November 2002

Digital Entertainment Post-Napster: Movies

DivX makes downloading movies easy. Should Hollywood be nervous?

By Thomas Bass

Last summer's first two blockbuster films, Spider-Man and Star Wars: Episode II-Attack of the Clones, played on more than 3,000 movie screens and grossed more than $100 million in their opening weeks. Impressive numbers. But not as impressive as the numbers generated by these movies' actual opening nights.

A bootlegged copy of Spider-Man appeared on the Internet the day before the movie premiered in theaters. A copy of Attack of the Clones-as if to mock its title-was widely available a week before that movie's scheduled release. From that virtual opening, which was accessible to half a billion people on their home computers, its Hollywood producers grossed exactly $0.

Many bootlegged movies are "cammers," shot by digital cameras that had been sneaked into movie-screening rooms. The better copies are shot illicitly with cameras placed on tripods in the projection booth. The best ones are produced directly from studio prints or DVDs. Hopelessly dingy or surprisingly good, most of the copies have one feature in common. They are released in a format called DivX, a digital video-compression technology that shrinks movies into packages small enough to be sent over the Internet or stored on standard compact discs.

These Internet premieres mark a milestone in the long-anticipated "Napsterization" of the movie industry. Just as music file-sharing software allowed Internet users to send millions of bootlegged music files freely over the Web, DivX threatens to do the same for full-length films. "Hollywood's worst nightmare has come true," says Robert Batchelder, a research director in new media at Gartner, a consulting firm based in Stamford, CT. "You used to need a factory to make quality copies of movies. Now you just buy a computer with a CD burner."

Indeed, the analogy to Napster is apt. A computer makes no distinction between music and movie downloads, which differ only in size. A CD can hold about 650 million bytes of recorded music. A movie, which is far bigger, requires a DVD holding about 4.7 billion bytes, roughly seven times the capacity of a CD. Files that large can be sent over the Internet only if they are compressed. Compression involves chopping out redundant data and using mathematical and visual tricks that shrink an elephant to the size of a mouse.

Of the dozens of data formats for playing video on the Internet, DivX, which debuted in late 1999, was among the first and it is still considered the best for handling feature length movies. Companies such as Apple Computer, RealNetworks, and Microsoft may have pioneered commercial video formats, but for a long time they thought movies were too big and their Internet audience too small to be of interest. So, while Apple, Real, and Microsoft were concentrating on serving up small video files and streaming media, DivX, specifically tailored to films, quickly became the format of choice for compressing movies.

DivX got another jump on its competitors, which are now scrambling to catch up, with its successful launch this spring of DivX 5.0. The update gives movie aficionados a wide variety of choices for compressing their films and delivers images with near DVD quality. Sixty-five million people searched out and downloaded the new DivX software in the six months after its release. "There's no way to put the genie back in the bottle," says Batchelder.