Hollywood braces for impact

After a year of turmoil in the music industry - where MP3 technology and song-swapping services like Napster threatened record-company profits - movie and TV companies are not rolling out the welcome mat for new technologies that make video-sharing easier.

One of the biggest threats: A new technology called DivX can compress movies into easily-swapped digital files online. A small group of Web users are doing that right now. The prospect of that underground growing to 50 million users (the number of current Napster subscribers) is a real possibility, according to Viant, a New York media consulting firm, which studied Internet piracy for major studios. "As bandwidth and compression improve, we'll see a much greater threat to bigger assets like films sent through the Internet," says Andrew Frank, head of Viant's media and entertainment division.

Digital video recorders could be equally subversive. DVRs that use the TiVo service emphasize recorded TV, and can zip past commercial breaks at lighting speed. TiVo's rival, Replay, has a "quick skip" button that fast forwards through 30 seconds of video - a handy increment for jumping past standard commercials. Both pose a serious threat to advertisers, and the networks that rely on ad revenue.

Customers have reason to be concerned, too. Digital, Internet-based products are a two-edged sword.

According to Michelle Abraham, a multimedia analyst with Cahners In-Stat Group in Scottsdale, Ariz., both video-on-demand and DVR services can assemble profiles of individual users based on their program choices.

Though TiVo uses the data to make show recommendations, it also sells it to advertisers. (They won't include customers' personal information without permission.) The result: Companies may eventually run ads targeted to specific users on TiVo's program guide and menu screens.

(c) Copyright 2001. The Christian Science Publishing Society