Where's the profit in online distribution?

I began selling films in 1999 - first for the British Film Institute and recently with my own independent sales company. During this time, I’ve heard repeatedly that “the future of film distribution is online”. But after 10 years, the returns remain stubbornly negligible with the promised future still two to three years away.

“The industry has made money from audiences for whom a quality viewing experience matters”

At markets such as Mipcom, I see start-up ventures whose enthusiasm for online streaming and downloading is never backed by a readiness to pay an advance. I’ve agreed a couple of revenue-sharing experiments which generated very little. I will engage with any business model that generates revenues, but will not waste time on things that do not.

But I want to be ahead of the game so take an interest in developments, and my conclusion is that online distribution is problematic in terms of technology and ill-considered in terms of the target audience. The debate is dominated by those with a vested interest in talking up their ventures while rubbishing the supposedly outdated models of the “traditional industry’, and is plagued by simplistic comparisons to the music industry.

Content is dependent on the device on which it is exhibited, and music was revolutionised by the iPod. But no comparable device has emerged for feature films: the TV is still the principal home entertainment medium. By contrast, the main purpose of a computer has never been to view feature films and there’s no sign these two devices will converge - quite the opposite.

TV screens are becoming bigger to showcase high-concept movies or sport, while computers are as compact and portable as possible. Moving content from online to the TV screen is a clumsy process, that involves burning a download to DVD or adding yet another decoder box to the mass of wires dangling from the TV set.

Broadband speeds remain a problem: 1Mbps to 2Mbps bandwidth means a four or five-hour wait to download a film, so clearly customers are not getting what they want, when they want it. UK telecoms company BT found in its research that broadband subscribers were not prepared to pay for an upgrade to superfast broadband to improve video quality. The Digital Britain report suggested this is paid for by a levy on landlines, which seems unlikely to be adopted in the current economic climate.

Clearly feature films are being downloaded in significant numbers but I don’t think downloaders are worried about its often inferior quality and are happy to wait four or five hours if they can get something for free. There has always been a sizeable portion of viewers who are not going to pay for a film, whether because they cannot afford it or they just aren’t interested enough. The industry could end up chasing after people from whom it’s never likely to make money.

I’ve seen DVDs of classics new and old being enthusiastically embraced by aficionados attracted to newly remastered editions with bonus interviews and so on. It’s difficult to see the attraction of downloads when these attributes are largely absent.

The industry has made money from audiences for whom a quality viewing experience matters. People will choose to drink more expensive coffee at Starbucks rather than a cheaper product at McDonald’s, and by the same token will want to see films in the best possible presentation.

Times may change, but right now online is just not delivering revenue for my company or the producers I represent.

Films distributed via on-demand

• Jackass 2.5 was the first major studio film to bypass cinemas and take the online distribution route when it was released by Paramount Digital Entertainment and MTV on Movielink (owned by Blockbuster) in the US in December 2007.
• Odeon and Sky formed joint distribution company Odeon and Sky Filmworks in 2007, releasing Jennifer Lynch’s Surveillance and Alex de la Iglesia’s The Oxford Murders theatrically before making them available to Sky viewers through its download service.
• Curzon Artificial Eye and Sky Television released Julia, starring Tilda Swinton, in cinemas, on Sky Box Office, and on transactional VoD via Sky Player in December 2008. This followed Fatih Akin’s The Edge Of Heaven, which was also released simultaneously in cinemas and on SBO in February 2008.
• UK distributor Revolver Entertainment released Steve Sheil’s Mum And Dad simultaneously on VoD, DVD and theatrically in December 2008.