Blocking Pirates

By Janet Rae-Dupree  |  Posted 10-01-2003 Print Email

Blocking Pirates

Of course, DMI is not without its challenges. Entertainment production remains largely an analog process, not a digital one. While studios are becoming more comfortable with digitizing everything of value—images, trailers, movies, television shows—and even storing, manipulating and editing content digitally, visual entertainment is moving very cautiously into digital distribution.

Rampant piracy in the music industry has made them skittish. Says CFO Hendler: "Digital rights management issues are some of the most critical and challenging that we're facing—ultimately affecting our ability to do business." That's where SPE's new CIO, Stubbs, will come in and pick up the slack. Stubbs, one of the nation's experts in digital rights management, comes aboard from a stint as a media and entertainment consultant and before that, 16 years as a partner at PricewaterhouseCoopers, to help initiate major new tech-powered distribution strategies for the movies made by SPE.

And Stubbs will also be called upon to help take IT to the next level. "The exact timing isn't at all clear, but there will be some fundamental changes in the way content is delivered to the consuming public," Stubbs says. (See "Thinking Out Loud," page 46.) Adds CFO Hendler: "People are going to be enjoying this content in their home on very high-powered devices that are going to resemble computers. The challenge for the industry is to step up to that and protect it and develop good business models that exploit this new technology."

Continuing many of the projects started by Yaros, plus creating and executing a new digital rights management initiative is a lot to juggle for any new CIO—especially as SPE continues to market and distribute content globally. Hendler acknowledges the load. "Like most entertainment companies, we are involved in a variety of global businesses, from motion pictures to television to digital initiatives, each in different stages of maturity and each with a unique set of technology challenges," he says.

Yet as digital media evolves, Stubbs, Hendler and their peers at other studios believe it will lay a foundation for the digital distribution of tomorrow. Theaters one day will stream digital movies onto screens, leaving old-fashioned film reels to gather dust. Consumers will order Sony movies delivered digitally to their home on-demand rather than running down to a video rental store.

And sitting in the center ring, coordinating it all, will be the information technology that Hollywood executives once relegated to the back room. Technology "is bringing information back to people who have the judgment and the understanding to make the call," Stubbs says. "I think the next three to five years are going to be very interesting."

It Goes Hollywood
How Sony Pictures Entertainment is using IT to cut costs and boost marketing and distribution efficiency:


  • Execs had little control over U.S. movie houses and distribution deals
  • SPE now knows faster what's a flop or a hit; more and better info means fatter deals and lower costs

  • Execs mostly guessed what foreign theaters might want, and for how long
  • SPE now has actual data to better target films, negotiate tougher deals and boost revenue per film

  • Rivals' distribution schedules and SPE marketing deals were poorly communicated
  • Execs now have a single, comprehensive view of release dates, to better coordinate marketing projects at home and abroad

    Chargeback Management System

  • SPE execs couldn't always tell if retailers were claiming too much credit for returned Sony movie DVDs and VHS tapes
  • Now, Sony matches each retailer's returned shipment against its own original invoices, for more accurate billings

    Janet Rae-Dupree has covered technology and science in Silicon Valley for a number of publications, including U.S. News & World Report, BusinessWeek and the San Jose Mercury News. Please send comments on this story to


    Managing Intellectual Assets in the Digital Age
    By Jeffery H. Matsuura Artech House, 2003
    Digital Rights Management: Business and Technology
    By William Rosenblatt, William Trippe and Stephen Mooney John Wiley & Sons Inc., 2001


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