Miércoles 22 de Junio de 2005, Ip nº 114

Smartest Guys Well Outside of Hollywood

FILM buffs have never had more options - DVD's, video-on-demand and myriad cable movie channels. But there is one choice that has not become easier: seeing a movie in the theater on the day it is released. For that, the Star Wars pilgrim who must know how the series ends - or begins, as the case may be - still has to schlep to the multiplex, wait in line and then fight for a seat.

Hollywood is hooked on the big opening weekend, but two very wealthy young men would like to break that habit. Mark Cuban and Todd Wagner, who timed the market nicely when they sold Broadcast.com to Yahoo for $5.7 billion in 1999, have created 2929 Entertainment, which will make, distribute and show films digitally - that is, without using actual film. And instead of using a theatrical release to build a market for DVD and cable broadcast, 2929 plans to release movies in any format you want to see them, on the same day. Its documentary " Enron: The Smartest Guys in the Room" was released in theaters and for broadcast at the same time.

Those tempted to write off Mr. Cuban and Mr. Wagner as harebrained outsiders with too much money and time on their hands might want to reconsider, given their histories. The two men, particularly Mr. Cuban, have prospered by ignoring convention at every turn.

"There is nothing more fun than blowing up tired traditions to create better business models and better customer experiences," Mr. Cuban said by e-mail.

In a business historically frantic about change, their plan has made exhibitors antsy and studios curious. Theatrical releases, which account for about $9 billion in revenue, have become expensive trailers for the real deal, a $24 billion after-market for home video and DVD's. The current food chain has made everybody fat and happy while the mere existence of a digitized entertainment product - ripe for the downloading - makes the industry shudder.

The theory behind 2929 goes like this: Over the past few years, Mr. Cuban and Mr. Wagner have acquired or built HDNet Films, which funds smaller budget movies, Magnolia Pictures for distribution, Landmark Theaters for exhibiting, and HDNet and HDNet Movies for cable broadcast. Consumers with access to those cable networks will be able to see a film at home on the day it comes out. Or they can see it in the theater or, once details are worked out, simply buy the DVD. By closing the window between when a movie is released and when it becomes available on DVD - usually about four months - 2929 will save on marketing by not having to advertise twice.

THE concept picked up a big name at the end of last month, when the company announced a deal with Steven Soderbergh, who directed "Oceans Eleven," "Oceans Twelve," "Erin Brockovich" and "Traffic," for six small-budget, digitally produced films. The first, "Bubble," a murder mystery set in Ohio, is in production and will be simultaneously broadcast and released in theaters and on DVD.

"If you are looking to really build something that could change things as opposed to just making acquisitions, what they did was very shrewd," said Mr. Soderbergh.

After graduating from Indiana University in 1981, Mr. Cuban built a computer consulting firm called MicroSolutions and sold it to CompuServe in 1990 for about $5 million. A few years later, he and a fellow alumnus, Mr. Wagner, were living in Dallas and lamenting their inability to hear Indiana basketball games. They came up with Broadcast.com, an early version of a Web-based media site, which they eventually sold to Yahoo.

Mr. Cuban took up blogging, basketball and terrorizing referees, buying the Dallas Mavericks for $280 million and racking up fines for railing against league officiating while using a blog to agitate and inform his fan base. In the meantime, Mr. Wagner busied himself with philanthropy. But the two friends wanted new business adventures. Mr. Cuban, who once starred in the reality series "The Benefactor," and Mr. Wagner, who has a deep love of cinema, started building movie assets.

Mr. Cuban responded to e-mail questions but declined to be interviewed on the phone, saying that as a sports team owner he was less than enthusiastic about reporters. But one gets the impression he does everything but brush his teeth by e-mail. He has said he receives thousands of messages a day, but answered an inquiry in minutes. Having once used the Web to buy a $41 million jet, he said he was convinced that technology could do great things for movies. Mr. Cuban wrote that he and Mr. Wagner were able to take a different approach because they were not vested in the current model.

"Any major studio could do it as well. No theaters are going to say 'no' to the new 'Star Wars' movie because it is running one time or it is being day and date released on DVD," he wrote, of the practice of releasing the DVD at the same time the film comes out.

John Fithian, president of the National Association of Theater Owners, agrees that the business is changing - several chains are investing in digital projectors - but said he did not think that 2929 would ever alter the calculus of when a film and DVD were released.

Their plan, he said, "does not establish any serious precedent for the rest of the industry because the pictures are small artistic projects with minimal commercial potential."

Although the exhibition side of the movie business has not changed much since air-conditioning was introduced, Hollywood has used digital technologies for decades. Movies are still primarily shot on film - there are pauses every 10 minutes to reload the cameras - but they are immediately converted to digital images for editing, only to go back through the process to become film prints, at a cost of over $600 million a year industrywide. Mr. Wagner says he thinks another approach is worth trying.

"We are making small, educated bets that the consumers will respond to having this choice," he said. "But we are not kamikaze pilots. If it doesn't work, we won't do it."

There are a few near-term roadblocks to an all-digital Hollywood. Few of the country's 36,000 theaters are equipped to screen digital films, and it will take billions to convert to digital distribution and exhibition. At the end of last month, George Lucas held a quiet conclave at his headquarters in San Francisco with many of the leading movie directors, including James Cameron, Robert Zemeckis and Peter Jackson, all of whom are making digital films.

"I don't think exhibitors are going to have a choice," said Jon Landau, who is producing Mr. Cameron's next film, "Battle Angel," in three-dimensional digital. At the conference, Mr. Cameron spoke of using 3-D as a battering ram to get the attention of exhibitors.

"I think one day we will look back on this process with an ironic smile," said Matthew Robbins, a writer and director who attended the gathering at Skywalker ranch. "The possibilities of digital are going to prove irresistible."

Whether it was the TV, VCR or DVD, innovation was always greeted by a chorus of Hollywood Chicken Littles. The industry now sees digitized output as a threat that would open movies to the kind of download mayhem the music industry has lived through. Mr. Cuban says he thinks that both the recording and film business risk obsolescence by ignoring new approaches. As he has demonstrated on the Web and in the NBA, good manners and deference can be overrated. He sees no reason people should have to wait in line for a new film, or for a future that seems to have already arrived.

  06/06/2005. The New York Times.