Why film studios are betting on Web again

From CNET News.com: As Netflix revenues soar and as Hulu ponders a $300 million public offering, a group of people who played an enormous part in the brightening prospects of Web TV is very much overlooked.

Managers at the major Hollywood studios: Disney, Warner Bros., 20th Century Fox, Paramount, NBC Universal, and Sony Pictures are pretty much despised in tech land allegedly for their anti-innovation and protectionist ways, but the record shows that, over the past year, they have helped build the foundation for Netflix's success and are embracing digital distribution like never before.

Last summer, the studios signed unprecedented licensing deals for Netflix's streaming service. This week, Disney quietly launched Disney Movies Online, which enables fans to rent or buy Disney and Pixar films over the Web. Perhaps most telling is the studios willingness to throw rocks at some of their most precious windows.

A window is a term used in the film business to describe the period of time when a specific distribution mode, such as cable or broadcast TV, has access to a film. The most important window of all is theatrical, when a film first makes the all-important public debut in a movie house. The studios are doing what once was considered unthinkable. They are to beginning to ask whether theaters should have exclusive rights to new releases.

Eric Garland, CEO and co-founder of Big Champagne, a company that tracks the consumption of digital film and music downloads, said he's privy to the digital plans of several a number of major studios and some bigger independent film companies and that the public will see "some shocking risk taking over the next few months." What this means is that the studios are playing an important role in providing consumers with alternatives to theaters, DVDs, cable, and traditional broadcast. But Garland warns their commitment to digital is fragile. He said a few bad quarters could still spook them away from the Web and back into the arms of their traditional distribution partners.

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