All Things Digital

French cinephiles are illegally downloading from the Internet as many films as they pay to see in theaters. This according to a new study from the Association Against Audiovisual Piracy (ALPA) that was–My God, THE IRONY–itself leaked to the Internet without its creator’s knowledge or consent. One of the largest studies of its kind, the ALPA effort found that 13.5 million films were illegally downloaded in May, while box office ticket sales for that month were 12.2 million. On average, more than 10 million copies of films are illegally downloaded in France every month. Some 450,000 copies are downloaded daily. Incroyable, but true. “We are facing a major phenomenon that can endanger the film industry and (other) audiovisual industries,” ALPA director Frederic Delacroix told Agence France-Presse. “We did not expect such numbers.”

Apparently, NBC Universal doesn’t know that jumping into rebound relationships after a particularly painful breakup is rarely a good idea. After Apple tossed its fall TV lineup off iTunes in August, saying the two companies couldn’t agree on pricing, the broadcast network has been spitefully seeking out distribution deals wherever it can find them: Hulu. Then Amazon Unbox. The hilariously ill-conceived NBC Direct. And Netflix.

Now SanDisk. Today, NBC U said it would make its shows available on SanDisk’s recently launched Fanfare PC-to-TV video player service. Come January, consumers will be able to download episodes of NBC series they can no longer purchase on iTunes, and transfer them to their TVs via SanDisk’s TakeTV product.

“Fanfare is going to be an iTunes-like store for us,” NBC U’s president of digital distribution, Jean-Briac Perrette, told Silicon Alley Insider. But with one noteworthy difference: NBC U controls pricing. “The business model is one we like,” said Perrette. “It’s normal for content owners to control the wholesale price of their content. This is no different than any other wholesale relationship; it’s not different in the sense that Wal-Mart decides to price DVDs at a loss. Ultimately we still set the wholesale price.”

Rupert Murdoch is in an unusually generous mood these days, isn’t he? This morning Fox Broadcasting said it would make season-premiere episodes of seven of its TV shows available for free through Apple’s iTunes store. Beginning this week and continuing through the two that follow, the network will offer free downloads of such series as “Prison Break,” “Bones,” “American Dad” and “K-Ville.” Said Fox’s William Bradford, senior vice president of content strategy, “We wanted to give our viewers and consumers a new way to discover our content.”

… And get hooked on it, and then watch it throughout the fall season–either on ad-supported network TV or as a paid download from the iTunes store. Which doesn’t sound like such a bad strategy when you think about it. Certainly, it’s far more appealing than NBC Universal’s hilariously ill-conceived download service and an interesting alternative to ABC’s, which will put full-length prime-time shows on AOL one day after they air on broadcast television.

That said, all three networks’ strategies are problematic in that they require the audience to access programming in disparate ways. Even traditional broadcast TV, as antiquated as it is, doesn’t force viewers to watch different networks on different systems. “The consumer is probably becoming confused,” notes 24/7 Wall St.’s Douglas A. McIntyre. “He will need to go to AOL to watch ABC. CBS programming is on the iPod. NBC will be doing direct downloads from its own Web site. NBC and News Corp. are starting a joint online venture called Hulu. TV and film will also be available on the Amazon Unbox. Wal-Mart has started a video download service. The large retailer will charge for its content. NetFlix is also planning an online movie service. Viewers will be better off getting their TV and movies from illegal file-sharing sites. At least all of the content is available from one source.”

Video downloads are going the way of the VHS tape. At least according to Forrester. The research outfit sees the paid download market continuing its growth through 2007–from $98 million to $279 million–and then stalling as advertising-supported TV streams take over the online video market. “The paid-video download market in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today,” Forrester theorizes. “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.”

And what of Amazon Unbox? Xbox Live Video and Movielink? What of AppleTV and the iTunes juggernaut? Adapt or die, says Forrester. Only with ad-supported content will these ventures be able to compete with free TV-quality web streams. There simply aren’t enough media junkies to support the download model they’ve developed. “The people who pay to download video are extreme media-philes,” Forrester analyst James McQuivey told Variety. “They are not the tip of an iceberg. They may grow their own spending, but there aren’t many people like that left. In the video space, iTunes is just a temporary flash while consumers wait for better ways to get video. They’re already coming.”