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Analyst: Web Movies Wont Replace PPV

New York -- Although it has been attracting interest from
electronic-commerce proponents, transmitting movies over the Internet drew mostly
skepticism at an investors' conference sponsored here recently by brokerage firm
Sanford C. Bernstein & Co.

In an overview of e-commerce opportunities in the
entertainment industry, Bernstein senior media analyst Tom Wolzien downplayed the
significance of recent moves such as Trimark Pictures' deal to license movies to
Webcaster Inc. and's acquisition by Yahoo! Inc. The Web,
he said, is unlikely to become a significant platform for delivering movies to the home.

"The contention is that the Web will soon replace
conventional pay-per-view because the Web is more efficient than cable at
distribution," he said. "That's not going to happen without a huge increase
in bandwidth."

Right now, sending video over the Web to be viewed in real
time -- video streaming -- is a clumsy process that produces poor-quality images. The
amount of digital data required to produce even VHS-quality video is beyond the capability
of most modems and phone lines currently in use.

Although greater bandwidth is coming, Wolzien said,
it's coming from using the high-capacity infrastructure of cable systems to connect
to the Internet and from high-speed cable modems in the home.

In that scenario, there's little incentive for cable
operators to allocate additional capacity to Webcasters because video downloading would
compete with the operator's own program offerings, including PPV movie distribution.

PPV movies generated more than $96 million in revenue last
year, according to Showtime Event Television figures.

"Streaming video takes the same bit rate as cable
video to produce the equivalent image quality," Wolzien said. "It will be up to
the cable operators to decide who gets the bandwidth to handle it."

Interest in video streaming has been growing in the wake of
an explosion in the number of Web sites offering music downloads. Music is far less
data-intensive than video, and current Web technology can easily provide
near-compact-disc-quality audio.

Many music-industry interests see the potential for
significant cost savings from distributing music electronically over the Web instead of
having to manufacture and distribute CDs.

But the Web has also become an alarming new source of music
piracy. Most music sites on the Web today are unauthorized, producing no benefit to
copyright holders.

Wolzien estimated the number of streamed-music sites on the
Web at as high as 75,000.

Paul Sweeting is a columnist for Video Business, a
sister publication to
Multichannel News.