Hollywood Gives In To On-Demand

06/10/2011 14:28 BST | Updated 06/12/2011 10:12 GMT

In these modern times where online video content is constantly being made available cheaply and quickly across the Internet, the reign of the DVD is drawing to a close it would seem. Studio executives have watched the home entertainment revenue stream drop by 40% whilst the online possibilities of streaming videos or renting them online through companies such as Netflix have risen to the fore.

"The days of baby steps on the Internet are over." Said president of Sony Pictures home entertainment unit, David Bishop. The major studios now believe that the key to making back the lost revenue lies in the rapid expansion of film delivery across the Internet.

"It's now critical that we experiment as much as possible and determine how to build a vibrant market for collecting digital movies."

Netflix has not recovered the losses made by the fall in DVD sales though despite its large customer base and application on games consoles such as the Playstation 3. There is no doubt that web videos are the future, but the best way to go about delivering the content to the customer is still unknown, as Rob Moore, Vice President of Paramount Pictures explains:

"What you have now is a lot of people pursuing a lot of different paths to figure out how to reverse the trends we've been seeing."

One outcome of this shift in focus will be the length of time fans of the classic rental format will have to wait to watch their movies at home. Studios plan to release the videos online at an inflated price to satisfy those viewers who want the films as soon as possible. This premium service has already been experimented with by Sony who have released online videos two weeks before their physical DVD release.

The problem for many consumers in buying movies online has been the storage aspect. The DVD being perfect for moving around at your leisure but for many, downloading a film means storing it on a single device.

The Hollywood solution is to place the content on a 'cloud' system. The UltraViolet initiative launches this year giving buyers of certain Blue Ray discs access to an online version of their chosen film. It is thought that Apple are also planning a similar system to work through their iTunes platform.

Video marketing is also high on the agenda for the studios with plans to utilise smartphones and tablets in order to create bespoke content related to the movies themselves, meaning that the modern devices are not just alternative screens for watching the films but also a portal into a community of viewers and fans.

"On these new platforms we have to forget the way we have thought about movies as 'transactions' and more as experiences." Said Lionsgate President Steve Beeks.