Sony mulls plans similar to Facebook-Warner deal

NEW YORK--A Sony Pictures executive said today that the film studio is "looking into" new Web distribution methods similar to the one announced yesterday by rival Warner Bros. Studios.

Warner Bros.' home-entertainment division said Monday that it will start renting movies via Facebook, starting with the 2008 hit "Batman: The Dark Knight." The offer is among the first attempts by a major media company to test the social network's potential as a distribution outlet.

Speaking on a panel during the Media Summit conference in New York, John Calkins, executive vice president of Sony Pictures' digital division, said distributing films through Facebook is a "great first step" in testing the power of social networks to sell films.

"Our view is that Facebook is certainly a viable pool for people interested in media content," Calkins told the audience. "If you can have fans do the marketing, that's a great idea...we're looking into things like that."

The reaction to the Warner Bros. announcement was similar to that in the forehead-slapping "could've had a V8" commercials. To some observers, the idea of trying to sell films to Facebook's 600 million worldwide monthly users is so obvious that one of the big questions raised is why it hadn't been tried before.

The deal even inspired some pundits and Wall Street investors to question whether Facebook could threaten Web-video services from Netflix, Amazon, and Apple.

Calkins seemed hesitant to put Facebook in Netflix's league just yet, as did some of his other panel members. Some on the panel, which included executives from Yahoo and MTV, said that they doubted the studios would risk distributing $100 million films on a social network for a long time to come. One person called Facebook a "backstop" for more traditional distribution means.

John Penney, executive vice president for strategy at Starz, the pay TV channel that was one of the first to license content for Netflix's streaming content, said he sees the studios renting and selling movies through Facebook and other Internet services following the initial period when DVD sales are hottest.

"For the post-DVD window, that's where these new platforms [such as social networking] are becoming interesting," Penney said. "Batman is a library product. These will be mechanisms to offset the drop in DVD sales."

Sony's Calkins got the audience laughing by responding: "Why so negative?"

In truth, those who run the six major film studios, Warner Bros., 20th Century Fox, Disney, Sony, Paramount, and Universal, are sensitive about all the media attention around waning interest in discs.

Last week, some studio executives met with CNET and they conceded that DVD sales are in decline. But that tells only part of the story, they said. This isn't an easy time for them as they navigate the transition from DVDs to Internet distribution. It's a razor-edge walk between giving consumers the wide access to content and lower prices they now demand and maintaining healthy revenue and profits.

Consider that the music industry has been fighting the same digital battle for much longer than the film sector, for over a decade now, and the results are mixed at best. Nonetheless, the studio managers I spoke with said they believe they can find profitable Internet-distribution models but that it will take time.

At Wednesday's conference, Calkins joked that he attended on the condition that he be allowed to talk about UltraViolet. That's the technology standard that all the major studios are backing save for Disney.

By creating standards, such as common file formats, for participating consumer-electronics manufacturers and distribution services to follow, the studios intend to provide consumers with a means to play their films across a wide range of devices and services, just like the DVD does today. The No.1 priority is to entice film fans to start buying and collecting movies again.

Sony is one of the studios leading the UV charge. "You'll have seamless access to your content, Calkins said. "You can make the argument that it's better than the DVD because you can watch your movies from a hotel in Taipei and you didn't have to travel with your discs."

Hopes are high for UV, but the studios aren't wedding themselves to any one Internet distribution service.

They still plan to deliver movies directly into homes even while the films are still in theaters with Premium Video on Demand (PVOD). They will distribute through the Internet services of the cable companies, the Xbox, and the PlayStation. They will sell and rent films through services such as Netflix, Amazon, Apple, Vudu, and yes, Facebook.

The fact that Warner Bros. was the first to stick a toe into Facebook waters wasn't an accident. The studio is among the most aggressive of the big six to test and adopt new technologies. In 2006, the studio was the first to sign a distribution deal with the creators of the BitTorrent software. Last year, Warner Bros. struck a groundbreaking agreement with Netflix that gave the Web's top video-rental service access to more streaming content in exchange for a 28-day moratorium on rentals of new releases. The move was designed to protect Warner Bros. DVD sales.

More recently, the studio began making some catalog titles available as iPad and iPhone apps.

Thomas Gewecke, president of Warner's digital distribution and the man who approved the Facebook project, is a big supporter of making content available online. Some of his ideas were likely shaped by his experiences at Sony Music, where he worked before moving to Warner Bros., in 2007.

During a speech he made in 2008, Gewecke said that when he started in music, CD sales were healthy and piracy wasn't a factor." He added: "We know how that changed."