Study: Web Movies Not-So-Boffo at Box Office

According to a new study by GartnerG2, online shoppers who want to download and watch moviesover the Internet will have to wait until 2005 for thetechnology to hit the mainstream.

Despite considerable interest and hype, Internet video-on-demand is years away from becoming an e-commerce reality in theUnited States. Even by 2005, it will account for just 2 percentof video distribution, the report said.

“It will take at least three years to deliver thelevel of service required for high-qualityentertainment programs via broadband,” GartnerG2 research director P.J. McNealy said.

Broadband Access

The problem is not with infrastructure, but ratherwith acceptance of the Internet as a viable means ofwatching a film. According to a Forrester (Nasdaq:FORR) study, more than half of North American onlineusers either have or want broadband access to the Web.

And GartnerG2 said 10 percent of the 106 millionU.S. households already have broadband access.

But GartnerG2 found that over a period of three months last year, just 2 percent of Web users in the United States had purchased a digital movie or video download.

In addition, 75percent of those who had never used a computer towatch a movie said they were “not very” or “not atall” interested in doing so in the future, GartnerG2 said.

Free Ride

The majority of Web users interestedin downloading movies to watch at home are looking toget the service for free, which might lead to problemswith copyright infringement, as in the case of musicdownloads.

“The biggest threat to any Internet video-on-demandservice is to compete with free, and the sources offree will be new peer-to-peer services and networks,”said Gale Daikoku, research director at GartnerG2.

Daikoku added that the Motion Picture Association of America mustkeep a close eye on those types of networks for pirated films.

And movie studios are not the only wary parties.

Just as the movie industry was nervous about the riseof home rental companies like Blockbuster, those samerental companies now are concerned that their businesswill be cannibalized by Web video-on-demand, the report said.

Hollywood on Board

The film industry already is consideringhow to adapt to the availability of video-on-demand over the Web and other mediums.

Several Hollywood studios have banded together todevelop new video-on-demand e-commerce services, promptingthe U.S. Department of Justice to look intowhether two separate ventures violate antitrust laws.