The method means anyone with a broadband connection to the Internet can download literally any movie they're looking for in as little as two hours. It has Hollywood, already on its heels in the war against piracy, sticking yet another thumb in the digital rights dam.
A regular consumer wouldn't be able to tell the difference between a legitimate DVD movie and one compressed using the new scheme, which is called DivX. The movies are full screen, even widescreen, with full fidelity stereo sound.
What's more, a DivX-compressed movie is about 400 times smaller than its DVD counterpart, ranging from 600 to 750 megabytes. That means pirates can usually copy a DVD movie onto a single CD-ROM. Since blank compact disks now cost less than $1, the door is open for Hollywood's greatest fear -- fully digital copies of its movies are now ripe for reselling by pirates.
"Do I feel that there's a huge river damming up? Yes," said Ken Jacobson, vice president of the Motion Picture Association of America. "Yes, we see it coming, and we are doing everything we can to deal with it."
Already, Jacobson said, traditional forms of piracy cost the industry $2.5 billion. Most of that is spent on analog videotape copies, where film quality obviously suffers.
But DVDs offer Hollywood's prized possession in pristine digital format -- a format that can be copied infinitely without quality loss. Information on DVDs is encrypted to prevent piracy, but that encryption was cracked last year, opening the door for piracy.
Publication of that crack has landed hacker Web site 2600.com in court, and the MPAA has managed to get a restraining order keeping the site from offering the software, called DeCSS. But that hasn't stopped hackers from finding DeCSS in other places on the Net.
Still, DVD copies of movies were as large as 7 gigabytes, impractical to download or even to store on a user's computer. Under the best of circumstances, movies could be shrunk to the size of two compact discs.
Enter DivX, which came into use in the video piracy arena sometime in February. The compression algorithm (often referred to as a "codec") simply slaps together Microsoft's latest video compression technology, the third revision of MPEG4, and the MP3 audio compression technology. An updated version offers as an option Microsoft's audio compression format. (Microsoft is a partner in MSNBC.)
To use it, a pirate need only install a 570K program that adds DivX playing capability to Microsoft's Windows Media Player.
Since its release, DivX has taken the video pirate arena by storm. Today, with just a little creativity and a willingness to trade, any movie released on DVD can be found in DivX format on the Internet. There are even Web pages cataloging DivX "releases," including information on who copied or "ripped" them, and what their trading policies are.
"The dam has already broken," said Eric Camirand, president of Cinax Designs Inc., which makes digital video editing tools. "Any movie you want I can just go get it for you right now."
DivX shares a name with the now-defunct DIVX video rental project started by U.S. electronics store Circuit City only by accident, according to Michael Saunders of Melbourne, Australia, who maintains the most popular DivX information Web page.
"I'd heard about DivX for a week and didn't believe what I heard," said the 19-year-old, who also maintains a video compact disc information page. "I got around to seeing one, and I was just amazed."
No one has publicly taken credit for doing the work, he said, though rumors suggest two video pirates in France are responsible; even the Web page that offers the codec for download makes no mention of the authors.
Recipies for copying a DVD to a DivX movie are now available on many Web sites. Some tricks are employed to shrink the film's file size. Frames per second are cut from 30 to 24, for example. Experts can notice some pixelization in complex moving images. And matching the sound track to the video can be a challenge for amateur editors.
But several film clips viewed by MSNBC displayed impressive quality, certainly good enough for an average consumer.
Despite their shrunken size, even in the best of circumstances, downloading a DivX movie is still cumbersome. It can take between two and 10 hours, even over a very fast Internet connection. And the movies are not posted on Web sites, which would quickly topple over under the bandwidth demands that would create.
Instead, they are posted to secret drop spots such as FTP servers, often university computers with little or no security.
"There are no easy, friendly ways to do this," said Gary McIntyre, a Canada-based security consultant with LGS Group Inc. He tracks piracy for clients, and pointed MSNBC to numerous FTP sites that hosted movies. "There is no Napster out there for video." (Napster provides software and servers that helps music listeners share files.)
These hoops keep DivX in the realm of hobbyists and out of regular consumers' hands. And so does the fact that DivX movies can only be played on a computer -- they won't play in any stand-alone device like a DVD player.
More important, say the pirates interviewed for this story, that keeps their DivX video trading innocent, since mass production would no tbe profitable. There is a big difference, in video pirate ethics, between downloading and watching movies for pleasure, and copying and selling for profit.
"There is no money being made online," said one, who would only identify himself as "qball." "Most people realize it's illegal, but they feel as long as they don't make any financial gains on it it's not all that bad."
Not all pirates are sure their activity is illegal. One, a 20-year-old college student from Maryland, said he had a library of 30 movies. When asked if he felt like he was stealing, he said, "In a way yes, but in a way no, DivX are like MP3's -- everyone is getting them.
"We're not selling any movies, [we] download them, watch them, and then delete them. It's all legal. Just like MP3's, you have to delete them within 24 hours or else they're illegal."
While rumors arerampant that there is someselling of DVDs copied toCDs going on, MSNBCwas only able to find onepirate who said he'spurchased aDivX-compressed movie.
"I bought them from someone who downloaded and recorded them, of course," the source wrote in an e-mail.
"It doesn't pay off to spend my time doing that."
And that's how most consumers still feel -- spending hours downloading movies is hardly worthwhile when rentals cost $3. So both Camirand and MPAA's Jacobson say DivX isn't really the most alarming development for the movie industry -- broadband is the looming two-headed monster. And there's still time to find a solution before digital movie anarchy hits, because there isn't yet a critical mass of broadband homes yet.
"Six months may be too soon, but 12 to 18 months out, broadband will be sufficiently available," he said. "That makes downloading that much more possible, and that much more likely to occur. We're hopeful that by the time that occurs, we will have in place a situation where people will go on the Net and lawfully secure our products."
Thanks to the sheer size of movies, the film industry was given about three more years than the music business to solve the problem of downloadable material. Critics say the fact that no legal downloadable system is yet in place means the industry has squandered its opportunity, and it may already be too late.
"Today on the Internet, they have no presence, other than a stupid Web site," Camirand said. "The bootlegger looks bigger than the studio on the Web ... If the floodgates open, they're screwed."
In the meantime, pirates feel justified in downloading movies the only way they can -- illegally. But many of them could be among the industry's best customers, some pirates say, if the movie business would just become a bit more creative.
"If people like what they see and really want to experience it, they still have to rent or buy the movie," said one. "Personally, I've gone out of my way to rent a movie because I saw a rip and liked it. I look at mpgs as previews. Extended previews :)"