The Internet is forcing the movie industry to adapt its current business model in order to keep up with the online trend. With the growing popularity of online movie download sites, Hollywood will have to figure out a way to compete. This article featured in The Economist argues that if the film industry embraces the Internet they will profit considerably more than if they were to fight it. One of the most advanced Internet distribution sites is ZML.com, which offers over a thousand films for download to various devices at low costs and good quality. Unfortunately for Hollywood, this website is a pirate site. Piracy and the increased accessibility pirates have to online material discourages the film industry from making titles accessible on the web. While film industry has always been slow to accept new technologies, failure to do so with the Internet could result in damaging effects. The article points out that studios such as Paramount and Disney were opposed to the DVD at its inception, primarily because they would rather keep their stringent business model than adapt to a new one. Still, some studios are embracing the Internet and its potential to spur new revenue.

While some studios have helped to create legal online rental services, they have reaped little success. The author suggests that download-to-buy options would be more profitable and could show the movie industry the capabilities of the Internet. In addition, the current sites are not particularly enticing for users because the movies offered are second-rate--with very few blockbusters or major hits available. The article goes on to explain the reasons for Hollywood's reluctance to go online. Most notably, the DVD industry is so popular that they fear risking such a large source of revenue. In reality, the industry could profit by increasing the amount of titles available through an infinite online database rather than through limited shelf space in DVD rental stores. Regardless, there exists technological obstacles that are difficult to combat. For example, download times can reach up to an hour and most people would rather watch movies on their televisions than on their computers. Lastly, the "lack of common standards" prevents a uniform system for online distributors. Despite these challenges, the article points out the potential remedies and the various ways the industry is currently taking steps towards overcoming these difficulties.

Although wary of what the Internet may bring, the industry recognizes its potential to reach the masses. Studios spend a significant percentage on online marketing because it is so successful and provides beneficial feedback. By targeting substantial groups interested in specific subjects, the industry can use this response to shape their films. The most promising invention described is the flash-memory enabled kiosk, which "overcomes many of the weaknesses of the present model and the current deficencies of the Internet," says Mr. Lieberfarb, who is on the board of MOD Systems.This article directly aids my paper through its summarization of the multitude of adaptations and inventions that film industry has had to make in such a digital world. It is apparent that the movie industry must adapt if it does not want to falter in this digitally advancing society.

This article from the Economist describes the potential future of Hollywood if it would embrace the internet as a legitimate ancillary market.  America’s film industry dreads the threat of piracy leading to the cautious adoption of the internet as opposed to the television which was instantly accepted as a popular medium.  The article focuses heavily on the current distribution options that are available to filmmakers and consumers, both legally vs. illegally, and ideas as to why Hollywood has been slow to act in using the internet.  The author suggests that in order for money to be made, more choices need to be available to consumers.   FilmOn.com and MovieFlix are two of the currently available options, however the former fails to carry a number of popular titles, while the latter focuses on true independents, straight-to-video, and student productions.   Great for niche audiences but certainly not good for studios.  Apple's iTunes is another option.  At the time of this article's writing, Apple was allowed by all six studios to distribute, but only via a rental agreement, offering no download-to-buy options.  If download-to-buy options were to be allowed, the writer contends that sales would be sufficient enough to show studios the internet's potential, which in turn would hopefully make Hollywood more comfortable with this new distribution tool.

The author suggests that Hollywood is so slow to act in using the internet distribution method because the industry takes major financial risks daily. Any changes to its existing business model would indicate taking an even bigger risk.  An important fact noted by the author is that Hollywood has always been slow to acknowledge new technologies, from cable to the VCR to VHS, even to DVD's.  Adopting the internet whole-heartedly will also allow studios to maximize their vast film libraries, considering that most store retailers do not have enough shelf space to stock all that's available (or could be available).  If you make more content available for DVD, effectively selling more films, they can be more affordably priced.  This effect on pricing could help deter piracy substantially.  Other obstacles mentioned include the popular consumer preference to view movies on their television screens, not computer screens, as well as the lack of common standards between websites and devices which enable the downloading of content from the internet to then be viewed on television.  Besides having to change their business model, Hollywood's exclusive 'windows' practice, a system that follows a film from theatrical release to on-demand, to DVD, to online for example, would be in jeopardy.  Hollywood is fixed to this system; though the overall time of different windows has shortened considerably, it doesn't seem that the studios are interested in abandoning this process any time soon.

This article discusses the potential future of Hollywood if it would open its arms and embrace the internet as a legitimate ancillary market. Fears of piracy leading to the death of America's film idustry pervade the thoughts of major film studios, leading them to very slowly and cautiously adopt the internet, unlike television which has been much more open to the possibilities of the medium.  I happened to read this article earlier in the semester and it was the spark that led me to pursue online film distribution in general as my research topic.  The article focuses heavily on the current distribution options that are available to filmmakers and consumers.  This information provides me with an efficient base in looking at what is available to filmmakers and consumers now, legally vs. illegally, and ideas as to why Hollywood has been slow to act.  

The article suggests that in order for money to be made, more choices need to be available to consumers. FilmOn.com and MovieFlix are two of the currently available options, however the former fails to carry a number of popular titles, while the latter focuses on true independents, straight-to-video, and student productions. Great for niche audiences but certainly not good for studios. Speaking of studios, Movielink, another distribution portal formed by studios with approximately $150million in start-up money, was recently sold to Blockbuster for only about $20million - this doesn't exactly bode well for proponents of online video opportunities.

Apple's iTunes is another option. At the time of this article's writing, Apple was allowed by all six studios to distribute, but only via a rental agreement, offering no download-to-buy options. If download-to-buy options were to be allowed, the writer contends that sales would be sufficient enough to show studios the internet's potential, which in turn would hopefully make Hollywood more comfortable with this new distribution tool.

The article hypothesizes on why Hollywood is so slow to act: the industry takes major financial risks daily. Any changes to its existing business model would indicate taking even bigger risk. Another reason relates to the values of Hollywood business as it's based on recognition of films, not necessarily on growth. Also, DVD's are still very much big business - a money maker that studios don't want to tamper with.

An important fact noted by the author is that Hollywood has always been slow to acknowledge new technologies, from cable to the VCR to VHS, even to DVD's. Adopting the internet whole-heartedly will also allow studios to maximize their vast film libraries, considering that most store retailers do not have enough shelf space to stock all that's available (or could be available). If you make more content available for DVD, effectively selling more films, they can be more affordably priced. This effect on pricing could help deter piracy substantially.

Other obstacles mentioned include the popular consumer preference to view movies on their t.v. screens, not computer screens, as well as the lack of common standards between websites and devices which enable the downloading of content from the internet to then be viewed on your t.v.

Besides having to change their business model, Hollywood's exclusive 'windows' practice, a system that follows a film from theatrical release to on-demand, to DVD, to online for example, would be in jeopardy. Hollywood is quite fixed to this system; though the overall time of different windows has shortened considerably, it doesn't seem that the studios are interested in abandoning this process any time soon.

An interesting question raised by the author is that Hollywood certainly knows and enjoys using the internet to market its films - why not sell them there as well?