Online movie downloading hasn’t caught on like a house afire because there’s something incendiary missing. That missing ingredient, say many of the analysts and pundits, is the freedom to burn. Movie buffs who seek a pleasurable personal viewing experience have a certain expectation that can be summed up by three letters: DVD. Most people, especially those sitting in their living rooms, expect their movie experience to be at least as good as the experience they've come to expect from a movie on DVD.
DVDs offer slo-mo, pause, fast forward, multiple camera angles, subtitles, multi-lingual audio tracks, extra scenes, director's notes, blooper reels, etc. And while you can get some of these capabilities from a TiVo, if you rent a movie online and get it streamed to you, you lose many of the DVD-style user controls, not to mention the extra content. And you lose the ability to watch the movie whenever you want to. And you lose the easy portability of DVD--the ability to store your purchased content onto a disc that you can carry to another device (laptop, Xbox, iPod, etc.) in another location and play it.
Potential online movie downloaders want the same thing they’ve come to expect from their local Blockbuster outlet and via the mail from Netflix--they want DVD. And, therefore, download-to-burn is something that people are willing to pay for, says Michael Greeson, principal analyst at The Diffusion Group. “People will pay to download as long as the virtues of buying a download are perceived to be equal to the virtues of purchasing a DVD,” he says.
Given the demand (or potential demand), it seems logical to assume that those online providers who have decided to offer DVD files for download-to-burn would outsell their competitors who are tied to the rental model. But if that is logical and true, why aren’t all the online movie download services offering download-to-burn? If everybody is in love with the concept of download-to-burn, why isn’t it ubiquitous? The answer: it’s because of resistance from the studios. And why aren’t the studios onboard? Good question, but the answer to this one isn’t so clear cut; it is fuzzy and complicated but has something to do with the studios’ paranoid fear of piracy.
Pirates On The Russian Front
Today, if you want to download a movie and burn it onto a DVD-R for convenient viewing, your best bet is to go to Russia (well, metaphorically speaking, that is--literally, you’d do it via the Internet, or course). Among the hundreds of less-than-legal websites using the Bittorrent P2P protocol to offer the latest DVD movies (with no download restrictions), the most visible and energetic pirates seem to be those that operate out of the former Soviet Union.
Some examples are The Movie Library (we won't offer links here) and My Video Library. All of these sites seem to be connected, by the way, offering the same films, perhaps just using different opening pages to the same duplicate online files. These sites pretend to be legitimate by posting the following disclaimer on their "Terms of Service” pages:
Copyrights
All materials presented on this site are available for the distribution over the Internet in accordance with the license of the Russian Organization for multimedia and Digital Systems (ROMS) and intended for personal use only. The site remunerates the fees for every downloaded File in accordance with the license agreement. The Client has no right to download any Files from the Site if this violates the law of his country.
The Movie Library offers 4,000 different movies for download without any DRM and at bargain basement prices, much in the same way Moscow-based AllofMP3 once offered MP3 files of the latest hit songs for 10 cents each. The recording industry tried to crack down on Russian music pirating sites and didn’t get very far. In December 2006 the RIAA filed a laughable lawsuit against AllofMP3 asking for $1.65 trillion, or $150,000 per song for the 11 million songs they claimed were downloaded from the site over a five-month period in 2006. Not only was the sum sought ridiculous. but the RIAA filed the suit in a U.S. court, which (duh!) obviously had no jurisdiction over anyone in Russia.
Later, EMI, Warner Music Group, and Universal were smart enough to file suit in a Russian court but the case was thrown out by the judge. The defendant claimed he had all along been paying 15% royalty to the shadowy (but legal in Russia) ROMS organization, which western organizations like RIAA and the individual record companies have refused to recognize.
Apparently, the U.S. government used Russia’s desire to join the World Trade Organization to pressure the country, and apparently, in turn, Russian officials put pressure on AllofMP3, because it closed down in June of 2007. Shortly thereafter, however, several other low-priced Russian music sites magically appeared on the web looking suspiciously similar to AllofMP3.
With the clamps tightening on the music market, it seems likely that movie downloading will be the next big market that Russian pirates will pursue, and it also seems likely that the freedom to burn the original DVD image onto a DVD-R will be a big lure.
Since piracy is nearly impossible to totally eradicate, what can be done? Well, here's a novel idea--what if, for a reasonable price, you could easily download and burn to DVD-R a movie legally? That’s the question being asked and answered by a few market mavericks like Jim Flynn, CEO of EZTakes.
Flynn agrees with the analysts who feel that that the online movie download market could be huge were it not for restrictive business models and policies (especially those that forbid burning). Consumer demand is not the problem, he says, and piracy is a minor irritation that can be minimized. He believes that when consumers are confronted with a choice of two roads--a legal road and a non-legal road--most will choose the legal one, provided that the road they are offered has smooth pavement, legible traffic signs, frequent rest stops, and enough other amenities to make it a comfortable ride. Give consumers what they want (portability, flexibility, etc.) and at a decent price, and they will do the right thing.
While giving consumers the ability to burn their downloaded movies to DVD-R seems like a good idea, it has not become mainstream. At this point there are only a handful of websites that permit users to burn their movie downloads. Flynn’s EZTakes and CinemaNow are among this elite group of daring pioneers. But neither of them is offering the latest releases. The Hollywood studios just are not cooperating.
Not An Easy Road For EZTakes
Founded in 2003, the EZTakes Movie Download Store (EZTakes.com) has been America’s trailblazer in DVD download-to-burn. Based in Northampton, Massachusetts, EZTakes uses a mix of business models, not just download-to-own, but also ad-supported movies streamed for free.
EZTakes CEO Jim Flynn says that he has been surprised to find that FREE isn’t always the consumer’s first choice. When EZTakes first began offering free ad-supported movies, Flynn was at bit apprehensive, afraid that this option would hurt his company’s download sales. He shouldn’t have worried. “An interesting thing we found,” he says, “is that when we put movies online for free, we increase the download sale of those movies by 20 percent.”
People are willing to pay not just for relief from commercials but for the quality and convenience that the download-to-DVD option offers. “There’s more value to having a DVD,” says Flynn. “You can get an ad-supported movie for free, but it is lower resolution than the DVD copy, and that’s not good enough for many people. People want the advantages that DVD offers. You want higher resolution, you want full DVD controls, you want portability; you want to be able to watch it in your mini-van or your bedroom; you want to be able to watch it with your family in your living room with your big-screen TV; maybe you want the extra features; you want the permanence of a DVD that you can put on your shelf, so that’s why you’ll pay the $7.99 to download and burn a DVD copy.”
Flynn notes that many people who start to watch a free movie on his site (about two thirds of them, he guesses) never finish watching that movie. He believes most of them spend 15 minutes to half an hour trying to decide whether it’s worth downloading to DVD or not. If the verdict is thumbs up, they pull out their credit cards; if the verdict is thumbs down, they simply give up on that particular movie and move on.
Flynn believes offering download to DVD gives his company a competitive advantage. “Movielink shows you a movie for free, but they don’t have any up-sale opportunity because they don’t let you burn it to a DVD,” he says. “We’ve been told by our content partners that we are outselling high-profile download vendors of the same titles by 10 to one.”
But not everyone thinks that burning movies onto DVD is the best idea since sliced bread. The online movie download site Jaman, for example, does not offer DVD-to-burn because CEO Gaurav Dhillon feels that DVD burning is too complicated a process for most consumers to master. “First of all, it’s tricky. No pun intended but I’ve been burned a few times trying to get a DVD I burned on my Mac to play back on my PC and visa versa,” says Dhillon. The technology is “very unreliable” and the “half the DVD burns fail,” he says.
“If you have a high percentage failure, you frustrate more people than you help,” he says. “We want movie downloading to be fast, seamless, and fun. We don’t think we should be forcing people to walk over and burn a DVD and then half of them don’t work.”
And some critics say that while people may want to download movies, they don’t really want to burn them to DVD. They say that most consumers want to watch a movie only once and don’t want all those discs cluttering up their homes. Flynn rejects this notion. “People want content portability,” he says. “It’s an extra step to burn a DVD, but I can’t think of an easier way to get portability. If you spend $300 bucks for an AppleTV, you can get it [a movie] on your living room TV, but you can’t get it in your bedroom or your minivan. And you’re not going to take your AppleTV on the road with you.”
In addition to the portability that DVD itself offers, EZTakes offers even more portability through a $9.99 utility it calls ToGo. Flynn describes how it works: “Users download a DVD image onto their hard drive. And that file has been fingerprinted using our digital fingerprinting technology. Then they can take that DVD image and using the ToGo utility they can convert it to a format that will play on their iPod or Zune. We’ll even start your iTunes software automatically and import it in.”
Although Flynn sees some demand for HD, he doesn’t think Blu-ray players will “have the same type of penetration as DVD,” he says. “There are too many other options--download, VOD, content through TV sets. For some time there will be value in burning DVD because you want portability. You want to be able to take it over to your friend’s house, get it to the living room, bedroom, etcetera, or just keep a permanent back up. But you won’t see an 85 percent market penetration for Blu-ray the way we have for DVD. We’ll support it, of course,” Flynn adds, “and HD is definitely where everything is going.”
The EZTakes library currently contains about 1500 feature films, all of which are available for download-to-burn. But most of the content is older movies, independent films, foreign films. You won’t find the latest Hollywood blockbuster releases on EZTakes, and that problem has held EZTakes back, and that problem is due to the fact that the Hollywood studios, simply won’t release them to websites in a timely manner because they aren’t convinced that sites like EZTakes have strong enough DRM and encryption technologies strong enough to prevent piracy. Flynn thinks this is irrational paranoia on the part of the studios.
EZTakes uses no DRM but it does employ a sort of digital fingerprinting that inserts a tracking number onto the burned DVD. “We insert a splash screen at the beginning that tells the consumer about terms of use, that redistribution is not allowed and so forth. It’s like the FBI warning at the head of videotapes. And we put a digital number on every DVD download so it can be tracked. This is similar to protection used in the music business by iTunes and Amazon. It is called forensic tracking. It allows you to trace these things and find out who the big pirates are, rather than cracking down on an innocent consumer making a personal copy. We’ve never had any problems with any of our users pirating. The people who get out their credit cards aren’t the ones to worry about.”
But such fingerprinting or watermarking technologies are obviously not sufficient copy protection to please the big studios. Lack of cooperation from the studios has forced EZTakes to surrender the "latest hits" market to movie rental stores and services like Netflix and to adapt to the current market realities. “We are starting now to segment content, so that we can go after market niches, like art-house films, for example” Flynn admits. But he also feels that in the long run this may make his company stronger by making it more responsive to its customers. He says that lately EZTakes has been “doing more work to help people find genre content,” something that makes his site more user friendly and engaging.
The CinemaNow Perspective
Another daring and progressive pioneer in the DVD-download-to-burn has been the veteran CinemaNow site. About two years ago (July 2006) CinemaNow began offering this option as a “trial program,” according to CEO Curt Marvis.
Currently, the CinemaNow site hosts about 4,000 movies and videos, which can be accessed through various business models, including ad-supported free (stream only), subscription, rental, download to buy (but not burn), and download-to-burn.
Unfortunately, the selection to be found in the “Burn To DVD” subsection of the CinemaNow site is meager, only about 100 titles. And as with EZTakes, the offerings are not exactly the latest blockbusters. Instead, the library includes mostly B-grade and past-their-prime movies and videos. Content providers include Buena Vista Home Entertainment, Lionsgate, MGM Worldwide Digital Media, Sony Pictures Home Entertainment, Universal Studios Home Entertainment, EagleVision, and the Sundance Channel. Prices to download and burn a movie range from $8.99 to $19.99.
The CinemaNow DVD-burn library remains small because the piracy-wary studios have been reluctant to release their latest and greatest hits, which pundits like to refer to as “premium content.” But CinemaNow has been unfazed by studio negativity, and Marvis seems committed to download-to-burn concept.
“We have a strong belief that burning is something that will increase people’s desire to go online and buy a digital file,” says Marvis, “because the problem today is that that digital file stays locked onto the PC that you download it to, and that creates a lousy consumer experience.”
Marvis believes download–to-burn will ultimately be accepted and become mainstream because it solves one of the market’s most vexing problems.
“The biggest challenge to Internet-based distribution is getting the content into the living room where people tend to watch movies in greater numbers than they do off their PCs. And obviously another device that sits in that living room is a DVD player,” says Marvis. “And so for quite a few years we have been exploring opportunities that might exist around burning DVDs. There obviously were some companies and formats out there that had that capability, like DIVX, but they have not been accepted by the studios from a security point of view. And so we came across a German company with a technology called fluxDVD that had the ability to actually download a file and burn it onto a standard DVD format, including extras, language versions, etcetera. We brought that technology around to the various studios and were able to get some, but not all, of them to accept that it was a secure format for their content.”
The fluxDVD technology was developed by ACE GmbH, a company based in Dortmund, Germany. “Flux uses a proprietary encryption methodology that is probably most closely related to OMA, which is a security format that is used primarily in the mobile space,” says Marvis.
“We wanted to offer our customers the ability to burn movies, so when the first format came along (fluxDVD) that we thought the studios would approve, at least on test basis, we pursued that format for burning.”
But the studios’ acceptance of the Flux technology was lukewarm, at best, hence the fact that the CinemaNow site hosts such a small number of Download-to-DVD films. “The studios weren’t satisfied with the technology we were using from Flux; from a quality, ease of use, and file size basis, they still thought it was just okay, not great,” says Marvis. “I think they have been waiting for CSS,” he says, referring to Content Scramble System, the standard encryption technology that is built into every retail DVD movie disc.
Since the studios hold all the cards, online movies services like CinemaNow and EZTakes have had to take whatever the studios were willing to give them, and the studios haven’t been willing to give them their premium content. This problem has severely hampered this market, says Marvis. CinemaNow seemed to have made a big advance in this area in the fall of 2006 when it announced that visitors to the CinemaNow site could download the entire contents (including menus and bonus features) of DVDs from LionsGate and Universal Pictures on the same day the movie was released nationwide at retail stores, something referred to in the biz as a “Day and Date” release. Marvis believes that “Day and Date” releases of DVDs for download are key to the future of the online movie download market. Unfortunately, however, the studios have been offering only “select” movies for day and date release. Downloaders can get some fresh new movies but still not the blockbusters they crave.
“The problem has been that we have just not had a critical mass of content to refresh the burn store,” says Marvis. “What should happen is that every movie available to buy or rent should be available for burn. That hasn’t been the case, but for this business to really take off and be meaningful, this needs to be the case. And the only way this is going to happen in today’s world is by utilization of the CSS burning platform.”
On November 6, 2007, CinemaNow announced that it had licensed Sonic Solutions' Qflix technology, which enables video to be recorded to DVD using CSS encryption.
Jim Taylor, senior vice president and general manager of Sonic Solutions’ Advanced Technology Group, dismisses DVDflux as “an anti-rip only solution,” and he obviously approves of CinemaNow’s decision to go with his company’s competing Qflix technology. “So the advantage of an anti-rip solution like Flux is that it works with existing DVD burners. It doesn’t require a new burner and new media,” he says. “The disadvantage is that there are some playback compatibility issues; and more importantly, there are studios who basically said that without CSS, they won’t release their content for download and burn. So the studios essentially saw Flux as an experiment with download and burn, not really a serious platform for delivery of their content. And that’s been borne out by the fact that CinemaNow got a bunch of titles to start with and then that was it. And now they are putting CSS into place instead of Flux.”
Marvis hopes and believes that the Qflix solution will pacify the studios enough that they will finally open their spigots and let their content flow onto the Internet; and consequently, day and date online releases will become the norm. But for now, that expectation is futuristic and will have to wait for an installed base of Qflix users to materialize.
Forward Slowly
Neither CinemaNow’s Marvis nor EZTakes’ Flynn expects things to change over night, and both have girded their loins and patiently prepared for a long slog toward success. “The reality is that the age of consumers burning movies has, frankly, not quite arrived yet,” says Marvis. “But we think that going forward, you’ll soon see the ability for more and more consumers to be able to burn standard-def content. Ultimately, that will eventually open up to HD content. We continue to be enthusiastic about the opportunity that that presents for generating revenue for us and creating a good experience for our users. But it’s going to take a little time to get there before this becomes a commonplace widespread business.”
Next up, in Part 5, we'll take a detailed look at Sonic's Qflix technology and its potential impact on the DVD Download market.
The DVD Download Business, Part 3: Is DRM Killing This Industry?
The DVD Download Business, Part 2: Potholes of a Bumpy Road
The DVD Download Business, Part 1: A Young Market Struggles to Take Off
Mark Fritz (markfritz at intergrafix.net) is a contributing editor to EMedialive and Streaming Media.