• by Laurie Sullivan  @lauriesullivan, March 3, 2008

Business and technical problems have slowed movie studios from producing short-form video clips for play on MP3s and cellular phones, but research shows it could help drive ticket sales at the box office and retail stores.

A joint white paper from the Entertainment Technology Center at the University of Southern California (ETC@USC) and research firm Parks Associates says the basic technology is available, and studios are missing a major opportunity to boost sales.

About 90% of broadband users have a mobile phone, but only 10% use it to watch video, and even fewer--6%--use it to watch live TV. Similarly, one-half of all broadband users have a portable MP3 player, but only 10% use it to watch video, according to the white paper.

"Rather than just sell digital content, offer free movie previews and clips as advertainment to encourage people to buy a theater ticket or talk about the movie," said John Barrett, director of research at Parks Associates. "The movie industry has evolved slowly in the past 100 years ... and you can't turn the industry on a dime, but you can adapt business relationships and technologies to market movies in short form."

It's not a modern-day fairy tale that box-office ticket sales haven't been stellar for years. Nor have consumers cozied up to buying and downloading full-length feature movies like Sofia Coppola's "Lost in Translation" that have been released in digital or DVD format, similar to the way they did music.

Although research firm eMarketer estimates that U.S. consumers will spend $245 million this year to download digital movies, it will take several years before the market reaches $846 million in 2011.

Big-box retailers have used music and movies as a lure to increase store traffic for years. Barrett believes movie studios can do the same with free advertainment for portable video players. Apple adapted this strategy to sell digital devices by offering content as a low-margin incentive, getting consumers to buy hardware, such as iPods. The company gave away millions of free music tracks to prime the market for iPod sales. It also offered low-cost prices on movie and TV titles to promote video iPods.

The white paper says the strategy has been a great success for Apple, but content producers like Fox, Paramount, Sony and Universal are less enthusiastic with Apple's triumphs. The content does not generate substantial amounts of revenue for studios--evidence heard in gripes from NBC Universal executives who say Apple has sold millions of dollars in hardware at the expense of movie studios.

Advertainment could become an option. "The video clips become the advertainment for new releases," Barrett said. "The emphasis has been on selling full-length digital movies for Apple's iPod, but studios are missing an opportunity, a marketing channel to get consumers into theaters."

Consumers have access to the basic technology--but business and tech challenges still exist, which has slowed adoption. Available bandwidth for mobile phones remains limited, which makes downloading and streaming content painfully slow.

The white paper suggests that high-quality content is limited mainly because not many devices can display the required 24 or 30 frame-per-second video. And although broadcast technologies DVB-H & MediaFLO are becoming available, they will only partially solve the problem because the technology is designed primarily for live TV, not on-demand content.

Studios and content producers can repurpose existing previews and clips as a low-cost way to promote movies running in theaters and on DVDs. Ideally, studios need to create content that takes into consideration the unique features of portable platforms.

Fast-paced clips, rapid cuts and panoramic scenes are examples of film techniques that do not adapt well to today's portable devices. Made-for-mobile programming will increase the appeal by offering unique content not available elsewhere. In the end, advertainment becomes content, and a profitable way to provide consumers with something to watch when they need a welcome diversion.

Business and technical obstacles have not been overcome, and consumers have yet to establish a thirst for buying movies through portable devices and cellular phones. Short-form videos as free promotional tools, however, can lead consumers toward more traditional channels as the entertainment industry prepares to distribute full-length movies and premium content on portable devices down the road.

Barrett said Hollywood needs to provide consumers with entertainment to prompt them to buy tickets and DVDs.