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Film studio blames money woes on economy, tech

Sony Pictures Entertainment tells employees it plans to cut 450 jobs next month, saying the economy and technology have changed people's film-consuming habits.

Some of the same technological forces that have consumed large portions of the music sector appear to be eating away at the film industry.

Sony Pictures Entertainment, one of the six biggest Hollywood film studios, told employees Monday that in March the company will lay off 450 workers, the equivalent of 6.5 percent of its global workforce, according to a story in The Los Angeles Times.

"Our industry is affected by two things: It's affected by the economy, of course, and it's affected by technology," Amy Pascal, the studio's co-chairman, said in a video message to employees. "Over the last two years, it's changed people's DVD-buying habits, which has had a huge effect on our company and the industry at large."

Greg Sandoval/CNET

Sony Pictures, which has produced such recent films as "2012," "This is it," and "District 9," saw an earlier round of layoffs less than a year ago. In March 2009, the studio cut 250 jobs.

Pascal's reference to changes in DVD-buying habits is easy to trace. In a down economy, people have sought to cut costs and one of the ways they do it is by logging on at illegal download or video-streaming sites. Video codecs and compression technologies have improved and downloading large digital film files has never been easier.

Netflix subscribers more and more are opting to watch videos via the company's Web-streaming service instead of waiting for physical discs to be delivered. Apple's iTunes rents and sells films to millions of iTunes users. Hulu, YouTube, and Sony's own offer ad-supported video films and TV shows to consumers free of charge.

Part of the problem is that movie theaters and TV networks have much more competition now. Where once we had to choose among watching four TV channels, visiting the neighborhood movie house, or throwing an album on the turntable, we now have cable, video games, user-generated video, social networking, and Pandora.

This all appears to be adding up to one important problem for Hollywood: the decline of the cash cow that once was the home viewing market. According to the Times, DVD and Blu-ray sales have plunged more than 13 percent in the U.S. over the last year.

If DVD revenue continues to fall, expect fewer films and possibly a shakeout among the largest studios. This is being predicted by some top filmmakers and studio power brokers.

Francis Ford Coppola, "The Godfather" director, said at the Beirut Film Festival last year that he expected some of the studios would go out of business.

"The cinema as we know it," Coppola said, "is falling apart."