After years of avoiding it, Hollywood studios are preparing to let people download and buy electronic copies of movies over the Internet, much as record labels now sell songs for 99 cents through Apple Computer's iTunes music store and other online services.
The movie industry has in years past made half-hearted attempts to let people rent a small number of movies online, but the rapidly growing use of Internet video, both legal and pirated, is prompting it to create more robust download options and to consider online business models it dismissed as recently as a year ago.
The studios have been working for months to confront the technological and business challenges of digital sales. Those initiatives gained new urgency on June 27 when the Supreme Court ruled that companies distributing software that allows users to trade pirated copies of audio and video files are liable for copyright infringement only if they induce users to break the law.
Sony, for example, is converting 500 movie titles to a digital format that can be downloaded and sold. Universal Pictures, a unit of NBC Universal, which is 80 percent owned by General Electric and 20 percent owned by Vivendi Universal, is preparing nearly 200 titles for digital online sale. And Warner Brothers, a division of Time Warner, says it has already digitized most of its library of 5,000 films and will start selling some of them online later this year
Broadcast, satellite and cable are all good models that provide us the ability to generate revenue for us and are relatively safe from piracy," said Robert C. Wright, the chief executive of NBC Universal, expressing the widely held view of studio executives. "The Internet may be more convenient, but it is Dodge City."
Josh Goldman, the chief executive of Akimbo, a company that sells a digital video service delivered through a special device that connects television sets to the Internet, said that while the industry was starting to experiment, "everyone is holding back the best of their programming until they figure out the right model." For example, Robert A. Iger, the president and next chief executive of the Walt Disney Company, said at a recent investor conference that he was interested in concepts like what he called "Desperate Housewives Plus," in which consumers could buy the right to watch an episode starting the day after it was broadcast along with additional scenes and "a few more bells and whistles."