Hollywood now betting on online distribution of movies

The growth of Internet video — both legal and pirated — is prompting the industry to create more robust download options and to consider online business models it dismissed as recently as a year ago
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After years of avoiding it, Hollywood motion picture studios are preparing to let people download and buy electronic copies of movies over the Internet, much like how record labels now sell songs through Apple Computer’s iTunes music store, the New York Times reported.

The movie industry has in years past made half-hearted attempts to let people rent a small number of movies online, but the rapidly growing use of Internet video — both legal and pirated — is prompting it to create more robust download options and to consider online business models it dismissed as recently as a year ago, the Times article said.

The studios have been working for months to confront the technological and business challenges of digital sales. Those initiatives gained new urgency last month after 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.

Sony, for example, is converting 500 movie titles to a digital format that can be downloaded and sold. Universal Pictures is preparing nearly 200 titles for digital online sale. And Warner Brothers says it has already digitized most of its library of 5000 films and will start selling some of them online later this year.

The studios have strong incentive to make sure they offer consumers legal options: The rapid adoption of high-speed Internet connections is making the trading of pirated copies online easier and more widespread.

Not surprisingly, the Times reported, the videos that people most want to download are those that Hollywood is most shy about making available online. Studios do not want to undercut box office receipts and DVD sales for hit movies, and TV networks do not want to put popular shows online, which might allow more viewers to skip the commercials. Nor do they want to rush into new technology whose security might be broken.

The studios will most likely make downloads available to a wide range of online distributors. Those that are preparing to offer the movies include Movielink, MSN, Sony’s Connect service, the Target’s Target.com and CinemaNow, an online movie rental store. Prices, to be set by the retailers, are expected to be similar to those of DVDs.

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