Film Fund-amentals: Coming Home

When you think movies, you think Wal-Mart. OK, normally there’s no way Wal-Mart should be in this equation, but with their purchase of the digital movie provider Vudu, Wal-Mart is hoping to dominate the brave new world of movie downloadables. Sort of makes sense. By now, Wal-Mart has already ravaged nearly every small store in America, and they obviously need a new territory to plunder.

Which also means that the war of the downloadables will turn nuclear as rival companies go to battle over a service that is both inevitable and poorly defined. At, Lance Ulanoff provides a quick but excellent analysis of the scene. At every level, from hardware brands to the software provider and beyond, the emerging business of direct movie downloads to the home consumer is divided between multiple exclusionary systems — kind of like the old days when videotapes were split between Beta-max and VHS, only much worse.

Part of the problem is the convergence of technology. In theory, convergence is a good thing. It opens up a wide and beautiful range of possibilities. You can watch movies and TV shows on your PC and laptop, access and download Internet material onto your big screen HDTV, send videos back and forth to your friends via your cell phone. The world is your iOyster.

But the reality is that you have a lot of different versions of the same technology, and lots and lots of issues concerning what format, company and/or provider you’re using. The current situation more closely resembles chaos theory than it does convergence (with the emphasis on the chaos).

The PC is the main standard, and the streaming video systems offered by Hulu, YouTube, and all the rest are readily available for online access the minute your boss is looking the other way (the workplace is the major venue for these sites). But the home market is based on Internet downloads via HDTV (mostly the really big screen models built for people who call their living room the “home theater”). Suddenly, the viewer is dealing with compatibility issues like crazy.

The Blockbuster download system works with the Samsung Blu-ray player and Samsung TV (and their online system only operates with Internet Explorer). Netflix requires an Xbox, PS3, Wii or Roku box (which actually makes it one of the more versatile systems). With Vudu, Wal-Mart will be hawking flicks via HDTVs from Mitsubishi, LG and Vizio.

So people will no longer simply be renting movies. They will practically have to decide on a whole lifestyle as they pick and choose among the various systems. In fact, it may actually be easier to just watch this stuff online at work.

As I seem to recall, most businesses seek out a form of standardization because it ends up being better for business all around. But the current drive with home downloadables is toward a non-standardized state of exclusion. As a general business principle, this doesn’t work well. People like to be able to just go to some store, buy the dang gizmo, take it home and watch stuff without having to spend the rest of the week trying to make a lot of decisions. Heck, for most of us, just reading the manual is hard enough.

Which is why I suspect some form of standardization will eventually evolve in the industry. It actually can happen at any time. The only thing standing in the way will be… well, Wal-Mart for one. The current home downloadable systems are all being bankrolled by major corporate interests, all of whom think that they’ll drive the others under. Most likely, this drive toward dominance will result in a half-baked stalemate (kind of like World War One) and several long articles in the Wall Street Journal.

But universal standardization will be the ultimate outcome. People are not going to want to be restricted by either providers or hardware brands. They are going to want available on their HDTVs the same wide open access that they already get with their PCs. That also means that they’re going to want not just diversity in systems and providers, but also wide variation in their choice of material. The current commercial approach to the HDTV downloadables is pretty much limited to standard Hollywood fare, but the extremely diverse nature of the contemporary market is too varied to be contained by this market approach.

The best way to describe the current scene is to view companies such as Wal-Mart (and even Netflix) as being like a dam, building up a large reservoir of material that they don’t particularly like or have any interest in releasing. Eventually, the sheer force of the reservoir’s pressure begins to create tiny cracks along the dam. Ironically, this may first come courtesy of the porn industry. Most of the major players are not interested in dealing with pornography, but since it’s well documented that we’re a nation of horn dogs, this will change. There is too great of a financial incentive.

Next, you’ll have the “Tarantino” moment. Some kind of hyper-violent but jazzy-snazzy cheap movie that catches on as a major youthquake and gets the suits jacked up in a panic to try and cash in.

Then, there will be the great flood. This is the event that will be of major importance for independent filmmakers and distributors. Since the technology is already in place, we just need for the market to finally evolve past the corporate structure.