HOLLYWOOD studios spend millions of dollars every year hyping their new
feature films around the world. Yet they still release films in North America
months before they appear in Europe and the rest of the world. This seems odd in
an age of instant communication but consumers haven鈥檛 been complaining so
Hollywood has been free to do what it likes.
Now, however, it has a problem. It鈥檚 called DVD, and it鈥檚 given the studios
an almighty headache. Fingers crossed, it might one day persuade them to abandon
the tradition of releasing movies to American audiences before the rest of the
world. About time too.
In the mid-1990s the studios, led by Time Warner, encouraged Japanese
electronics companies Toshiba and Panasonic to develop a digital video system
that stores a whole movie on a single 12-centimetre disc. For producers, DVDs
are quicker and cheaper to mass-produce than tape cassettes. For consumers, they
have all the benefits of digital technology.
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There was only one problem: a DVD disc can play in any country. This means
that I could buy a disc from a US website and watch the movie in Outer Mongolia
long before its official release in Ulan Bator, scuppering Hollywood鈥檚 neat
little arrangement of staggered release. To get round this hitch, the studios
insisted that DVD players would be coded according to six geographical zones,
and that DVD machines sold in one region would be unable to use discs intended
for another. The big electronics companies agreed and formed an alliance called
the DVD Forum.
That would have been the end of that, had it not been for a small development
in world affairs: the reunification of Hong Kong with China. When the DVD codes
were being set, China and Hong Kong were allocated to different regions. By the
time DVD had caught on, Hong Kong was once more a part of China. Companies in
the DVD Forum might have merged the two codes, but they were beaten to it by
smaller manufacturers who saw an opportunity to make money by hacking into DVD
players and doing the job themselves. There are now around thirty factories in
China making at least a million DVD players a year between them that are either
code-free or easily freed by a couple of keystrokes on a remote control.
You could argue that Hollywood and the DVD Forum shouldn鈥檛 worry. China is
not exactly the world鈥檚 number one market for Hollywood films. But Hollywood
isn鈥檛 worried about its Chinese viewers; its headache is that cheap, code-free
DVD players are finding their way to Europe and the US. What鈥檚 more, retailers
appear to have fewer qualms about selling them. Market analysts reckon that
three-quarters of all players sold in Europe can play foreign discs, and that at
least 10 million American discs were shipped around the world last year.
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American consumers are also gravitating towards multi-region players. Not
only do they allow them to watch longer versions of feature films鈥攑rints
for the US tend to be more heavily cut鈥攂ut they also get to see BBC videos
like Dr Who and Monty Python, which were aimed exclusively at
Europe.
Some retailers are circumspect about what they do. Others are more brazen.
The European hi-fi chain Richer Sounds sells a Chinese DVD player with the
unashamed promise that it 鈥減lays discs from any region鈥�. Tesco supermarkets sell
players that customers can easily modify themselves and has publicly called for
Time Warner to abandon coding because it 鈥渋s against the spirit of free
competition and potentially a barrier to trade鈥�.
So why doesn鈥檛 Hollywood give in? If the system is on the verge of breaking
down, why should DVD manufacturers stick to regional coding? The studios claim
that it鈥檚 a question of logistics and economics. They argue that it鈥檚 too
expensive to print and distribute new films to every cinema in the world at the
same time.
This claim doesn鈥檛 really stand up. There are now around 100 000 screens in
cinema multiplexes round the world that show movies made in Europe, the US and
Australia, and 36 000 of them are in the US. When Hollywood releases a new
movie, the studio must 鈥渟trike鈥� up to 4000 35-millimetre English-language prints
to ensure that each cinema can have at least one. Each print costs around
$1500. So Hollywood鈥檚 combined print bill is around $6 million. If
the studios released films simultaneously, that figure might double, but that
would hardly break the bank for a billion-dollar industry.
Hollywood has been hinting that DVD manufacturers should hang on for a while,
because the 35-millimetre print will soon be on the way out鈥攁nd with it,
the need for regional coding. The studios are experimenting with digital video
to save on the costs of printing, packing and transporting 35-millimetre film.
The dream is to transmit a movie by satellite or fibre-optic link, store it on
computer hard discs in the cinema, and screen it with a video projector.
Several cinemas round the world have shown Toy Story 2 and the
latest Star Wars epic this way. With electronic distribution, worldwide
release can be simultaneous.
Yet I find it hard to believe that Hollywood really thinks this will happen.
The 35-millimetre projector is a hardy, trusted piece of technology. At worst, a
replacement after decades of use costs $25 000. Digital video hardware
costs around $100 000, and like all computer equipment, it quickly
becomes obsolete. Most cinemas run on such tight budgets that their profits come
from popcorn sales. If Hollywood wants them all to go electronic, Hollywood will
have to pay.
So, if 35-millimetre prints are going to stay, and Hollywood won鈥檛 change its
ways, is there a solution to the coding problem? Koji Hase, chairman of the DVD
Forum, has made many trips to Beijing to try to persuade the Chinese
manufacturers to honour the regional coding scheme. Alternatively, the studios
might find that events overtake them. If code-free players continue to stream
into Europe and the US, one of the manufacturers in the DVD Forum may want to
break ranks and make one themselves. So far, they all feel bound by promises
made to Hollywood before DVD was launched. But with the market created by Forum
members now being stolen by China, how long can that loyalty last?