How Hollywood Should Monetize Popcorn Time
A report done for Goizueta Business School’s Film & Media Management Concentration
Since its release in early March, Popcorn Time has turned heads in both the online piracy community and the media industry. The open source software takes the notoriously finicky protocol BitTorrent, a high speed peer-to-peer method for sharing data, and makes it consumer friendly. Users simply need to download Popcorn Time to their computer and select a video. The chosen movie or television program then streams instantly, mimicking Netflix, but serving an infinitely larger, illegal obtained content library.
Naturally, Hollywood is not happy. The original creators of the site announced their retirement from development in mid-March, but have since posted the source code online, generating a multi-headed hydra of replacements. Still, nearly every offshoot (or “fork” in open source dev terms) has subsequently shuttered under mysterious circumstances. Online speculation points the finger at copyright holders, a suspicion yet to be confirmed.
Ironically, Popcorn Time’s devs have provided Hollywood with a potentially industry changing distribution model — all for free. Large video files are difficult to move around the internet, in turn stemming video piracy (especially in comparison to music). If studios can leverage Popcorn Time’s vision quickly and efficiently, they stand a chance of surviving the future onslaught of piracy, which will only increase as the average consumer gains access to ever-faster internet connections.
The Brilliance and Difficulty of BitTorrent
There is nothing inherently illegal about BitTorrent. It’s just way of downloading data. Typically, when a user downloads a file, the information comes from a single source. For example, while streaming a Netflix video, the video is sent from Netflix’s servers to a user’s computer. In contrast, BitTorrent leverages power in numbers — at a given time, every user downloading a file shares bits and pieces of the file with one another, in turn speeding up the download immensely. Furthermore, those who have already downloaded the file can choose to stay online and “seed”, or continue to help others download.
The decentralized nature of BitTorrent lends itself to piracy, but BitTorrent has proven a capable driver of legal technology as well. BitTorrent Inc., the company that invented the namesake protocol, has leveraged the BitTorrent to help Facebook push updates to its website and everyday consumers move their personal files around the web.
BitTorrent Inc., has even helped creatives get their work in the hands of consumers through their “bundles” program. Past bundles have included an Oscar nominated film, best selling book and Grammy nominated album in 2013 alone. These bundles offer a limited amount of content for free, and typically require some sort of user input to unlock the entire download ( usually an email address to be used in future marketing efforts).
However, BitTorrent’s single greatest barrier to widespread adoption is ease of use. A potential user must first download specialized software and search the open web for torrent files. Then, the torrent file must be downloaded and fed into the specialized software, which downloads the actual piece of content. Clearly, this entire paradigm has room for improvement.
Popcorn Time Innovates
Popcorn Time is not technologically revolutionary. The product is a mashup of two common products — a search engine and a BitTorrent client — but the result is greater than the sum of its parts. Popcorn Time takes the multistep process of downloading and watching a torrent and simplifies it to the bare minimum. In fact, the experience closely imitates existing sources of video on demand (VOD), but entirely for free and with a theoretically endless library.
Even considering it’s success, Popcorn Time is far from perfect. The program’s biggest weakness actually lies in it’s total reliance on BitTorrent. Because BitTorrent utilizes those downloading the same file, any niche file does not download at high speeds. While popular releases such as The Avengers stream on command, catalogue movies take a frustratingly long time to buffer. Among young consumers, these films are not very important, but for an older audience ( e.g. those with disposable income), time tested content is essential.
Cooking Up a Business Model
Popcorn Time has proven proof of concept. For the correct value proposition, users are willing to download specialized software to watch film and television. Nonetheless, no one is paying for the content — yet. I believe that a legal Popcorn Time app could generate revenue with some creative thinking and a disregard for convention:
1) Charge for Content
This may sound simple, but charging for BitTorrent has not been tried, even though it is technically possible. BitTorrent Inc plans on adding “pay gates” to bundles in the future, and the program has already proven that partially “locked” torrent files can be popular with consumers.
2) Reward Users for Seeding
BitTorrent is inherently participatory. By downloading a file, a user helps those in the community also download a file as well. I propose that a legal Popcorn Time compensate seeders with credit for future purchases. In this model, distributors can save money on web hosting costs and server upkeep by allowing their users to help disseminate content. However, content providers should compliment peer-to-peer distribution with centralized servers in order to insure that catalogue content can always be served. This hybrid approach has been successful in the past — while growing, Spotify used peer-to-peer tech in conjunction with traditional streaming in order to compensate for their nascent server capacity.
3) Reward Users for Engagement
Virility is central to BitTorrent. As seeders increase, download speeds increase exponentially. I want to extend this thinking to the marketing itself, by compensating users for acts of social engagement. The new Popcorn Time would award credit for small grassroots efforts, including tweets, volunteered email address, and Facebook shares, but here, I would warning against anything not genuine. The goal is for users to champion content they enjoy by helping distribute and marketing it, not spamming social networks with cookie-cutter messages. Thus, I suggested that rewards be priced algorithmically, adjusting for quality content as measured through retweets and likes.
Hollywood’s Hubris and Utility to Indies
I doubt that mainstream Hollywood would voluntarily make such drastic changes to online distribution, but I believe the strategy outlined above could help indies leverage online communities to help spread work today. Small films with niche audiences could have their film seen without ceding control to YouTube or paying for a Vimeo Pro account.
As technology changes, business models must change as well. Thus far, Hollywood has yet to react to the death of the DVD and the growth of digital in a clear, coherent matter. It remains to be seen whether they will do so on their own terms or continue watch upstarts like Popcorn Time disrupt the status quo.
