When talking about 2007′s revenue, a top executive in 2008 was quoted as saying, “Who in their right mind would swap these analog dollars for digital pennies?” The analog dollars came from cable and network television, pay television, DVDs, licensing products and local stations.

The digital pennies came from the Apple iTunes Store, downloads from Amazon Video on Demand and various websites. At this time, most people were still watching movies on TVs, not computers, so he did not see the need to change a good thing. The analog dollars that came from the six major studios (Disney, Sony, Universal, Warner Bros., Fox, and Paramount) equaled $42.9 billion. Pay and free television brought in $16.2 billion, with $17.9 billion from DVD sales and $8.8 billion from theaters.

Fast forward less than two years. The same top executive completely changed his mindset. He realized that home TV sets would also be treated as computers in the near future. The end of 2010 brought about this change as TV manufacturers in China, Korea and Japan added this technology of web surfing to their TV sets. This allows major competition for Hollywood studios from YouTube, Hulu, Sony’s PlayStation and Microsoft’s Xbox.

Unfortunately, computerized TVs allow easy access to TV programs and movies that have been pirated. Pirating has become much easier with the introduction of the digital revolution. It is nearly impossible to put an end to digital copying, even with litigators, private detectives and help from government agencies.

Movie files are kept in “cyber-lockers” or online storage sites that cannot be accessed without a password. This makes piracy extremely difficult to police. Many times, the hosts of these cyber-lockers are located in countries that do not have to follow American or European copyright laws making it even more difficult to monitor.

The pirating of films is what has led to the “windows” system. This is the system in which studios spread out the release of their products over a long period of time. First, the movie is released to theaters. Next, it is available in video stores, then on Pay-TV channels like Showtime, Starz and HBO. After this process, it is available to free and cable television.

This gives each market an exclusive “window” for the movie. If people are able to download the movie through the online storage sites, Pay-TV channels are less likely to pay big bucks for the exclusive window.

Because of the uncontrollable piracy, Hollywood decided to look into alternatives to the “windows” method. One alternative choice would be that of a global campaign where it would be necessary to have cooperation of users who share the digital downloads. Another option they considered was the abandonment of the “windows” system and the simultaneous release to theaters, download services, television and video stores.

If Hollywood fails to suppress the digital copying, analog dollars will soon be a thing of the past. Their replacement will be digital pennies.

Digital Film Distribution