InformationWeek
Defining The Business Value Of Technology
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October 23, 2000 |
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Hollywood's New Star Is IT
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Other studio CIOs are cautious about the future of video on demand because of the infrastructure issues. MGM CIO Spenchian says his company is evaluating digital delivery but doesn't see it as a viable business until broadband Internet access is both widely available and living up to its billing--perhaps not until 2003 or 2004. "If you have to wait for this thing for an hour or so, you'd rather pick yourself up and go to Blockbuster," he says.
But Yaros insists that digital compression and Internet technology are maturing rapidly. The first digitally distributed movie could go out to consumers within a year, he says, although it will fall short of what Fox ultimately plans. It will be delivered to a PC, rather than to a television or a set-top box, and it may be downloaded instead of streamed. But it will be a full-quality release, and it will never see the inside of a video box. Fox hasn't set pricing, but Yaros expects it to cost roughly the same as pay-per-view.
Digital delivery is already changing other parts of the entertainment business. Because film footage is typically scanned into digital files for faster editing, studios can pass parts of movies around quickly and cheaply. For example, when directors, producers, or executives want to look at dailies--raw film footage from each day of shooting--studios such as MGM and Fox used to copy the footage onto videotapes and deliver them not only on the lot, but to locations around the country. Now, the studios let executives look at digital dailies on a Web browser over a high-speed network connection.
The technology also helps studios build up their international presence. Fox sends trailers for preview by its international distributors, who look them over and decide which to place in their theaters. The studio used to send them as cans of film, a process both expensive and slow. "The average hold-up in customs was two days," says Tom Roach, VP of IT. So Fox started sending the trailers using a Lotus Notes application that automatically replicates a digital copy of the trailer for each partner. Now the company plans to deliver projection-quality trailers digitally as well. The high-quality trailers will use the same system, but with a significantly upgraded infrastructure, primarily driven by Fox's IT and post-production departments, to support the larger files.
Of course, there's more to distribution than going digital. For Fox, finding new ways to track and ship its films helped it seal a franchise. In exchange for the rights to George Lucas' new Star Wars trilogy, the studio built an elaborate system based on technology from Hollywood Software Inc. that closely monitors the distribution process. The system, called Falcon after Han Solo's legendary spaceship, was a critical part of the deal for Lucas. Falcon handles the booking of films in theaters, as well as the accounting behind the split between the theater and the studio. Each night, the theaters' point-of-sale systems report the evening's box-office take to Falcon, which summarizes those numbers for executives.
Distribution is a big deal for MGM, too. It has adopted SAP to handle its video and DVD distribution, a task it once outsourced to rival Warner Bros. MGM has been using SAP's logistics modules since February to help it track inventory sent to retailers such as Wal-Mart Stores Inc. and video distributors such as Blockbuster, then submit orders to MGM's duplication and fulfillment houses. The SAP software, coupled with electronic data interchange, helps MGM ensure that its inventory is in sync with that of its retailers and suppliers. More important, Spenchian says, "It gives you better control over your assets."
Fox may see the Internet as a new distribution channel, but MGM sees the potential for a whole new business. MGM owns the rights to a host of classics, including The Wizard of Oz and The Manchurian Candidate. What if it were to open up that content to consumers? Rather than selling a video, MGM could sell a specific scene, much the way it sells a movie still or other memorabilia. MGM would also provide tools that would let the consumer manipulate the scene to put himself and his family into the movie, for example.
MGM may be opening up more than its assets, however--including a whole set of copyright issues. By contract, studios usually can't sell scenes with someone's likeness unless the scene is intended to promote the film. But that isn't stopping Spenchian and his IT group from exploring the model. He says he hopes to have the technical issues figured out before the company works out all the legal details. Right now, MGM's content-management systems and Web tools aren't strong enough to handle a full consumer push; the studio is testing the concept by selling digital assets to businesses for advertising use.
The Internet also gives studios entrée into the lives of their customers. MGM, for example, is using software from Net Perceptions Inc. to ask viewers whether they like particular movies; it uses that information to recommend other movies from the MGM library. Another feature, called Backlot, lets Web-site visitors track a movie through its production cycle, from script selection to casting decisions to the shooting of the movie itself. Right now, the feature is intended to help customers feel involved in the production process. But ultimately, Spenchian says, Backlot, coupled with demographic information gathered from the site, could be used to shape the final film. It's the ultimate goal in an industry that has no way of knowing whether its next product will be a blockbuster or a bomb.
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Illustration by Allen Crawford
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