Paid Downloads History: Hollywood

LAS VEGAS — After years in which paid downloads saw little traction, Hollywood is focused on ad-supported streaming in '08.

Top showbiz executives largely agreed on that point both during a panel sponsored by Variety and as reflected in the new initiatives they unveiled on the first day of International CES, here.

Execs overseeing digital distribution for ABC Disney TV, Fox, Warner Bros. and Paramount joined Variety president/publisher Charlie Koones for the panel. Most of the talk about 2008 focused on high-quality on-demand streaming, from Paramount's "Jackass 2.5" to Fox and NBC's Hulu.com to ABC's media player.

"People online want to watch for free, because they can get content for free via piracy," said Fox digital media president Dan Fawcett. "Downloading to own and keep on a PC seems to be losing out. People like to watch on an impulse."

Approach was mirrored in Sony Pictures TV's Monday morning announcement that it will start distributing its Minisode Network, which shrinks old TV shows to five minutes for the Web, on Google-owned YouTube. Deal makes Sony the only major Hollywood entertainment company distributing more than short promotional clips on YouTube, as most have been bypassing it in distribution deals with other sites due to concerns over piracy.

Sony, however, will put its 21 Minisode channels, including new entrants "NewsRadio" and "Married With Children," on YouTube, where it will get a cut of revenue from the Netco's ads, which are overlaid on the bottom of videos.

At an hour-long showcase of its content on the opening day of the show, Sony Pictures president Steve Mosko noted that Sony engaged Nielsen to do an original research project on the total reach of its on-air and digital media offerings. The press event, which featured appearances by Jerry Seinfeld, Alex Trebek, Vanna White and Tony Bennett, was the only one at CES put on by a studio.

At the Variety panel, execs said that while they now have the technology to distribute their content in a variety of ways online and via mobile, they're still trying to figure out the most effective ways to monetize it. ABC-Disney TV digital media exec VP Albert Cheng said his network still hasn't been able to sell all of the ad inventory that its content online is generating.

"The inflow of revenue isn't tracking demand yet," he told the audience. "We haven't caught up yet."

While most of the focus was on ad-supported content, panelists all agreed that download-to-own, particularly through Apple's iTunes, is a net positive for their companies. That may become even more important since Apple unveils a movie rental service via iTunes at MacWorld a week after CES (TWICE, Jan. 21, p. 1).

While all agreed that digital media revenue won't match income from traditional distribution in the foreseeable future, they were quick to react to an audience member's question about when they would start making money from their businesses.

"There is revenue being created today," said Paramount digital president Tom Lesinski. "It's not a lot, but we're not losing money."

Ben Fritz is a reporter for Variety, published by Reed Business Information and a sister publication of TWICE.