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CNN Live At Daybreak

For Many People, Latest Movies Just a Click Away

Aired May 16, 2002 - 05:23   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Moviegoers are heading out to see the new "Star Wars" movie and other big shows at theaters. But for many people the latest movies are just a click away on their computers.

Our financial news correspondent Bruce Francis reports movie downloading is a real horror for Hollywood.

(BEGIN VIDEOTAPE)

"JOSH": "The Return of the Jedi," "Saving Private Ryan," "Crouching Tiger" maybe, "Memento."

BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): This 23-year-old has a memento from one of his sessions on the Net. Not just any memento, a complete copy of the Oscar nominated film downloaded for free. "Josh," as we'll call him, has many mementoes.

"JOSH": I found screeners of movies that before they were out. If I can get on a good streak then I can pull down about five movies a day.

FRANCIS (on camera): Welcome to Hollywood's worst nightmare. Studio executives say that the downloading of films will ruin the movie industry. Meanwhile, fans of downloading say that Hollywood's missing out on an opportunity to capture a new audience in a new way. And that audience is growing.

ANDREW FRANK, CONSULTANT, VIANT: And there's "Lord of the Rings."

FRANCIS (voice-over): Andrew Frank is an analyst for Viant, a technology consulting firm. He says that as many as half a million movies are downloaded every day, including those in current release like "Spider-Man."

UNIDENTIFIED MALE: Cheese!

FRANK: The potential threat is fairly large, as high speed connections become more prevalent and as the services become easier and more difficult to stop.

FRANCIS: And movie studios, including those owned by CNN parent AOL Time Warner, are doing everything they can to stop them, including a lawsuit to shut down file trading networks like Morpheus. Many of the same companies all but crushed Napster's music trading. So far, their own fee-based alternatives for music haven't caught on the same way.

Hollywood isn't just blaming the downloaders. They're lashing out at technology companies like Intel, whose chips run the PCs that make it all happen.

MICHAEL EISNER, CHAIRMAN & CEO, WALT DISNEY COMPANY: It's very hard to negotiate with an industry whose growth, they think, their short-term growth is dependent on pirated content.

LES VADESZ, EXECUTIVE VICE PRESIDENT, INTEL: The media industry will try to make that personal computer nothing more than a DVD player, an expensive DVD player or a CD player and maybe not at that.

FRANCIS: Both have a point. After a dismal year, the PC industry has targeted online entertainment as a killer act.

UNIDENTIFIED MALE: I see where this family's going, Hollywood.

FRANCIS: But Hollywood has a history of fighting new technologies, most notably, the videocassette. The studio tried to sue that technology out of existence only to lean on it as a huge source of profits years later. As for "Josh," he's gotten a free taste of a world that he wants to know more about.

"JOSH": It just kind of piques my interest. I've kind of gotten more into movies because of this. I don't think my grandma is going to start downloading movies, you know, on her old machine. If you have some, you know, some tech know how, then, yes. I mean and once you start doing it, it gets easier and easier. It was just kind of funny, at the bottom it would say property of Columbia TriStar every 10 minutes. And I'm like no, it's not. Now I have it.

UNIDENTIFIED MALE: It is a strange fate that you suffer so much fear and doubt over so small a thing.

FRANCIS: A little thing that experts say is growing every day.

(END VIDEOTAPE)

COSTELLO: That report from CNN Financial News Correspondent Bruce Francis.

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