December 21, 2000 12:50 PM PST

Film studios stream toward Web delivery

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Sony Pictures Entertainment this week created about 50 streaming media jobs, a sign that the company is fast-forwarding its efforts to deliver entertainment over the Internet.

Calls for producers, engineers, programmers and technicians quickly crossed the Web on Wednesday morning as a new batch of positions became available.

Some of the jobs pointed to the company's desire to deliver feature films on demand for consumers who have access to high-speed Internet connections. Company executives say they hope to complete the effort by spring.

Other positions would beef up Web sites of popular TV shows such as "Dawson's Creek" or broader sites such as SoapCity.com, a soap opera news site.

"Basically we know broadband is where it's at," said Lisa Delucia, spokeswoman for Sony Pictures Digital Entertainment. "We're trying to circumvent what we call 'getting Napsterized.' We would rather be in that space" before an illegal film-swapping service hits the market.

Sony representatives confirmed that the company is in advanced talks with studios to come up with a joint digital delivery initiative that would operate as an open-access service. Time Warner's Warner Bros. is among the partners.

Sony Pictures and other major Hollywood studios, such as Walt Disney, Warner Bros. and Paramount Pictures, are trying to avoid the pitfalls discovered by the music industry. The recording industry was caught by surprise when a new peer-to-peer technology made it possible to exchange music on the Internet for free. Napster, the most popular song-swapping service, has been at the center of nasty copyright battles with artists, studios and record labels.

The movie studios are positioning themselves early to develop an Internet strategy for entertainment. But the industry needs to overcome some large obstacles before consumers can easily watch film online. The biggest hurdle is that only 5 million American households have the high-speed Internet access needed to view rich-quality video.

Aside from broadband access, the lengths of feature films could bog down Internet networks.

"Forget five-minute animated shorts or two-minute music videos," said Jim Penhune, director of media and entertainment strategies at The Yankee Group. "We're talking about a two-hour movie and getting the thing through the network and onto the set-top box or onto the computer."

What's more, Penhune says, the costs of encoding, storing, distributing and delivering the content is not "inconsequential."

For those reasons, "distributing feature films online is still years away," he said.

Sony Pictures acknowledged that its online efforts will not immediately pay off.

"We're not banking on a revenue stream next year," Delucia said. "We know it's not going to happen until 2005."

Online movies may still be far off, but several other companies are already making moves in the area.

Just this week, video retailer Blockbuster and broadband provider Enron began streaming full-length videos as part of a trial program that will reach 1,000 households in Seattle; Portland, Ore.; New York; and American Fork, a suburb of Salt Lake City. Participants can digitally rent movies directly from their TV sets.

In addition, Intertainer, based in Culver City, Calif., is working with telephone companies and cable operators to deliver films, music, videos, TV shows and other forms of entertainment.

Sony Pictures in March created a new unit dedicated to its digital efforts dubbed Sony Pictures Digital Entertainment; senior Sony executive Yair Landau has been named its president.

Landau's new duties included spearheading Sony Pictures' drive to provide video-on-demand, interactive TV and other forms of digital content.

"Sony as a company really takes the long-term focus," Penhune said. "If anybody is going to be ahead of the curve, it's going to be Sony."

 

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