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Movies may be mouse click away as interest in Internet films grows

Imagine a Blockbuster night without Blockbuster, a time when no video store will ever slap you with a late fee or fine you for failing to rewind. Because, in this world there are no videos, only home computers.

It's closer than you might imagine -- and closer than the video industry may want to admit.With technology surging ahead and investors going gaga over any company with a "" to its name, interest is building in delivering rental movies over the Internet.

It's already technically possible for those with fast Internet connections. One company recently offered over the Internet the brainy sci-fi film "Pi" for $2.95 a pop, and its upcoming slate includes the Rosanna Arquette picture "Fait Accompli" and the B-movie anti-classic "Toxic Avenger."

Internet movies for the masses must still wait for a variety of technical, economic and regulatory problems to be sorted out. The best estimates see Internet movies booming in five to 10 years

But the prospect of having movies a mouse click away has already shaken up an entertainment industry that was late in recognizing the impact of music over the Internet. It has also moved society another step closer to a lifestyle bound up in the Internet and the home computer.

Signs of change are everywhere, from the financial markets to studio boardrooms, even the courtroom.

The high-profile lawsuit by Jeffrey Katzenberg against his former employer, the Walt Disney Co., brought to light Hollywood's high-tech future, with his first expert witness predicting tens of millions of homes will have movies-on-demand in the next decade.

This is important to Katzenberg because he believes his fat incentive bonus -- the subject of the litigation -- will grow even fatter by a cut from the money Disney can make off Internet-delivered movies.

Elsewhere, in Cannes, moviemakers were joined at this year's film festival by Web company executives on the prowl for product. One of them, Michael Metcalfe, recalled that when he went to the Cannes Film Festival last year "no one would really listen to me."

"This year, I came back and it was just overwhelming," said Metcalfe, head of Canadian-based Global Media Corp., which wants to deliver movies over the Internet. "The response was just, 'Wow! When can we do this?' "

Also in Cannes was Scott Sander, president of, who went to the festival after signing what is believed to be the first licensing deal between a studio and an Internet company, acquiring the cyberspace rights to "Pi."

"A lot of people in the industry were really blown away by this," said Sander, noting that research found a surprising percentage of those downloading "Pi" were entertainment business types checking out the future.

Sander believes demand for Internet movies initially will be fueled by college students, whose schools have broadband Internet connections that can download a feature-length movie in about 20 minutes and show it on a Microsoft media player.

The next step will be high-speed hookups in the average American home. The exact timeline is still in dispute, but the process may have been sped up by recent technological breakthroughs in software compression, the now-routine digitizing of movies for the new DVD format, and megadeals like the one struck by AT&T to get into the cable business.

Predictably, those least bullish on Internet movies are video store owners.

"In the short time frame, I think it's only real value is publicity and gimmickry," said Mark Vrieling, owner of three Rain City Video stores in Seattle and chairman of the board of the Video Software Dealers Association. "The pipes just aren't there to handle it. It's not even close. Until that infrastructure is built, it's just not realistic."

One thing going for the video industry is that it has confounded all previous predictions of its demise. It has survived everything from pay-per-view movies to the recent upheaval over rental revenue-sharing deals with the studios.

And it may survive Internet movies. One option is for video stores to join the Web wave.

"Nothing stops us from having a bunch of DVDs in the back room and sending them to people's houses on phone line," Vrieling said.

While Internet movies are not expected to affect theatrical movies -- in the same way video has not crimped the old-fashioned way of watching films -- the major studios are wary.

In the Katzenberg trial, for example, Disney has been a lot less optimistic about its cyberfuture, and not just because it's trying to save shareholders a few hundred million dollars.

The studios fear Internet-delivered movies will only exacerbate the huge problem of movie piracy, which is already costing Hollywood millions in video sales at home and abroad.

During the early media previews of the new "Star Wars" prequel, audiences were urged to report anyone who may have been clandestinely videotaping the film. But despite 20th Century Fox's vigilance, pirated copies of "Star Wars: Episode I -- The Phantom Menace" are sure to surface following the theft earlier this week of a print from a theater in Wisconsin.

Films like "Armageddon," "Godzilla," "Payback" and "The Thin Red Line" have all been found on Internet sites.

"We see the Internet as a great opportunity and a great resource for the film industry," said Richard Taylor, spokesman for the Motion Picture Association of America, the lobbying arm of the major movie studios. "But we also recognize that if left unchecked, piracy on the Internet can cause a great deal of damage."