HIVE EXCLUSIVE: Studios, Matsushita Set Up VOD Think Tank

6 Apr, 2001 By: Joan Villa

With new technology for delivering movies into the home at a crossroads, Universal and other studios have joined with MatsushitaElectric to form a laboratory to help the process along.

The new Panasonic Hollywood Laboratory, which set up shop this week on the Universal Studios lot, is a studio-consumer electronics partnership aimed at ironing out the numerous wrinkles in broadband delivery. It ismodeled on Matsushita’s two centers for converting film tohigh-definition video and for developing digital video compression, bothestablished in the 1990s.

The lab’s mission is the "long-term development of technology," according to Jerry Pierce, senior v.p. of technology for UniversalPictures. He says the research and development facility that will let studios evaluate options, drawbacks and opportunities in a "friendly, cooperative" relationship with a consumer electronics manufacturer.

And it will help the studios get ahead of the curve in refining high-quality movie delivery before someone else, such as a Napster-likefileshare service, beats them to it.

One application for the new lab’s work will be Internet downloading, although digital compression and broadband technology will be applied toa wide range of uses from digital cinema to cell-phone movies, Pierce says.

The topics "will evolve as the lab works with us and the other studios to help define what the directions are" for next-generation moviedelivery, he adds. Rather than trying to force a particular application or product, Universal is now refocusing on "core technologies as a better way of trying to predict where things are going to go."

In other words, the studios first need to assess the qualitative difference between video compression technologies and understand such details as the optimum "bit rate" for preserving a high-quality image, before actual products or services — like "pay-per-download" Internettechnologies — can follow. The lab will also evaluate the nuances of high-definition image quality for digital cinema, digital TV and next generation DVD, as well as highly compressed imaging for mobile devices.

Although Pierce wouldn’t speculate on what direction the studios are planning to take video-on-demand or even a realistic time-frame forrollout, a Forrester Research report based heavily on studio interviews provides some answers.

The report, released late last month, expects cable-based VOD to be used by 38% of consumers by 2005. Extensive interviews withstudios and mid-size suppliers reveal that three out of four believe either Internet or cable-based VOD will have a "strong" or "very strong" impact on the industry, but they say cable deployment is the more likelyof the two because "security and quality issues are stalling Internet-based VOD."

Despite optimism for the new technologies, studios interviewed for the report were also uncertain about the exact rate, nature or impact of technology-driven change; but they were clear of the need to avoid the music industry’s fate and not "let the pirates establish the market and the rules."

"We all watched our sister companies in the music business not react fast enough," observes one anonymous major studio executive in the report. "Every studio has its heads of home video and pay TV looking at the Internet: ‘How am I being hurt today, and how will I be hurt tomorrow?’"