In the Bay Area? Play @ Berkeley on Nov. 15th

The students at Berkeley's Haas School of Business put together a great conference every fall about digital media, games, and entertainment, called Play. It costs just $50 to go. It usually sells out. This year, it's on Saturday, November 15th.

There are keynote speakers from Microsoft and Twitter. The organizers describe some of the topics the panels will address here.

A Four-Link Summer Reading List

Just wanted to share a few blog posts and articles that are worth a read today...

- 'Web TV is a hit. So where's the big money?' from the SF Chronicle. From the story:

Even with a YouTube partnership, contest winnings from Internet video clearinghouse Metacafe and other recognitions, [the video series] "Break a Leg" has grossed about $2,500 for two years' work.

"We're in a funny place," admitted director-producer-star Yuri Baranovsky. "I don't know how many people get how much work it is to make this."

"Break a Leg" embodies the key contradictions of the brave new world of online video entertainment. It's easier and cheaper than ever for individuals to produce their own work and put it up for global audiences - on sites like YouTube, Revver, Veoh and My Damn Channel - but it's almost impossible to make a living outside of the established TV and film industry.

- Venture capitalist David Beisel on the next phase of online video. Beisel writes:

...I believe we’re entering a second phase of the online video space in which the discovery mechanisms for (semi-)professional content, coupled with the increase of professional content available online in a distributed fashion, will facilitate a willingness of users to venture beyond YouTube to consume video across the net. But it won’t happen overnight. Especially when I hear that the dirty little secret from many independent video producers which maintain their own destination sites is that an overwhelming number of their views come via YouTube and not on their own distribution.

- Mark Cuban on 'The Way to Save Internet Video' (link it to the traditional television distribution systems, he suggests)

- Finally, the Xbox 360 game console will now deliver Netflix streaming movies (at least to the 5 million users who pay $50 a year for a "gold" membership, and also have a Netflix subscription)

Can User-Gen Movies Give Microsoft's Vista a Boost?

Interesting story in today's New York Times about a contest that Microsoft is running, called the Ultimate Video Relay. The goal is to get budding filmmakers to continue a story begun by Kyle Newman, director of the forthcoming feature 'Fanboys.'

From the Times:

[The contest] is intended to promote the higher-end version of Vista — Windows Vista Ultimate — among videophiles, early adopters of technology and filmmakers.

The contest...has its own Web site (ultimatevideorelay.com), a spinoff of the Windows Vista Ultimate Web site (ultimatepc.com). The relay reference comes from the invitation to computer users to complete a story titled “The Cube” in several stages. The tale, a humorous cross between “The Matrix” and “The Office” (or “Office Space”) begins with a six-minute clip that can be watched on the relay Web site. The clip is directed by Kyle Newman, the director of “Fanboys,” a coming movie about “Star Wars” aficionados.

The online clip is labeled Act I of “The Cube” and ends abruptly. Contestants are supposed to finish the story by providing first a middle (Act II) and later an end (Act III). The entries will be judged by visitors to ultimatevideorelay.com.

Sony Pics on Phones ... Original Content for Xbox ... Yahoo and Microsoft's Video Strategies ... Pocket Projectors

- Sony Pictures Television is developing PIX, the first movie network for mobile phones. It'll be available on the recently-announced AT&T Mobile TV service in May. From the Hollywood Reporter piece:

Sony eventually might convert PIX to an on-demand model and might take the brand online as well. The full-length linear strategy is just one of many different content plays with which the studio is experimenting. "We're not doubling down and saying it's only about longform," [Sony VP Eric] Berger said. "We'll continue to do innovative things in the shortform universe as well."

- Microsoft and the Safran Company are collaborating to create original shows for the Xbox game console, according to the NY Times. From the piece:

In an interview at his office in Los Angeles last week, [producer and talent manager Peter] Safran said his first round of programs would all be scripted, as opposed to reality shows, and would probably run under 10 minutes. He said he planned initially to focus on genres, like comedy and horror, that appeal to the Xbox 360 audience, which is heavily concentrated from the ages of 14 to 34, and tends to be more male than female. The first shows are expected to be available to viewers by the fall.

Microsoft’s previous forays in digital entertainment include a two-year-old initiative, MSN Originals, to provide original shows for the Web, and an ill-fated foray more than 10 years ago in which it poured about $100 million into Internet shows like the comedy “475 Madison,” about an advertising agency, then quickly canceled most of them.

- I wrote a piece for this week's edition of Variety that looks at Yahoo and Microsoft's video strategies. From the piece:

"Video consumption is becoming part of most users' Internet experience," says Karin Gilford, VP of entertainment at Yahoo. "The question is, what do you do to differentiate yourself?"

Yahoo and Microsoft have both been struggling to answer that question since the February 2005 launch of YouTube. Since then, video viewing on the Net has become an addiction for some: The top 20% of diehard downloaders watch an average of 14 hours a month, according to research firms comScore and Media Contacts.

- I've been eagerly following the development of pocket LED projectors for a few years now... looks like 2008 could finally be the year a few of them hit the US market, according to the NY Times.

For Thursday: Set-Top Box Reviews, Upconverting DVDs, and Player-Developed Games

- NY Times columnist David Pogue evaluates four leading Internet-connected set-top boxes, and gives the $300 Vudu the highest overall grade. (Others included in his survey include Xbox 360, Apple TV, and TiVo.) Pogue also makes some good points about the limitations imposed on all of the boxes by studios:

...[N]o matter which movie-download service you choose, you’ll find yourself facing the same confusing, ridiculous time limits for viewing. You have to start watching the movie you’ve rented within 30 days, and once you start, you have to finish it within 24 hours.

...What would the studios lose by offering a 27-hour rental period? Or three days, or even a week? Nothing. In fact, they’d attract millions more customers. (At the very least, instead of just deleting itself, the movie should say: “Would you like another 24-hour period for an additional $1?”)

Then there’s the fact that to protect their cash cows, most studios don’t release their movies on the Internet until a month after they’ve been available on DVD.

- NY Times reporter Saul Hansell talks to an electronics retailer who says that until the cost of Blu-ray players drops below $200 or $150, most consumers will still be happy buying standard-def DVD players that upconvert, producing a very nice looking picture from a garden-variety DVD.

- This feels important, somehow: Microsoft allowing players to develop their own videogames and share them with others via Xbox. A vidgame twist on YouTube?

Some mid-week linkage: ILM, Sam Raimi, Michael Bay, and More

- For about a week, the blog world has been buzzing about this post from director Michael Bay, alleging that Microsoft is trying to slow down adoption of either high-def DVD format so that it'll have time to corner the market on digital downloads.

I think the theory is a bit off. First of all, Microsoft's Xbox Live Marketplace, where it sells digital downloads, is still an unknown quantity -- the company has never announced how many movies and TV shows it has sold there (unlike Apple with iTunes). Second of all, if you wanted to propagate conspiracy theories, why wouldn't you suggest that Apple is trying to hamstring high-def discs? It's iTunes Store is the dominant place for buying downloads, and Apple has yet to ship a computer that can play either Blu-ray or HD DVD discs.

- Industrial Light & Magic says it wants to work on lower-budget projects. What's a shoestring pic to the San Francisco-based VFX topdog? $35 to $40 million, according to Variety.

- Director Sam Raimi talks visual effects in another Variety piece. (I have a soft spot for Raimi, since in his 'Dark Man' days, he was the first director I ever interviewed.) He says:

No director is ever done with their film. Now the director has the necessity and opportunity to keep directing the film, not just for the shooting period of three months, but on a longer picture, maybe for an entire year or on a 'Spider-Man' film for 2½ frickin' years straight. And it's hard. It's exhausting. You can keep redirecting this shot forever. It's an opportunity to work yourself to death.

- Lots of cool video on the promo site for the new Indiana Jones movie... but no way to embed it in a blog, or link directly to an interesting clip. That makes it harder for bloggers and fans to promote the movie on their sites.

- Wall Street Journal reports on Internet-connected set-top boxes, which aren't yet getting traction in the market. Nick Wingfield writes:

What's the holdup? Generally speaking, the video players are just too complicated to hook up, too expensive and too limited in what they can do. There are skeptics, too, who think Internet video players are trying to solve a problem that simply doesn't exist -- especially as cable companies enhance on-demand video services.

...Still, tech companies can't stay away from the idea, because of the booming popularity of Internet video. In August, Internet users in the U.S. viewed 9.13 billion online videos, up 26% from 7.24 billion in January, estimates research firm comScore Inc.

Users watched more than a quarter of those videos on Google Inc.'s YouTube, but online video from traditional entertainment companies is exploding, too.

`Why are striking writers so intent on getting a cut of Internet profits?'

That's the question LA Times writer Joseph Menn asks in today's paper. The answer is that digital media revenues are poised for explosive growth ... and the Internet-connected TV in the living room could mean that writers don't earn as much as they once did for TV and cable broadcasts...and consumers may not spend as much on DVD purchases and rentals.

From the story:

"The real winners from the writers holding out are the people in five or seven years," said analyst Laura Martin of Soleil/Media Metrics.

Exactly how entertainment will be delivered in the future is a matter of speculation. "In 10 years, there will be a monitor on the wall in the family room, and it will be connected to a box -- maybe an Xbox, maybe something else -- and I'm going to watch [content] on demand," said Richard Wolpert, an L.A. investor and former chief of strategy at RealNetworks Inc. "That's not going to be delivered over cable, it's going to come over Internet protocol."

Bypassing broadcast and cable delivery could wipe out a big chunk of residuals that writers now collect when their material is rerun. Wolpert said that explains why the writers are so intent on staking a claim to all new modes of transport into the home.

Google, Microsoft and Yahoo to Media Co's: Enough with the copyright warnings

Interesting new front in the copyright wars...

A group of tech and communication companies say that media companies are using copyright warnings to scare consumers, and they've just filed a complaint with the Federal Trade Commission, according to the NY Times. From the piece:

...[T[he group, the Computer and Communications Industry Association, said that the National Football League, Major League Baseball, NBC and Universal Studios, DreamWorks, Harcourt and Penguin Group display copyright warnings that are a “systematic misrepresentation of consumers’ rights to use legally acquired content.”

The complaint alleges that the warnings may intimidate consumers from making legal use of copyrighted material, like photocopying a page from a book to use in class.

“It is an attempt to convince Americans that they don’t have rights that they do in fact have,” said Ed Black, the association’s president and chief executive. “This is part of the larger context of what should be and what are proper rules for copyright in an Internet age.”

60Frames Entertainment: Model for a New Kind of Studio? Plus, Disney movies on Xbox

- Ad Age reports that Brent Weinstein, head of United Talent Agency's digital division, is starting a new venture in partnership with Spot Runner, an online advertising firm. It'll be called 60Frames Entertainment, and has an initial bankroll of $3.5 million, according to the WSJ.

The idea is to fund professionally-produced short-form comedic content for the Web. Spot Runner will sell ads around the content. This is similar to what Barry Diller has been up to, Michael Eisner's Vuguru, or the Atom Films Studio.

All these experiments, it seems to me, are essential to figuring out how a next-gen TV "network" or movie "studio" will work: how it will identify and fund cool content, support creatives, structure the costs of production, market the finished product, and spin it off from the Web into other media. One important milestone that probably isn't more than a year away: a Web series that attracts a big enough audience to get a movie greenlit. We've already seen an animated cell phone series spawn a TV show, after all.

Here's the official press release.

- About 35 Disney movies, including 'Aladdin' and 'Armageddon,' are now available on the MSFT Xbox. WSJ story...LA Times. The Times notes that there had previously been 192 movies from Warner Bros., Paramount, Lions Gate, and New Line, and 179 TV shows available on Xbox. From the story:

Xbox Live's users can rent high-definition versions of new release movies for $6, or $4 for standard definition. Older movies are $4.50 for high definition, $3 for standard.

Once downloaded, consumers have 14 days to begin watching the films before they are erased from the console's hard disk drive.

Monday Links: Costner on the Web ... CustomFlix to Support HD DVD ... New Edition of Film Financing Book ... And More

- This is an interesting model: Kevin Costner is financing an animated Web series called "The Explorer's Club." It'll debut later this year, as 12 four-minute episodes, with Costner's voice. The goal is to later turn "The Explorer's Club" into a live-action feature. This approach uses the Internet as a proving ground for new characters and stories, before committing to make a feature -- something I think we'll soon see a lot more of.

- CustomFlix, part of Amazon.com, will now accept indie films in high definition, and sell them in the HD DVD format, according to the NY Times. From the story: "The company said it would waive processing fees for the first 1,000 films it accepts for production by its CustomFlix Labs subsidiary."

- Via Lance Weiler's WorkbookProject Web site, I learned about a new edition of The Film Finance Handbook. They're offering a free chapter online, too, which deals with using the Net to distribute movies -- one of my favorite topics. The authors' premise in this chapter is that the Internet is evolving into the seventh major studio. They write:

"...We have seen the gradual emergency, very loosely, of a seventh major studio-like power. It is neither owned by a single organisation or individual. It does not even have a manager. Rather it is a collection of tools, networks, information and communities which collectively could be said to be beginning to offer similar functions to a traditional vertically integrated studio. ...And of most interest to the independent producer, this 'studio' is neutral, largely meritocratic and completely global."

- This piece about Xbox users watching movies and TV shows on the system really annoyed me, because it contains not a single statistic about how many people have paid for TV shows or movies through Xbox...yet it's basically a wet kiss to Microsoft. If Xbox is doing so well, why not back it up with some data, guys?

- Robert Katz will be head of production at The Film Department, a new indie production company founded by Mark Gill and Neil Sacker.

Thursday links: FunnyOrDie in the NY Times ... Jobs, Gates & Lucas ... Hollingshead Day is June 6th

- Today's NY Times has a lengthy piece about the creation of FunnyOrDie.com. The site's big hit, "The Landlord," starring Will Ferrell, took less than an hour to shoot, cost almost nothing, and has been seen about 30 million times.

My questions: how long will Ferrell and site co-creator Adam McKay stay motivated, given that they're working for equity and not pay... and how eager will other vid-comics be to contribute, given that the site doesn't share revenues yet?

- Here's all the video you could want from yesterday's on-stage encounter between Steve Jobs and Bill Gates at the 'D' conference in Carlsbad, CA. George Lucas was also on the agenda.

- Finally, next Wednesday (June 6th) is Hollingshead Day: the 74th anniversary of the opening of the first drive-in movie theater. (The first one was in New Jersey, opened by Richard Holingshead.) So visit one near you.

Paid Downloads on the Way to Extinction: Ads and Subscriptions are the Future

That's the word from Forrester Research analyst James McQuivey. (I'll bet Steve Jobs doesn't agree with him.) Here's the alert I got from them this morning (and here's the press release):

The paid video download market is a dead end according to a new report by Forrester Research. Forrester estimates that paid video downloads will peak in 2007, generating $279 million in revenue, up from $98 million last year. Instead, advertising models will drive the online video market.

In the past year, companies such as Apple, Amazon, Microsoft, and Wal-Mart have begun offering consumers the ability to download television programs and movies to own or rent. But a recent Forrester survey showed that only nine percent of online adults have ever paid to download a movie or TV show. Furthermore, an analysis of these consumers showed they are a niche of media junkies willing to spend heavily on such content; they do not represent the vanguard of a rush by mainstream consumers. Without mainstream viewers joining the party, the video download market will not grow fast enough to support the ambitions of all the companies involved.

"The paid video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today,” writes well-respected Forrester analyst James McQuivey. "Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today's paid downloads, will put their weight behind subscription models that imitate premium cable channel services.”

I don't agree with McQuivey's take on this -- I think media companies that crank out TV shows and movies enjoy being able to charge for them a la carte, on DVDs or as downloads, and I think they're going to do what they can to preserve that model, alongside advertising and subscription programs. They'll try to sell new, premium content as paid downloads (on Apple's iTunes and elsewhere), and make available slightly older stuff in subscription services, or free and supported by ads.

Internet Movie Marketplaces: Who's Most Likely to Succeed?

Who’ll end up as the Blockbuster of Internet movie distribution?

No one has all the elements in place yet: big audience, vast selection, intuitive design, and a simple way to transfer movies onto portable devices and the living room television.

But here’s my ranking of the five players that are “most likely to succeed” in the business of digital distribution.

1. iTunes Store The big dog. Works for both Mac and PC users, and as of April 2007, had sold 50 million TV shows and two million feature films. New $299 Apple TV device makes it easy to wirelessly transfer iTunes content to a television and view it there. The negatives: no rentals (only download-to-own, at $9.99 and up), no way yet for indie producers to sell their content, no simple way to burn shows or movies from iTunes to a DVD. Also: only a few studios offer features on iTunes, including Disney, MGM, and Lionsgate. Paramount supplies older films -- not new releases. Others have so far been reluctant to cut deals with Apple CEO (and Disney board member) Steve Jobs.

2. Amazon Unbox Unlike iTunes, Amazon Unbox makes movies available for digital rental and purchase. Movies can be sent directly to an Internet-connnected TiVo device for viewing on a TV. While Unbox hasn’t yet built much momentum in the marketplace, Amazon has a built-in advantage over the other players on this list: hundreds of thousands of consumers already trust the company with their payment information, and have Amazon accounts already. Amazon can also make movie recommendations based on past purchases. Indie producers can make their content available on Unbox using Amazon’s CustomFlix service, and keep 50 percent of the revenues. That makes Unbox the most “long tail”-friendly movie service. Among the studios offering features: 20th Century Fox, Lionsgate, Universal, Paramount, Sony, MGM, and Warner Bros. Movies from Lionsgate, Sony, Warner Bros., and Fox. Works well with Windows-compatible portable devices like the Creative Zen Vision. PC only.

3. CinemaNow CinemaNow has been in the movie download business longer than most anybody else: since 1999. It helped pioneer technology to download a movie and then burn it to a DVD (more than 100 titles are now available, mostly older movies), and CinemaNow also hasn’t been prudish about offering “mature content,” working with porn providers like Vivid and Hustler. CinemaNow is the only service working with all six major Hollywood studios. Offers some movies for free, as ad-supported streams. Movies can get to TV with a Windows Media Center Edition PC, and to Windows-compatible portable players. PC only.

4. Vongo Vongo is unique in offering an “all you can eat” movie service for a dirt-cheap $9.99 monthly fee. About 1000 movies are available at any given time, but some titles rotate in and out of inventory. Works with various Windows systems (Media Center Edition, Vista Ultimate, Xbox 360) to display content on a TV. Content can also be synced with Windows-friendly portable media players. Vongo also offers a live, streaming version of the Starz TV channel. Rental only, PC only.

5. Microsoft Xbox 360 Video Marketplace Microsoft has sold more than 10 million of its Xbox 360 gaming consoles, as of December 2006. The video marketplace offers standard-def and high-def features from Warner Bros., Paramount, Lionsgate, and New Line. (As of April 2007, Xbox and CinemaNow are the only of these services offering movies in high-definition.) Rentals only; no download-to-own. High-def new release movies cost $6, and standard-def new releases cost $4. Since the gaming console is already connected to a TV, viewing on the big screen is a breeze.

Dark horses (in no particular order) MovieLink: Initially launched as a joint venture of several major studios, but never well-promoted. Blockbuster is reportedly interested in acquiring Movielink – which could help introduce the service to a wider audience, especially if Blockbuster ties in digital downloads with rentals from its retail locations. ClickStar: Offers both rentals and downloads. Some movies, like “10 Items or Less,” will appear on Clickstar just a few weeks after their theatrical debut. Biggest things ClickStar has going for it: the involvement of Morgan Freeman and his producing partner, the supremely tech-savvy Lori McCreary. Netflix: Digital downloads are now built into Netflix’s monthly subscription package. About 1000 titles available, which could grow to 5000 by the end of 2007. Streaming only, PCs only. Wal-Mart: Expect Wal-Mart to offer the cheapest prices, if not the most compelling user experience. Launched in February 2007. Joost: Viacom announced a deal in February 2007 to make movies from Paramount and MTV Films available on Joost. BitTorrent: Download or rent movies from Fox, MGM, Paramount, and Warner Bros. Bit Torrent’s advantage is zippy peer-to-peer download speed. GUBA: Partnerships with Warner Bros. and Sony.

Some other comparisons of Internet movie marketplaces:

TechCrunch (good pricing comparison)

ExtremeTech

The MPAA's Annual Report, Video on the Xbox, and More

- In advance of next week's ShoWest gathering in Vegas, the Motion Picture Association of America has released its annual report on movie industry economics. (A PDF of the press release is here.) From the NY Times coverage:

The average production cost of a film made by [an MPAA] member company rose about 3.4 percent to $65.8 million in 2006, according to the report, while the marketing cost fell slightly, to an average of $34.5 million. (Association executives noted that the production cost figure does not include money contributed by outside investors who frequently underwrite the expense of Hollywood films.) The domestic box office rose about 5.5 percent last year to $9.49 billion, while theatrical admissions rose 3.3 percent to 1.45 billion, and the worldwide box office rose about 11 percent to $25.8 billion.

Variety offers a thorough analysis of the numbers. Some interesting elements from that:

> Spending on online marketing is growing
> So is the number of movies released each year (607 in 2006, an all-time high)
> There's a correlation between people who have a lot of technology in their homes (game consoles, DVD players, high-def TV) and people who see a lot of movies. (Seems to me this could be purely related to household net worth, rather than home theaters generating a desire to see movies in theaters.)

- Microsoft is clearly trying to promote the Xbox's video offerings, if this piece from Sunday's NY Times is any indication. Dave Itzkoff writes:

In late November Microsoft began expanding the library on its Xbox Live network, a broadband service available by subscription to Xbox 360 owners. In addition to the video-game trailers and playable demonstrations that the network has traditionally offered, you can now find an eclectically selected collection of films and television shows offered for downloading to a console’s hard drive: for a few dollars you can view “Mission: Impossible III” or “Chinatown” or the episode of “Chappelle’s Show” with the blind white supremacist, on your television, just as if you were watching a DVD or a video-on-demand channel.

...This month XBox Live will offer a new view of the corpulent form of Eric Cartman when it becomes the first outlet ever to offer an episode of “South Park” in high definition.

While Microsoft acknowledges that most consumers are buying Xbox 360s primarily, if not solely, to play video games, the company also sees an opportunity to use film and television content to draw an audience that doesn’t fit the stereotypical gamer profile.

“The original Xbox was probably the domain of that testosterone-fueled male in the household, and while we love him to death, we also want his little brother and sister and mom and dad and their friends to be able to enjoy it,” said Peter Moore, corporate vice president of Microsoft’s interactive entertainment business division.

- Viacom's CEO disses YouTube at an investment conference in New York, and says a deal with the video service Joost will give the company more control over its content, according to the LA Times.