Sparrow was right !!!

Honest people do/say stupid things.

Reviewers said the sequel – Dead Man’s Chest – would be a bomb. It racked up record ticket sales in its first 10 days … $258.2 million.

MPAA said pirates stole more than $70 million from them in the same period.

Their solution — put the biggest, baddest safe around their treasures imaginable with double, nay triple locks to keep the low-lifes out.

At the same time, honest people are telling us:

* content will soon be virtual and on demand, when and where you want it
* the better the DRM control the more people will enjoy the content because they will be protected from themselves
* the disagreement on formats is killing the next generation technology so no one will buy it anyway

Capture the Ghost

Honest folks who tell you everything is going to be instantly available when, where you want it…live in a virtual fantasy world. Some of them also told you about the paperless office. A forecast right up there with the paperless toilet.

Raise your hand if you watch a show on HDTV at home, take your notebook and watch the show on the plane, switch to viewing it on your cellphone in the cab.

Right…only happens in the movies !!!

There are a few isolated tribes that have no concept of “owning” stuff or “having” things.

They don’t live in our neighborhood. Our neighbors can’t get their cars in their garages !!!!

Today’s two-hour DVD movie occupies about 5.4GB of space. A two-hour HD movie consumes about 11GB.

Downloading a DVD movie on DSL requires 14 hours. Using cable takes four hours. Fiber? 25 minutes.

Download a 20GB HighDef DVD with DSL and it takes three days…cable, 19 hours…fiber, 2.5 hours.

And that assumes smooth seas and a fair wind at your back.

What’s worse, not everyone has DSL, cable or satellite TV. Not everyone uses a computer. There are some (gasp!!!) that don’t have cellphones !!!!

They want their entertainment in a physical form they can see…touch…own (Fig 1).

Keep the Pirates at Bay

For the less digitally astute, the MPAA has convinced Congress that it is their responsibility to protect people from themselves. They have clear proof that pirates are stealing food out of their children’s mouths (Fig 2)

So they shoehorned through a great idea called the Digital Millennium Copyright Act (DCMA) makes breaking copy protection illegal. Making copies for personal use, your fair use rights have been effectively abrogated. Or more simply…look at my stuff but you can’t own it.

Want to buy/have a copy? Then they will protect you from yourself (accidentally copying the content) with something that sounds benevolent called DRM (Digital Rights Management).

That’s what the content, computer and CE industries have been working on so diligently to develop for you…pirate-proof DRM.

And this stuff is ggggooodddd !!!

Since there are two different HighDef disc camps it is only natural there are two different approaches (Fig 3).

Both start with AACS (Advanced Access Content System) which is going to be tough for even the best pirate to crack (real pirates don’t do it that way; they go right to the source but…). This sucker has an advanced encryption system and next generation media key blocks (something like a secret society handshake).

Probably take a rum-sodden pirate weeks to break.

But the BD group got more creative because they really want to protect … you !!!

They added ROM-Mark and BD+!

The ROM-Mark keeps real pirates from cookie cutting millions of unauthorized copies. BD+ is a little thing Tellywood can put on their discs that does all kinds of things in your player to determine whether or not you can play their disc.

Working through all of the keys will probably take a 15 year-old at least a day or two to unlock the content and let it fly free.

Then BAM!!! to the virtual world…

Yo ho, yo ho a Pirate’s Life for Me

Sure Johnny Depp made big bucks as Jack Sparrow but are you going to do as well after you go through all of that DRM and DCMA hassle?

Let’s take the $70 million loss that Tellywood had from their HighDef Dead Man’s Chest and put it out on blue media (notice they use “retail” numbers even only a percentage is actually “their” portion).

You’ve gotten into the treasure chest and knocked off 100 BD (or HD DVD we don’t care) discs.

Media cost is let’s say conservatively $20 a disc. So sell them for $30 and you’ve made $10 profit…cool !!!

But to who (or is it whom) ???

Obviously to HighDef player owners (Fig 4).

Well that market sucks right now !!!

It’s a cruel fact of life. Technology takes time to be refined…understood…absorbed… broadly accepted (Fig. 5).

It happened with B&W TV…color TV…VCR…PC…Internet…CD…DVD…

Remember the quirky $1,000 CD burners and the $10+ discs?

Remember the temperamental $7,000 DVD burners and $40 discs?

Remember the software for both?

Producers and directors are only barely tipping their toes in the HighDef water because film gives them that extra margin of safety.

Post production work?

These ordinary seamen have all of the tools they need right now for producing conventional DVDs. The tools are solid. The features, capabilities, shortcuts and gee whiz stuff are now in common use.

In the studios’ back rooms there is a growing set of HighDef professional tools that are fairly sound. It has been tough sailing because the software was being developed in parallel with the specifications and the specs have only recently been approved…sort of.

At the consumer/prosumer level there are products like InterVideo’s WinDVD HD DVD and BD modules as well as Ulead’s MovieFactory and VideoStudio authoring and burning upgrades. These are really only for the early adopters or the folks on the block who want bragging rights, not day-to-day tools.

The first movies that have been published are rudimentary HighDef content work done on modest hits (save the good stuff until you know what you’re doing).

It’s a lot like the DVDs of the first 24 series we bought…clumsy, awkward, rough (by today’s standards) DVD post production. By the time we looked at the fourth series the menus, special effects work and interactive portions were professional and polished.

The early HD DVD and BD movies are just that…the early offerings. Basically DVDs with more content thrown in to fill the big bit buckets. As the content people become more comfortable with the tools and learn new skill sets, they will learn the strengths and weaknesses of the new formats, the quirks and undocumented features of the products they have to work with.

To help the professionals get up to speed there is the HDAA (High Definition Authoring Association) – Their goal? Help Tellywood and post production houses migrate to HD authoring.

And if the hands who work the decks every day are learning a whole new skill set what is the rush to get one of the first players?

Format disagreements aren’t hurting HighDef DVD sales.

Jack Valenti, former head of MPAA, taught Tellywood well…you’ve got to collect money from the audience but you don’t have to really sell them anything…right away. When they are relatively certain the content will be well protected…it will be on discs and in the stores.

They learned a lot from their DVD CSS “problems.”

They learned even more watching the RIAA’s problems with legal and illegal music downloads as well as “wide scale” ripping and selling.

While you may feel the best DRM is a product the consumer wants at a price the consumer is willing to pay.

Honest folks don’t agree.

HighDef DVD hardware, software and content are here. The sales will increase over the next few years (Fig. 6) just as other consumer electronic technologies have in the past.

Ultimately so will IPTV, video podcasts, broadband downloads as well as casual and serious pirates.

Tellywood is going to have to either sue everyone or say…”hang the pirate’s code and hang the rules. They’re more like guidelines anyway.”

Of course we’ll always have reviewers who will say movies are going to bomb and experts who say technologies are going to fail.