies to its subscribers, and especially its partnership, announced last year, with TiVo to develop some sort of movies-on-demand service that'd beam movies straight to your TiVo's hard drive.

Well, Eric's curious, too. His company offers a subscription service called StarzTicket, which for $12.95 a month gives users access to a catalog of about 300 downloadable films at any point in time. (The movies aren't yours forever - they do expire at a certain point in time.)

Eric points out that Starz, HBO, and Showtime pay millions for the rights to offer the output of the major movie studios as a subscription service, whether the subscription is delivered over cable, satellite, or the Net. (Starz and HBO each get about 40 percent of new releases, and Showtime gets the rest.) These are long-term, exclusive contracts "lasting well into the next decade, and possibly longer if contractual options are exercised for new films," Eric writes.

Essentially, they've got subscription-based movie delivery sewn up.

So what's Netflix gonna do? Could be pay-per-view, since those rights are non-exclusive. Or maybe focus on art house and specialty films.

"If NFLX-TIVO wants to use electronic delivery for art house/niche/int'l films, perhaps some of those rights are not already locked up," Eric writes. Or "if they want to electronically deliver to a PVR and charge on a transactional basis (a lot less compelling), they could cut separate revenue share deals with studios.[By transactional, Eric means a la carte.] Or, if they want to use old films, they might on a messy, title-by-title basis be able to piece together an assemblage of old films, but they still are not acknowledging the gigantic pre-existing hurdle of the long-term output deals that are already in place for the next decade or so with the premium networks when they discuss extending the Netflix brand and service to electronic delivery. When pressed, [Netflix CEO Reed] Hastings has floated the notion of waiting out our deals and outbidding one of us (forecasting that NFLX will also have more critical mass and subscribers by then), but he is not always forthright in acknowledging that this 'wait out' could be about a decade, if not more."

After I got Eric's e-mail, on the verge of the Fourth of July weekend, we chatted a bit by phone about other stuff. (Eric attended law school at Boston University, my alma mater. It's well-known as the tallest law school in America.)

Eric said that while the theatrical release window for movies is getting shorter, it isn't likely to vanish altogether (allowing studios to offer, for instance, a new release like "Wedding Crashers" simultaneously in theatres, on the Net, and on DVD - which might make a lot of consumers happy). Right now, films come out on DVD about four months after their theatrical release, and they show up on pay-per-view and on download services like CinemaNow and Movielink roughly six months after they've played your neighborhood cinema. Starz and other premium cable operators get them about ten months after they first entered the theatre.

Finally, I asked Eric what his colleagues at Starz were most excited about. He said that the guys at Creative had loaned them a Portable Media Center, which is similar to the Sony PlayStation Portable.

Eric thinks devices like these will increase the amount of video we watch when we're not at home (on the train, at the gym, etc), and I definitely agree. The Creative device could help Starz attract more subscribers to its $12.95 a month StarzTicket service - especially folks who don't get Starz on cable (30 percent of today's StarzTicket subscribers don't even *have* cable or satellite), or who aren't inclined to watch movies on their laptop, or...

Of course, Eric added that the digital rights management on these devices will have to be strong enough to make the studios comfortable.