PC World Star-Struck by Online Movies

Downloading movies on demand sounds great, and some technology reporters agree -- while forgetting to look at the possible downside.

A group of Hollywood movie studios have begun to tentatively dip their toes into the world of online distribution — but the forecast for success or failure depends on which news outlet you’re looking at.

On Monday, a group of six studios began selling films online the same day they’re released to DVD. PC World magazine took a look at the new venture yesterday, offering a laudatory, uncritical look at the sites and their services — a sunny outlook not necessarily shared by many other observers.

The magazine gave plenty of space to Jim Ramo, CEO of Movielink (one of the companies offering the new downloads), to tout the new offerings, without reserving any space for the obvious holes in the company’s business plan.

For starters, the magazine writes that “At both sites, movies will be priced comparably with DVDs: $20 to $30 for new flicks, and $10 to $20 for catalog titles at Movielink; and $10 to $20 for catalog and new titles at CinemaNow. Movielink is offering 300 films at launch, while CinemaNow has about 85 titles.”

While PC World failed to look very hard at the economics of the system, FC Now, Fast Company’s blog, asked the right question: “At those prices, can downloads be successful? With DVDs often costing much less than $20, especially through chains like Wal-Mart and Best Buy, those downloads are bound to be perceived as less of a value (since they are not tangible objects and have limited portability) than an actual DVD. The movies also take more than an hour to download and can’t be played back on a traditional DVD player, further limiting their appeal.”

Similarly, as the Financial Times pointed out on Monday, the move to offer films online conflicts with many long-standing agreements the studios have with large retail chains such as Wal-Mart, “which [studios] rely on to sell DVDs.”

Also contrary to PC World’s rosy scenario, the Los Angeles Times wasn’t quite so enthused. “The price,” the Times noted, “$18 to $28 for new releases — is at least as high as a DVD, yet the downloads would have few or none of the extras found on the discs. What’s worse, the downloads cannot be copied onto a DVD that works in a regular disc player. Watching one on a TV requires running a cable from PC to TV, or piping it through a specially equipped home network.”

Since the downloaded movies can only be copied to a maximum of three computers (thus, the theory goes, cutting down on piracy), consumers are restricted as to where and how to watch the movie they just bought. “Rather than getting hung up over piracy threats,” advises the Times, “the studios should focus on making the downloadable versions of their films compelling enough to buy.”

The New York Times was also underwhelmed by the idea, writing that “the high prices and technological limits of the new permanent downloads suggest that they may not be an instant hit” — especially if the studios continue to offer such a minuscule amount of titles for purchase, and deny the consumer the right to watch the films where they want.

None of those criticisms — which don’t exactly take an industry insider to make — were offered in the glowing PC World report. Don’t get us wrong; there’s little doubt that the technology and the services offered by these two sites will improve over time, and we’re not slamming PC World for writing a positive story about a new media rollout.

But it would have helped if PC World had uploaded a little skepticism into the story before running it.

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Paul McLeary is senior editor of Defense Technology International magazine, and is a former CJR staffer.