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Sony to offer film on Internet TV, then DVD

Sony, the only movie studio tied to a top hardware maker, is in a unique position to try selling movies directly to consumers through television sets.

online movies

In a nod to its vision of the future, Sony will make its animated hit "Cloudy with a Chance of Meatballs" available to consumers directly through Internet-enabled televisions and Blu-ray players before the movie is released on DVD.

It is the latest experiment in Hollywood's effort to find a way to compensate for the steep decline in profits from home entertainment.

The move is significant because it represents the latest tinkering with the movie industry's release windows, something Hollywood has long been reluctant to do out of fear of upsetting the profitability of DVD sales and angering its most important retailer, Wal-Mart. But with the decline in DVD sales, off as much as 25 percent at some studios, finding new ways to distribute movies has become a necessity.

The price of the film, $24.95, is high enough not to alienate retailers, Sony said.

"We don't need a war with Wal-Mart or any other organization, and I don't think they're hostile to this," said Howard Stringer, the chief executive of Sony. "It will make televisions more valuable, and that's a good thing."

Sony Pictures Entertainment, the only Hollywood studio tethered to a major hardware manufacturer, is in a unique position to experiment with selling movies directly to consumers through television sets, in this case Sony's Bravia Internet-enabled sets.

As part of this experiment, "Cloudy with a Chance of Meatballs" will also be available through Sony's networked Blu-ray Disc players, which came on the market last month.

The experiment is part of a search in Hollywood for ways to capitalize on the Internet's potential for film distribution.

"The time when a majority of consumers have Internet-enabled TVs is a long way off," said Richard Greenfield, an analyst at Pali Capital. "But it's moving the ball in the right direction."

"Cloudy with a Chance of Meatballs," Sony's biggest animated hit, was released in September and has generated almost $174 million in worldwide box office receipts, according to Box Office Mojo, which tracks movie ticket sales.

It will be available to owners of Sony Bravia sets and Blu-ray players with Internet capability from December 8 to January 4, the day before the movie is released on DVD. (On a smaller scale, Sony tried a similar experiment last year with its Will Smith movie "Hancock.")

Eventually, Sony intends to distribute films over a wider array of devices, including its PlayStation system.

In addition to the industry ramifications, the experiment is important to the vision of Stringer for Sony's two pillars--hardware and content--to work together profitably. "The process of moving to the next stage of content delivery is as inevitable as night and day," he said. "And we're the only company that can do this because we own hardware and content."

Sony hopes later to entice other studios to make their films available to owners of Sony televisions, bypassing cable and satellite companies that offer their own video-on-demand services.

Hollywood and cable and satellite companies have been reluctant to offer films over video-on-demand before their release on DVD because of the threat that movies will be copied with digital video recorders and other devices. The Motion Picture Association of America recently filed a letter with the government seeking approval to block technologies that allow the copying of high-definition movies on cable set-top boxes.

Mindful of the music industry's contraction after the collapse of compact disc sales, Hollywood is frantically trying to develop new sources of home entertainment revenue. In the third quarter, according to the Digital Entertainment Group, spending on home entertainment was about $4 billion, down 3.2 percent. But spending on DVDs, which has been the profit engine for the movie studios, was off 13.9 percent. Spending on rentals of DVDs, which provide smaller profit margins than sales, was up about 10 percent.

Meanwhile, at some studios the decline in DVD sales has been steeper. At Paramount, for example, which is owned by Viacom, movie ticket sales rose 16 percent in the third quarter, while home entertainment revenue was down 21 percent.

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