• by Mark Naples , April 14, 2006

As I write this, it's early Thursday morning and I'm enduring my usual Amtrak commute to New York from Philly. Around me sit as many as 800 other souls on this train, more than half of whom are pounding away on their keyboards as I am. Cell phones are already in use (annoyingly) and while there are a few of us sleeping the miles away on board this careening vessel, there are even fewer watching movies or playing games on their computers.

I'm paying closer attention to the activity composition than I usually would because there has been so much coverage lately about filmmakers releasing their products on the Web, and how so many households are finally doing what industry types thought would happen before the turn of the millennium--a convergence of the last mile between telephony and television.

But, that convergence never really happened, did it? Whenever I read stories about some outrageously cool new distribution model or about how the new content generation models are changing everything, I take a look around at the many workplaces I frequent and think about common settings like this train--where pretty much everyone uses their computers to work, not to play. What's up with this? Why is there a new wave of buzz about this convergence, and just how much of a big deal should we be making of it? Is this part of the exuberance around MySpace and that kind of user-generated content model? Or, is it something else?

The fact is that more movie studios are focused on the Web than ever. Part of this is due to the fact that bandwidth has improved dramatically, so the user experience has improved dramatically. We all know that. But do you know anyone who has figured out how to make money from the content generation business for digital entertainment--other than those making money from games?

I've always been a big fan of iFilm, YouTube, and Atom Entertainment's Atom Films, to name three of the more notable companies in the online movie space. But, I want to caution anyone against getting too excited about huge video podcasts and downloads of feature-length movies. As the average size of a home television surpasses 25 inches and laptop computers get smaller and smaller, the ceiling for downloads may be approached sooner rather than later.

But what of shorter films that have become a staple on the Web? Features under five minutes have become the standard platform for nascent filmmakers, it's true. There are more producers than ever who used to focus their energies on movie-theater-style feature-length films, but who have begun to dedicate themselves to developing shorter stories for distribution online. Some film industry observers are predicting that the large migration of filmmaking talent from traditional film production online could position the Web competitively against television and theaters for moviegoers' dollars.

Don't bank on it.

Downloading video podcasts of television episodes is a very different animal from downloading longer films. Ever wonder why so many commercials can't be repurposed and streamed on line? It's largely about digital rights, and the rights involved with talent for commercials are dwarfed by those for feature films. The studio system's ownership model for syndication of television episodes is constructed to far more easily accommodate other kinds of distribution. I anticipate many challenges to movie producers of longer features who want to leverage the Web for distribution.

At the very least, there must be hundreds of lawyers in Los Angeles who are preparing to build a whole new book of business around this challenge of digital rights, both for longer films and shorter ones alike. From these challenges to behavioral ones among consumers, diminishing factors for this sub-segment make me bearish on the nascent Internet film industry.