Studios still searching for best way to do video online

LAS VEGAS--Studios know how to make money in the traditional way--in the theater, via broadcast television. But the Internet still has them slightly flummoxed.

True, most of the major film and television studios are embracing the Web. But the exact formula for distributing their content while still making money remains somewhat up in the air.

Here at CES during a panel sponsored by Hollywood trade pub Variety, the heads of digitial distribution for Disney/ABC, Fox, Paramount Pictures, and Warner Bros. discussed what is and isn't working for them.

All present were adamant that there is no one good way to make money online yet. "We're using every model because consumers will ultimately decide how they want to consume (content)," said Tom Lesinski, president of Paramount Pictures Digital Entertainment. For Paramount, that means downloads of its films via iTunes, Xbox Live, Netflix Watch it Now, and the Vudu set-top box.

The head of Fox Entertainment's digital media group, Dan Fawcett, said the best way is to give content to people the way they're used to. "People online want things for free. They can get it for free on piracy sites," he said. "They are inclined to watch it with a reasonable amount of advertising, but downloading a movie that takes a couple of hours just to own it doesn't seem to be a very compelling consumer experience."

This, of course, gave Fawcett the opportunity to plug Hulu.com, the online video partnership between Fox and NBC Universal where some of the two companies' most popular shows are viewable for free with some ads.

Paramount's Lesinski agreed that studios have to "give (content) to people anyway they want," he said.

Digital content heads of major Hollywood studios at CES.

(Credit: Erica Ogg/CNET News.com)

And so did everyone else: a constant familiar refrain from all of them was "letting consumers consume content when and how they want." But isn't the way they want it instant and free?

Other tidbits: All of them profess to like Steve Jobs. Some think Apple and its iTunes Store hold too much sway over the download business, but those on the panel didn't seem to agree. Warner Bros. called Apple "a great partner," and Paramount is really, really happy that 5- and 10-year-old film titles are selling in volumes of hundreds of thousands today on iTunes. Disney, perhaps unsurprisingly, was almost defensive of Apple. (Jobs is Disney's largest shareholder.)

"Apple wanted to legitimize the marketplace," said Albert Cheng, executive vice president of digital media for Disney-ABC Television. "They compete with so many other different options, including piracy. To say Apple has so much control is looking at a very narrow slice of pie."

All had plenty to say on the impact of the Web on professional content. But despite talk of successes with viral video, streaming branded sites, and partnership deals across different platforms, none had an articulate response when an audience member asked when online revenue would surpass traditional revenue sources for each.

After some amused stares with each other, finally Fox's Fawcett was able to stammer: "Nowhere in the forseeable future."