Viacom Can't Get Punitive Damages in YouTube/Google Suit

Viacom's suit against YouTube and Google slowly works its way through the legal system. In a decision rendered last week, but only generally reported yesterday, the Federal District Court in New York hearing the case denied Viacom's motion to amend its complaint to seek punitive damages against the defendants.

The Court's reasoning: the Copyright law doesn't provide for punitive damages. Thus, the decision says nothing about the strength of Viacom's case, or the thorny issue of whether the DMCA safe harbor - the notice and takedown procedures that govern one-off infringements on websites - applies in the case of the massive infringement alleged in this suit.

Punitive damages are damages intended to punish particularly conduct by defendants that's particularly egregious, as Viacom alleges is the case here. If available, they would come in addition to actual damages (the plaintiff's actual losses) or statutory damages, which are an alternative to actual damages where it's difficult to show actual damages (or where none have occurred).

Format War Over: Toshiba Drops HD DVD

It's official: Toshiba has discontinued HD DVD, reports Variety Asia. That's the end of the format -- Toshiba is the owner of the format -- and of the high-def DVD format war. The move follows a string of recent setbacks for HD DVD, and should give a boost to that format. It may also delay adoption of Internet downloads as a format, at least until there's a better way to get Internet content onto TV sets. Blu-ray wins - unless the Internet does.

Blu-ray Wins

In the presidential campaign, the battle between blue states and red states hasn't yet begun, but in the DVD format wars, there's finally a victor, reports the New York Times (although the LA Times is a little less certain), and it's blue. Blu-ray, that is.

HD DVD suffered a quick succession of body blows: Last year, Target stores dropped HD DVD (though Target still sells the players and discs online ). Then, in the last six weeks, Warner Brothers, Best Buy, Netflix, and yesterday Wal-mart, in a coup de grace, each abandoned the format.

A question worth asking - and neither article does - is why Blu-ray prevailed. Perhaps because the discs have greater capacity, perhaps because the format (my sources tell me) have better technology, or perhaps even because the name is cooler (never underestimate the power of branding).

The other question, for Blu-ray and its backers, is how much of a window of opportunity they have to push their wares. On the one hand, many consumers may see little reason to upgrade their players and libraries for only an incremental improvement in quality. And on the other hand, digital downloads are growing in popularity, albeit slowly. The Blu-ray hardware companies will have to reduce their prices, and the studios will have to do likewise with disc prices, if they want to overcome consumer resistance, and establish significant market share before downloads become a real threat.

And not to forget the just-settled writers strike, the battle between discs and downloads will have an effect on writers residuals. See my article on DVD residuals and my analysis of the WGA deal (note discussions of download residuals and DVD residuals).

Meanwhile, Toshiba, the primary backer (and owner) of the HD DVD technology, is apparently not expected to withdraw the technology anytime soon - Microsoft still supports it, as do three studios - but the format war is over. According to the NY Times, Toshiba execs wouldn't even return calls.

Vudu Works Its Magic, Releases HD Movies Day-and-Date With HD DVD and Blu-ray

For the first time, a movie will be available (legally) in electronic form on the same day it's released on physical media, the LA Times/AP reports.

The movie is The Bourne Ultimatum, and it will be available this Tuesday in high-def on the Vudu box - a hybrid download/streaming device - the same day as the DVD is released. The film industry term for this is a "day-and-date" release.

Usually, electronic releases are not available until the pay-per-view or pay-TV window, which is usually a month or so after the DVD release. Most such releases are in download or streaming form via the Internet, whereas Vudu is a somewhat unique device that attaches to the television set.

Still, if the experiment is successful, it could lead the way to accelerated online delivery of more films - a development that the big DVD retailers (Wal-mart, Best Buy and Target) might strenuously resist, but that might be favored by download vendors such as Apple (iTunes) and Amazon.

This development will contribute to the debate over release windows - the film industry practice of releasing a movie in phases via different media - first theatrically, then DVD, then pay cable, basic cable, and finally syndication. The industry maintains that this approach maximizes revenue, while critics suggest that refusing to make films immediately available via some form of home media encourages piracy and frustrates consumers.

Interestingly, there has been some collapse of windows related to foreign release patterns. In the past, foreign theatrical releases followed domestic. Today, due to the Internet's effect on both piracy and worldwide publicity, many large "event" films ("tentpoles") are released in some international territories day-and-date with domestic.

Slow Growth for Movie Downloads

A study by Screen Digest Magazine predicts that the aggregate U.S. and European movie download biz will be $1.3 billion by 2011, reports Variety -- only 3% of the total home vid market.

Why so low? Lack of a "single download model," the trade paper reports. Presumably this refers to the diversity of formats and websites. In other words, the only one-stop shopping for movies will probably continue to be pirate services such as BitTorrent servers. :(

Terminology refresher:

Electronic Sell Through (EST) = download-to-own = customer downloads the movie and gets to play it forever on the proprietary player corresponding to the format of the file - analogous to home-video sell-through (sale).

Broadband video-on-demand = download or streaming that is playable for a limited time only - analogous to home-video rental.