All Things Digital

Hollywood is finally embracing day-and-date film releases.

Yesterday, Time Warner (TWX) CEO Jeffrey Bewkes said that Warner Bros. plans to experiment with VOD releases day-and-date with DVD later this year. And now this morning, Apple (AAPL) announced that a number of major and independent movie studios have agreed to make their films available on iTunes day-and-date with DVD–$9.99 for library title purchases and $14.99 for new release purchases. Among the studios participating in the deal: 20th Century Fox (NWS), Walt Disney Studios (DIS), Warner Bros., Paramount Pictures (VIA), Universal Studios Home Entertainment (GE), Sony Pictures Entertainment (SNE), Lionsgate (LGF), Image Entertainment (DISK) and First Look Studios (FRST.PK).

An impressive lineup and one that clearly heralds a shift in the movie industry’s view of digital distribution. A shift in iTunes movie purchases as well–upward. The removal of Hollywood’s typical 30-day lead time on DVD releases will no doubt boost new-release sales on iTunes, assuming customers don’t mind paying $14.99 for films that lack the extra features and picture quality of their DVD counterparts. It will boost movie studio revenues as well. With no manufacturing and reproduction costs to speak of, margins from day-and-date download releases are presumably quite high.

So much for that hard-fought DVD format war …

Hollywood has finally begun sniffing at the long tail.

Paramount Pictures (VIA) and application developer FanRocket this week debuted a new service for Facebook users that will enable them to send each other movie clips. A combination media player and clip library, the service called VooZoo aims to exploit the Hey-Remember-That-Funny-Scene-From-”Nacho Libre” phenomenon by providing users with access to clips from such movies and an easy means of bombarding their friends with them.

The studio will plug the DVD version of the movies after each clip is played in the hopes of driving further sales. An interesting strategy, but one analysts seem to have met with a raised eyebrow. “It’s one thing to go to a friend’s profile page and they have a clip of Eddie Murphy driving the Ferrari and go, ‘Oh, yeah, that was hysterical,’ ” said John Barrett, research director at Parks Associates. “It’s quite something else to say, ‘Hey, that was such a great scene I’m going to spend the next two hours right here in front of my PC.’ It would be some kind of clip that would make someone do that.”

Reports of HD DVD’s death may have been exaggerated, but reports of its fast-declining health have not.

Though Paramount Pictures has denied reports that it plans to abandon the next-generation DVD format, news of an escape clause in its HD DVD contract allowing it to release films on Blu-ray has the industry wondering aloud about the format’s continued viability.

And for good reason. Earlier this week Universal’s HD DVD-exclusive contract ended. And last Friday, on the eve of the Consumer Electronics Show, Warner Bros. stunned the industry by announcing plans to end support of the format entirely in June. “[That] maybe the pivotal event that resolves the format war,” said Thomas Coughlin of Coughlin Associates. “It certainly changes the rules and the playing field. I think everyone is trying to reassess what this means–including the HD DVD guys. [If Blu-ray does come out on top] it would be poetic justice after the Betamax vs. VHS war. That time, Sony lost.”

But is it truly the format’s death knell? Ovum analyst Carl Gressum says no. “There is a lot of speculation whether this is the end of HD DVD,” he said. “It is not, but we are getting dangerously close to a ‘chapter 11’ for the group. If the other supporting studios now decide to drop HD DVD, the situation will turn dire, and HD DVD could become more of a replacement to DVD on the PC client than as a movie-distribution playback format.”

UPDATE: Universal Pictures flatly denies it’s abandoning the HD DVD format. Said Ken Graffeo, executive vice president of HD strategic marketing for Universal Studios Home Entertainment, “Contrary to unsubstantiated rumors from unnamed sources, Universal’s current plan is to continue to support the HD DVD format.”

Looking five, six, seven, 10 years ahead, advertising will become 15%, 20%, 25% of Microsoft’s business. As much as people have bones to pick with advertising, people much prefer an advertising-funded experience to one they pay for.”

–Microsoft CEO Steve Ballmer

Viacom has a new online advertising partner and–big surprise–it’s not Google. It’s Microsoft.

The entertainment broadcaster has signed a far-reaching, five-year strategic partnership with the world’s largest software company valued at approximately $500 million. Under its terms, Microsoft will buy ads across Viacom’s broadcast and online networks and license content from its MTV, Comedy Central, BET and Paramount Pictures properties for use on the MSN Web site and the Xbox 360.

In return, Viacom will adopt Microsoft’s Atlas AdManager digital-advertising technology and grant Redmond the exclusive right to sell remnant display-advertising inventory on its U.S. sites.

Quite the partnership, and one that may further in evolve in the years ahead. “This broad-based relationship will lead to conversations in other business areas,” Viacom CEO Philippe Dauman told Reuters. “What impressed me was the extent to which Microsoft is making the commitment–technological, financial and otherwise–to be a winner in this space.”

“Financial and otherwise,” indeed. As Om Malik notes, Viacom seems to have gotten itself quite a deal from Microsoft. “Viacom doesn’t have to spend anything and at the same time it is getting advertising dollars and more distribution for their content,” he writes. “I get a feeling that, going forward, this is going to become a template deal for all large media companies with content assets. For them it’s a green light to pillage Microsoft’s overflowing coffers. Deals like this will increase the pressure on Google to do similar ones with other content providers, mostly to thwart Microsoft’s advertising ambitions.”

Odd to think that a 64-minute foray into excrement and emesis might be a defining moment in Hollywood’s transition to digital distribution. But it could.

Paramount Pictures plans to debut “Jackass 2.5,” the third installment of the “Jackass” movies, online, skipping the multiplexes entirely. “2.5” will launch Dec. 19 on Blockbuster’s new online property, Movielink, where it will be streamed free for two weeks. Then, beginning Dec. 26, it will be released on DVD, through video-on-demand and in Apple’s iTunes Store. An interesting experiment, and one that could pave the way for first-run broadband movies.

But will it succeed? Paramount certainly seems to think so. After all, the film is sort of a long-form version of the rough-edged, occasionally tasteless DIY content that predominates online. Said Tom Lesinski, president of Paramount Pictures Digital Entertainment, “When you think about what people generally consume online it’s fairly low-end user-generated content, yet there are hundreds of millions of people online watching video every day.”

Or as another executive candidly told the New York Times: “There’s more vomiting, nudity and defecation. The stuff that consumers really want.”

Note: John Paczkowski is on vacation and won’t be writing or posting videos until he returns Monday, Aug. 27.

To keep you abreast of tech news while he’s away, we’re compiling a daily digest of 10 must-read tech stories. We’re calling it the Tech 10 and it appears below.

1. Although they made no jokes about their secret marriage, as did Apple’s Steve Jobs when he appeared with Microsoft’s Bill Gates at D5 in May, the CEO schmoozefest between Steve Ballmer of Microsoft and John Chambers of Cisco today in New York City yielded news of increased cooperation between the two tech giants, according to eWeek. Ballmer also deflected questions from moderator Charlie Rose about whether Microsoft was contemplating acquiring Yahoo, writes Elizabeth Montalbano of IDG News Service.
2. Adobe’s Media Player isn’t quite ready for show time: the eagerly awaited player won’t be fully released until next year. In an exclusive, Beet.TV’s Andy Plesser gets the word from an Adobe spokesman and posts a video interview with Adobe’s Chris Hock, head of its Flash media group.
3. Paramount Pictures and DreamWorks have chosen HD DVD over competing technology Blu-Ray as a means of releasing their DVD movie titles, according to FT.com. The decision heats up the DVD format battle, as media companies consider which technology provides a better viewing experience.
4. With little fanfare, Hewlett-Packard has debuted Cloudprint, a free service enabling users to print documents on any printer from almost any location worldwide. According to the New York Times, the innovation came after H-P wondered earlier this year how it might piggyback on the release of Apple’s iPhone.
5. Speaking of the iPhone (left), recycling is already catching on. This week, Apple is bringing out refurbished iPhones at the online Apple store. Engadget notes that the company is discounting the reconditioned handsets by $100 for both models.
6. Skype, reports the Register, is blaming its outage woes last week on a flood of users downloading a routine security patch. The VOIP provider has also issued an apology for the “unprecedented” service interruption, which for some users lasted into the weekend.
7. Google is flexing its muscle in China. Reuters reports that the search colossus has bought a stake in a Chinese community Web site called Tianya.cn. The move in the second-largest Internet market in the world marks Google’s growing interest in social networking.
8. Tilera Corp., a start-up in Silicon Valley, has revealed details of its 64-processor chip. The Wall Street Journal says that the chip and its underlying design could be used in products that have upward of a thousand calculating engines.
9. A multistage attack has left job-search site Monster.com reeling from a potentially huge stolen-data headache. Computerworld disclosed that more than 1.6 million records belonging to several hundred thousand people have been compromised by a Trojan horse program that could plant malware on their computers.



10. Who’s behind those mysterious edits to the entries on Wikipedia? Why, the very corporations written about. According to Wired, Wikipedia Scanner, a data-mining service launched earlier this month, has shown that millions of entry changes can be tracked to corporate “editors.”

–posted by Associate Editor John Sullivan

From top to bottom, Blockbuster is deliberately and willfully infringing on our patented methods. Netflix invented a 100 percent better mousetrap that Blockbuster copied.
- Netflix spokesperson Steve Swasey, April 5, 2006

Apparently, Blockbuster isn’t as hopelessly tethered to its VHS rental-business past as you might think. Yesterday, the video-rental retailer acquired studio-owned movie download service Movielink and with it a potentially significant foothold in the video-on-demand market. Terms of the deal were not disclosed, but early this year when rumors of an acquisition first began to circulate, analysts had estimated that Blockbuster might pay as much as $50 million.

Founded in 2002, Movielink is backed by Paramount Pictures, Sony Pictures, Metro-Goldwyn-Mayer, Universal Studios and Warner Bros. Studios. But while its impressive catalog makes it one of the Web’s largest digital-movie libraries, the service hasn’t caught on because of its strict digital-rights management software and prices (roughly the same as a typical DVD). Still, it’s likely a good acquisition for Blockbuster, whose market value has declined to just over $800 million from $8.4 billion, largely because of its failure to buy Netflix when it had the chance.

Blockbuster chair and CEO Jim Keyes called the deal the next “logical” step in the company’s transformation. Presumably, that means the next phase in Blockbuster’s re-creation of the Netflix business model, which the video-rental chain has been diligently following for the past few years. Netflix, of course, is spending some $40 million this year on its own VOD service, which is already up and running.