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Warner Banks on VOD to Slow Video Piracy in South Korea

8 Oct, 2008 By: Erik Gruenwedel

Warner Bros. in the coming weeks will bow select new movies online before their DVD release in South Korea in an effort to circumvent piracy — rampant throughout much of Asia.

Warner becomes the first Hollywood studio to make movies available via video-on-demand (VOD) two weeks before the DVD release. Specific titles have not been announced.

Citing data from the Korean Film Council, the studio said 47% of respondents of a consumer poll said they had downloaded a movie at least once from the Internet. Household broadband penetration in country exceeds 94%.

“Korea is the ideal market for us to expand our digital distribution strategy,” said Thomas Gewecke, president of Warner Bros. Digital Distribution. “There is already a broad base of consumers who are immersed in technology and very comfortable getting movies through VOD or similar services.”

The studio has made digital delivery a cornerstone of its distribution strategy following the appointment of Kevin Tsujihara as president of Warner Bros. Home Entertainment Group in 2005.
Tsujihara has been key to Warner and other studios testing same-day releases of new movies on cable VOD and DVD in the U.S.

MultiMedia Intelligence, a Scottsdale, Ariz.-based market research firm, said Warner’s strategic “experiment” makes sense since it considers online distribution more secure than DVD.

“The CSS digital rights management (DRM) technology that protects consumer DVDs is already compromised,” said Mark Kirstein, president of MultiMedia. “For professional pirates, there might as well be no DRM at all.”

Multimedia said advances such as digital transactional (also known as forensic or serialized) watermarking allow for easier tracking of digital media (compared to disc watermarking) because it can be refreshed if compromised by a third-party.

If copyrighted content is illegally distributed, the transactional watermark enables the infringing content to be tracked back to the source for prosecution. 

“This not only enables enforcement, but the publicity is intended to act as a deterrent to copyright infringement,” Kirstein said.

Independent analyst Rob Enderle said Warner’s broadband VOD tests in Korea allow it to root out bugs in the system in a contained region before wider dissemination.

“They’re seeing whether or not this works,” Enderle said. “If people are willing to pay a premium for the content and it doesn’t increase piracy, then they will likely roll something like this worldwide.”

He said the studios realize digital delivery is the future of home entertainment and that there is a market — at a price — to get content earlier to consumers than DVD.

“And if you don’t deliver that movie at the correct price, then clearly, the pirate market will deliver it for you,” Enderle said.

The analyst said Asia has become ground zero for advances in wireless digital entertainment distribution, notably through cell phones.

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