Will digital ever stick?

Hollywood executives wonder aloud whether consumers will embrace the new technology, and where the profit is
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Digitally distributed entertainment-from on-demand TV content to Web-streamed films-was definitely what people were talking about at the Western Show. But during a Wednesday session titled "Hooray for Digital Holly-wood," several industry executives wondered whether enough consumers will ever latch onto the technology for entertainment companies to push it into the mainstream.

Certain savvy viewers do enjoy short films on the Internet or watch programs on digitally sent cable channels, but most make do with basic network and cable services. Still, there have been recent examples of digital technology catching on: For instance, the success of film
The Blair Witch Project

has been credited to the Internet.

"Once there's massive deployment of high-speed, broadband services to TV sets, we will not be backing unprofitable business models," explained Luke McDonough, of iFilm, which offers short films on the Web. "This is a better, faster, cheaper way to deliver what people want."

Panelist Renee Besson, a digital-only filmmaker, explained that his latest project
Boxer
, which recently aired on the Independent Film Channel, cost less than $300.

Digital video technology also provides more opportunities for studios to get their product out to consumers in general, and studios are looking to deliver on-demand programs through broadband, high-speed technology.

But "what's their business model going to be?" asked Sun Microsystems Entertainment Director Stephen McKenna. "If everyone has every movie all the time at their fingertips, then why watch A channel over B channel?"

The answer: Branding. Traditional cable companies, with strong name recognition, can survive in a digital world, if it ever arrives, said McKenna. Moreover, a company like Disney, which operates its own cable channel, is unlikely to digitize its films for on-demand usage anytime soon: He estimates that it would cost "hundreds of millions of dollars" for Disney to digitize its entire catalogue of films.

Paul Lee, chief operating officer of digitally delivered BBC America, which reaches 15 million U.S. households, added, "Cable is in a strong position. They have a relationship with people already, in a way that the entire dotcom community doesn't have. [The dotcoms] are asking, how do I get that for myself."

Cable then may have a head start on a digital revolution because "they are the only in-house network solution at the moment," said moderator Joe Cantwell, Bravo Networks new-media executive vice president. Cable companies, he observed, can just add the digital elements themselves to their offerings.

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