Hollywood and the internet: the film business tries to learn from others’ mistakes

Hollywood came late to the internet. Protected for years from digital piracy by huge file sizes, it was not forced to develop an online retail model, as the music business was. Nor, having watched newspapers struggle on the internet, did it much want to try. This week it finally stepped forward, touting two systems for selling films and television shows online. The initiatives are well thought-out, reflecting the lessons learned from watching others’ mistakes. But they may also be too late.Legal film downloads in America accounted for just $250m last year, according to Adams Media Research. In many countries there is no legitimate market. That would not worry anybody, except that sales of DVDs, the silver discs that rebuilt Hollywood’s fortunes over the past decade, are faltering. They have fallen from $12 billion in 2004 to $8.7 billion in 2009 (see chart). It seems that consumers have rediscovered renting — which is less lucrative for Hollywood — through the post and the rapidly-proliferating kiosks owned by Redbox.

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