VSDA: Movie Downloads No Threat Yet

Most Net-connected movie fans have heard of downloading films. They have sampled AVI files and found the results less than satisfying. The digital video is jerky, out of focus, and suffers from terrible pixelation effects---all caused by slow microprocessors and low frame rates. The present typical state of the art isn't high enough for most folks to take Internet video seriously.

Video software dealers are among those least concerned about digital threats to their hegemony, despite the film industry's endorsement of companies like Sightsound.com, which is poised to begin offering movies on demand, and Broadcast.com, which has a $4 million share of Trimark Entertainment. Almost everyone---from the most casual movie fan to top studio executives---seems to agree that digital downloads are the wave of the future for movie theaters as well as for private residences, but most believe that scenario is several years away.

Mark Vrieling, president of the Video Software Dealers Association and the owner of three Rain City Video stores in Seattle, believes the threat to video-rental outlets is vastly overblown. "In the short time frame, I think its only real value is publicity and gimmickry," he says of direct video downloading. "The pipes just aren't there to handle it. It's not even close. Until that infrastructure is built, it's just not realistic." Vrieling thinks the download age is at least 10 years away. In the long term, though, "It's got a potential for affecting us in a very large way."

The current business model is still valid, but software dealers should be strategizing for the future. Direct sales of DVDs over the Internet have already begun to affect the bottom lines of rental stores. Film producers have noticed a new awareness of the Internet at such big international film festivals as the annual bash in Cannes, France. Michael Metcalf of Canada's Global Media Corporation, which plans to distribute movies over the Internet, told the Associated Press that the response his company received this year at Cannes was "overwhelming." Last year, Metcalf was disappointed that no one wanted to talk to him. This year, the typical response from potential business partners was "Wow! When can we do this?"