Warner partners with BitTorrent

UPDATE: Online file-sharing service to offer download-to-own movies

By Jennifer Netherby -- Video Business, 5/9/2006

MAY 9 | Warner Bros. Home Entertainment Group inked a deal with the movie industry’s former sworn, enemy, BitTorrent to sell and rent its movies through the peer-to-peer service's Web site beginning this summer.

BitTorrent was until recently a Web hub of movie piracy due to its “file-swarming” file-sharing technology that makes it easy to transfer large files over the Internet quickly. In November, the company joined with the Motion Picture Assn. of America to fight piracy on its site and work with content providers for legal digital distribution of content as it seeks to transition into a legitimate business.

Many of BitTorrent’s 65 million worldwide users continue to use the site to share pirated films and TV shows. However, the company has made an effort to remove copyrighted material that's posted illegally, partly by launching a search function in 2005 to make it easier to find content.

Warner will make its films and TV shows available on BitTorrent download-to-own day and date with the studio's DVD releases. Films will be available for video-on-demand rental in the movie’s pay-per-view window.

Warner will initially make 200 new releases, catalog and TV shows available through the site, including Harry Potter and the Goblet of Fire, Tim Burton’s Corpse Bride, Dukes of Hazzard, The Matrix and Dog Day Afternoon.

The studio is the first to sign with BitTorrent, but the Web site is in talks with other major and independent players for the launch of its online store this summer. (Though Disney CEO Bob Iger said in the company’s earnings call Tuesday that he’s not in favor of a deal with BitTorrent.)

But Warner believes it can convert 10% to 15% of BitTorrent users into content buyers. “This goes back to just a bigger philosophical approach,” Warner Home Entertainment Group senior VP of digital distribution Jim Wuthrich said of the deal. “We know that digital distribution is going to happen. We know that there is a lot of piracy happening out on these networks. We are looking to legitimize some of that piracy.”

BitTorrent expects to offer TV episodes for $1 for download-to-own, undercutting the $1.99 price offered by Apple iTunes, Google and others. Warner doesn’t currently offer its TV programming through iTunes or Google but does offer free streaming of older TV show episodes through In2TV, which it launched with sister company AOL in March. Wuthrich said Warner will sell TV episode downloads through other sites.

Like Internet movie service Movielink, BitTorrent will operate under a retail wholesale model for films and TV shows, unlike the revenue-sharing model used by iTunes. BitTorrent hasn’t yet set a price for movie sales or rentals, spokeswoman Lily Lin said.

The deal with Warner makes BitTorrent the third company to enter the digital download-to-own space. In March, Movielink, backed by five major studios, began selling movie downloads from Warner, Universal, Sony, MGM, Fox and Paramount. And CinemaNow, backed by Lionsgate and Blockbuster, announced download-to-own deals with Sony and Lionsgate.

Unlike the Movielink and CinemaNow services, BitTorrent uses peer-to-peer technology to offer downloadable content.

In making the deal, Warner cited BitTorrent’s ability to transfer TV programs and movies quickly over the Internet and peer-to-peer’s popularity with consumers. This is Warner’s second entry into the peer-to-peer space. In January, the studio partnered with German technology firm Arvato Mobile to launch peer-to-peer movie site In2Movies in Germany, Austria and Switzerland (VB, 1-30).

Download times on BitTorrent will vary based on the popularity of content (more popular content can be downloaded faster because it is seeded in more locations, unlike centralized downloads from non-peer-to-peer services).

“If a title is requested by lots of people, it helps to feed the network and make it easier to distribute,” explained Darcy Antonellis, Warner Bros. Technical Operations executive VP of distribution technology and operations.

BitTorrent will use Microsoft Windows Media DRM to copy protect files. Users will be able to make three backup copies of downloads to DVD, but the DVDs will be playable only on the computer with the original downloads. Downloads won’t be playable on portable devices for now.

Warner films will be available to only BitTorrent’s U.S. users at the start, Lin said.

Warner and other studios aren’t licensing their film downloads for portable players or burn-to-DVD for TV playback because the technology and content protection isn’t yet in place.

The limited playback also has limited digital sales somewhat.

Wuthrich said download-to-own movie sales on Movielink have so far been below expectations, but he added that the site is still experimenting with its business model.

“Obviously, there is a market here for digital content,” Wuthrich said. “All you have to do is look at what iTunes has been able to do.”

Downloads won’t be able to attract a mass audience until content can be played on a TV either through a copy burned to a disc playable on DVD players or other means, he said.

Wuthrich, who spent seven years at Warner Home Video, said he is working with retailers to help them move into the digital era and allay concerns.

“Retail is very good at delivering physical goods either online or in their stores,” Wuthrich said, adding that many retailers are showing interest in entering the digital world. “This is a really exciting time to be in this part of the business. It is a business that is just forming. Our approach is to experiment and take chances. We’re trying to grow the business and grow the pie for everyone.”