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Movies on cable before DVD?

Mpaa_logo The MPAA has offered a deal to the Federal Communications Commission that could bring movies to cable and satellite viewers more quickly after their original release. The trade-off, though, is that the movies couldn't be viewed by some high-definition TVs, nor could they be recorded by stand-alone TiVos. The FCC moved quickly to invite public comments on the MPAA's petition, meaning that it could decide the issue later this summer.

Kung_fu_panda Ars Technica reported this story over the weekend, emphasizing the restrictions on recording and the unusual alacrity of the FCC's response. To me, however, the more intriguing element is the studios' interest in creating a new release window for home viewing of high-def movies. Today, studios release the DVD version of a film about four months after it hit the multiplexes (bombs often are released sooner, and hits sometimes take longer). Cable pay-per-view and VOD services have to wait another 30 to 45 days for the movie, although Warner Bros. has started experimenting with simultaneous DVD and VOD release. These delays are designed to preserve box-office and DVD sales, but they also concede the market to bootleggers. There's no legitimate way to watch "Kung Fu Panda" at home today, but there's no shortage of illegitimate ones.

In its petition, the MPAA says each of the major Hollywood studios wants to explore deals with cable and satellite operators that would make high definition versions of their movies available prior to their release on DVD. No details about the price or timing were included, but one would expect the movies to carry a premium. To a family of four, paying $30 to see a (relatively) new movie in high def at home might seem like a reasonable offer, compared to paying $50 for tickets and popcorn at the multiplex. Of course, the reasonableness of the premium would depend on how soon the movie became available.

Now here's the tradeoff.

To discourage piracy, the studios want the FCC to carve out an exception to the prohibition it tentatively adopted in 2003 (and affirmed in 2004) on "selectable output control." A set of commands embedded into programming, SOC enables copyright owners to tell cable and satellite set-top boxes not to transmit a movie or TV show through certain outputs. Typically, cable and satellite receivers have both analog (component, S-video or composite) and digital (DVI or HDMI) outputs. A studio would presumably use SOC to turn off any output that wasn't encrypted and copy-protected. That would rule out analog connectors to TV sets and TiVos, as well as digital connectors that didn't include copy protection (e.g., an HDMI socket that didn't support HDCP.)

Responding to pressure from set manufacturers and consumer groups, the FCC barred the use of SOC with existing cable and satellite TV services, such as premium movie channels, VOD and pay-per-view. Because the first few generations of high-definition sets relied on analog or unprotected digital connectors, the FCC worried that allowing SOC could  leave millions of early adopters "completely shut off from the high-definition content they expect to receive," the commission said in its 2003 order. The FCC left the door open to SOC, however, on future services with different business models. The MPAA argues that its new proposal falls squarely into that category.

SOC could cut off stand-alone DVRs, but I don't think it would disable a recorder built into a cable or satellite receiver. Of course, there are other mechanisms studios could use to turn off built-in recording capabilities in a set-top box. The issue here is whether it's reasonable for studios to restrict this particular service -- home viewing of high-def movies before the DVD release -- to secure digital outputs. Five years ago, only expensive professional gear could record the uncompressed video streams coming out of analog high-def outputs. Today, you can do it with a computer plug-in card costing a few hundred dollars. So thanks to Moore's law, the piracy threat associated with analog outputs has become more real. And while it might not seem fair to deny service to those whose HDTVs don't meet Hollywood's requirements, those viewers could continue to watch movies at home during the existing release windows.

On the other hand, the risk here is that the exception will become the rule. Release windows are in flux, and the service floated here fits into a continuum of changes the studios are making. And any supposedly limited restriction on outputs needs to be viewed in the context of Hollywood's longstanding distaste for home recording. A limited exception needs to be just that. The market may eventually persuade the studios to offer movies earlier on less restrictive terms, just as it convinced the major record companies to drop DRM from their 99-cent downloads. In the meantime, it's important to preserve the option for consumers to record the programming they pay for.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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