DivX: A high-tech revolution waiting to happen
By : Anna KociNska
The days of trudging down to the local video store to rent a movie could soon become a thing of the past if U.S.-based DivXNetworks has its way. Set up last month, the company is working on software that will allow Internet users to download their favorite movies onto DVDs and store them on CD-ROMs.
A format for downloading films called DivX is already on the market, but Internauts generally use it to pirate DVDs, which often produce badly recorded movies. DivXNetworks plans to release an improved version called (DivX) Deux. The company said the new version is still being tested, although it's ready to use. DivX enthusiasts are calling it the MP3 of video
MP3 being a method for downloading music over the Internet.
Above all, the new format could make a previously flourishing illegal industry legal. According to DivXNetworks' CEO Jordan Greenhall, now is the time to move the DivX format to the legal market. He said the Internet could become a new distribution channel for the movie industry.
According to Polish market insiders, however, it's questionable whether downloading video files over the Internet can become legal and profitable.
"(DivX) has been widely available for pirating movies for quite a long time," said Tomasz Wozniak of Wirtualna Polska (WP), a leading portal owned by Prokom. "Even if somebody offered to legally download a movie for a fee, the next day the copied file would be distributed for free among friends."
According to PricewaterhouseCoopers' (PwC) 2000 Consumer Technology Survey, the potential customer base for downloading movies already exists, but it consists mainly of Internauts who download movies illegally and for free.
In addition, 75-92% of Net surfers said downloading movies was already easy, but half of them said they would not download if a fee were involved. The survey estimated that 11% of Internauts in the U.S. download movies over the Internet compared to 13% in Europe. Software enabling the pirating of DVDs, so-called DVD decrypters, are easily accessible on the Internet. Also, information on how to use such software is available in online chat rooms.
According to Wozniak, while some Internauts will continue to make money illegally, paying to download movies in Poland is unrealistic due to the large size of the files involved.
"We're talking really huge files here, sometimes even hundreds of times bigger than music files," Wozniak said. "I don't think anybody would plan to make money this way, at least not in Poland where (due to) the poor quality of links, one would have to wait hours to download a movie."
Wozniak said the MP3 format is a more feasible business in Poland. WP could follow e-businesses, such as Italy's Vitaminic, which sells music via the Internet, generating profit as a result of low distribution costs. "WP will try to introduce such services this year," he said.
Meanwhile, film distributors already view Internet pirating as a threat to their interests. "The Internet is a potential threat to everybody, cinemas, distributors, etc," said Slawomir Salomon, vice president of Syrena Entertainment, a Warsaw-based movie distributor. "Especially when it comes to young people who are used to computers," he said. "When they get a chance to download a movie for free they will do it."
PwC's survey showed that Internauts aged 18-34 are far more likely to download movies than their older counterparts. But according to Salomon, the Internet poses another threat to traditional cinema. "Internet changed what I call 'access to information,'" he said. "It's faster than three or four years ago. Many cinemagoers check Web sites and read chatroom reviews (which are often negative) before deciding to see a movie. Thus they lose the surprise factor."
As a result, film distributors have pushed to revamp movie theaters to entice customers. "That's why modern multiplex cinemas were created," he said. "We tell the viewer, 'Go to the movies because it's only there that you will get the sound quality.'" By the beginning of next year, 20 multiplexes will be open around the country, seven more than in December 2000.
Video and DVD distributors, however, appear less threatened by the Internet. "In the long run, yes, it can be a serious threat to distributors," said Dawid Mazurek, marketing director at ITI Home Video. "But now, thank god, access to the Internet is still poor in Poland."
Even so, sales of video cassettes have leveled off and sales of DVDs are going up, Mazurek said. "At ITI, sales of DVDs have increased by 50% in 2000 compared to 1999," he said. "Some customers have started collecting DVDs."
In the United States, more than 28 million DVDs are to be shipped worldwide in 2001 and more than 60 million will be shipped in 2004, according to In-Stat Group, a high-tech market research firm. The company estimated that in 2004, DVD player sales in the United States will equal the number of VCRs sold today. "It might take us longer than in the States to equal the number of VCRs and DVD players sold today, but anyway DVD is the future," Mazurek said.
